5 Critical Facts to Get A Higher Return on Your Remodeling Dollars Now
Updated March 16, 2019
Do you struggle with where to start first when it comes to remodeling or fixing up your home? Does your home resemble The Money Pit from the 1986 movie with Tom Hanks and Shelly Long? If you were taking a multiple-choice quiz about what need to be done at your home would you click the box that says “all of the above?”
Knowing where to put your hard-earned remodeling dollars can be confusing. Is it best to fix the broken windows, doors or poorly insulated walls or do a major addition to gain more space? Do you get bigger returns from a kitchen or bathroom remodel? If you redesign and remodel your bathroom to “age in place” will this improvement hurt you when you go to sell your home?
It’s easy to come up with these questions – the answers, though, are not so obvious. So, this brings us back to the question where should you put your remodeling dollars to get the biggest bang for your buck (or conversely should you even give a hoot about return on investment?).
Every year an extensive research team puts together the Remodeling Cost/Value Study to dig into these questions and provide you and I with the answers. My goal in this article is to not bore you with stats. I say this even though I will confess to being a bit of a stats geek. I’m so strange I took 3 statistics courses while majoring in Business at Carnegie-Mellon University. You’ve got to be a bit touched to do that (ha! ha!).
In this article, I’m going to focus on 5 critical facts (which don’t require you to like statistics) so you can get the best return on your remodeling dollars. At the end of this article I’m going to share with you my IMHO (In My Humble Opinion) how I look at return on remodeling personally (my opinion as a financially conservative building material supplier and contractor may surprise you). Let’s check out these 5 critical facts.
Critical Fact #1 – If it’s broke, fix it. The case for replacement projects vs. larger scale remodeling
Does your home feels like the builder forgot to insulate it? Is your front door practically falling off its hinges? Are windows like the lyrics to “Twas the Night Before Christmas” with a twist (yes someone “tore open the shutters and threw up the sash,” but then it feels like nobody remembered to shut the doggone sash because of how cold it is inside!).
If your insulation, doors and windows resemble any of these remarks that’s not as bad a thing as you may think. What’s nice to know is you can get the best return on your remodeling investment by fixing what is broken (like windows, doors and adding insulation). Some of the highest retuning projects were adding fiberglass attic insulation (your costs recouped on this project are 107.7% of what you pay for it!), vinyl replacement windows (73.9% return) and entry door replacements (90.7%).
On the other hand, large kitchen remodels came in around 63%. The conclusion – fix your windows and doors first, do your bigger remodeling projects second.
Critical Fact #2 – If your real estate market is hot so is your return…. kind of
When it comes to return on remodeling (just like return on real estate) it’s all about location, location, location. Where you live absolutely does matter on getting a return on your remodeling investment. If you live in hot housing markets like San Jose, San Francisco, San Diego, Albuquerque, Tulsa, or Columbia South Carolina you’ll get the best return on your remodeling (and sometimes get back more than you paid for it).
If you live in a “rust belt” city like me (note – I’m a proud “buckeye” who lives a few miles from Lebron James in Akron O-H-I-O – but he hasn’t invited me over yet!) you cannot expect to get as much back in resale (bummer). But one thing historic rust belt cities offer is nostalgic homes like the one below from A Christmas Story with the leg lamp (can you see fragile with an Italian accent?).
While I understand the “statistics” behind these numbers make sense, I will also make a counterargument that these numbers are also a bit “make-believe.” Why do I say this? Well if you live in San Diego where the prices of the homes are astronomical (and continuing to go up) you only “gain” from this real estate market if you “cash out” and move to another city (I remember when my cousin moved from NYC back to Cleveland in the late 90’s and made a killing. He went from a rapidly increasing real estate market to a much more modest home value region). If you stay in the same city the next home you buy will also be rising rapidly in value – so you’re not really gaining as much as you think.
Critical Fact #3 – Go big, while relaxing in your new spa bathroom. The biggest increase in value vs. last year is upscale bathroom remodeling!
Have you been dreaming of that spa-bathroom with jet sprays coming out of every wall, a gentle flow of water coming out of your overhead rain shower head and a large walk in shower? If so – the timing may never be better! The highest increase in value from 2015 to 2016 projects came in the upscale bathroom remodeling category which grew 7.4% over the previous year. Maybe with our crazy hectic lives we’re starting to value having a bathroom to not only get ready quick in the morning – but also a place to relax and reflect.
Critical Fact #4 – What you see isn’t what you get. What you see (from the curb) will get you more!
Is it best to spend your remodeling or replacement dollars on the inside of the home (a bathroom or kitchen remodel) or on the outside (new siding, new replacement windows or a front entry door)? According to the cost/value study what people see on the outside will outweigh the value of the improvements you do on the inside. So, when your Mom used to tell you “beauty is only skin deep, it’s what’s on the inside that matters” – she was wrong when it comes to home remodeling projects (Mom – I’m sorry to partially dispel this myth!).
Critical Fact #5 – Staying in place has its privileges. A tighter new home market makes universal design projects smarter than ever.
“Aging in place” (a buzzword I hate!) has become a hot topic as the number of baby boomers grow and their desire to continue to enjoy the comforts of the home they have lived in for years is still strong. While we may like our existing home, the question is, is it a good idea to remodel this home to make it safer? Would it be best to move into a new 55+ style community home as we get older instead?
To get to the bottom of this question the Cost/Value study added a new category to the study looking at a “universal design bathroom” (i.e. a bathroom designed to work for people of all abilities). This project includes features like a one level zero threshold shower, a wall mounted vanity which could accommodate a wheelchair and widening the doorways for accessibility. Many people worry that making a bathroom more accessible will reduce the value of their home when it’s time to sell because it will look institutional.
The good news is in the Cost/Value report the return on a universal designed bathroom was higher (68.4%) than the return received on a standard bathroom remodel (59.1%). What’s nice to know is there are many sleek remodeling products where you can make a bathroom accessible and stylish -so it won’t look like a hospital room. This is key for resale. Check out one example below:
Cost/Value remodeling and replacement – In my humble opinion
This article has been focused on getting a return on your remodeling dollars. In my humble opinion – while I think this data is helpful I believe you should throw most of this data out and do the project you’d really like to do. Maybe this is me talking like a guy who has been a heart patient (2 times now) and feeling life is made to be lived and enjoyed. The reality is we’re going to go out of this world with exactly we came into this world with – NOTHING! Enjoy your home, enjoy today and make a place you’ll love to come home to. Maybe this isn’t the best financial advice – but are finances really everything?
Whether you choose to use these facts and figures or go with my “do what makes you happy” philosophy is up to you. If ROI matters to you (this can be especially important if you don’t plan to hold onto your home for long) filter in these 5 critical facts and/or dig into the 2016 Cost/Value study further. If you just want to live and enjoy life, it’s not always a bad idea to throw caution to the wind and do what your heart tells you makes sense. If I (or my company) can help you with either a Columbus or Cleveland remodeling project, or nationwide supply of remodeling products we would be delighted to be of assistance. Contact us at the numbers below.
For an Akron or Cleveland remodeling project call Cleveland Design and Remodeling at 216-658-1270. For help for nationwide supply of unique bathroom remodeling products call Innovate Building Solutions at 877-668-5888.
If you’re a remodeler or builder and want practical advice on remodeling products, industry trends, marketing and sales tips to grow your business (and cut day to day hassles), start reading my newest blog – Innovate Builders Blog. It’s packed with ideas you can use now. Click here to Sign Up for the Innovate Builders Blog.