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Are Renovations Worth It?

Updated: Jan 19






If you're considering a renovation, there's one question that's probably at the top of your list: "How much should I spend?" Well, the answer is, it depends.

If you plan to stay in your home for five years or more, invest what you can afford for the look and upgrades you want. If you’re planning to sell, take a different approach. Focus on getting back the maximum return on your investment. U.S. homeowners spend more than $400 billion each year on renovations and repairs, according to the 2019 Remodeling Impact Report by the National Association of Realtors® Research Group, so it only makes sense you want to get that

money back—and then some.

"If you’re remodeling for resale, we always suggest for the homeowner to first have a home inspection and be proactive to find issues," says Joanne Theunissen, CGP, CGR, 2018 chair of the National Association of Home Builders (NAHB) Remodelers and owner of Howling Hammer Builders Inc. "The home inspector can identify issues that may come up later to bite you. You don’t want to put money into cosmetic fixes, then find out when you go to sell that you have major problem. Identify any structural issues first, then deal with cosmetic improvements."




Homeowners in the United States spend more than $300 billion on renovations and repairs each year.


The Kitchen

Kitchens are said to sell homes. "It's the heart of the house," says Elle H-Millard, CKD, the National Kitchen & Bath Association's industry relations manager and resident designer (NKBA). "This is a place where people want to unwind. People congregate here, and you want to have a positive vibe in this setting."


A low-cost kitchen makeover will pay for itself faster than a high-end overhaul. A big kitchen makeover costs $68,490, according to Remodeling magazine's Cost Vs. Value Report, and homeowners recover $40,127, or 58.6%. A high-end kitchen makeover costs $135,547 and has a 53.9 percent return on investment.


The materials you pick have a significant impact on how soon and for how much your property sells. Cabinets and faucets are the first items to become outmoded, according to the NKBA 2020 Kitchen & Bath Market Outlook. New countertops go hand in hand with new cabinets. Countertops are the second most common update in a kitchen makeover (only painting is more popular), and stylish quartz alternatives are becoming increasingly popular.


"Quartz will offer you a better return on investment since it won't go out of style as soon," H-Millard explains.


Ceramic and porcelain tile are chosen for backsplashes over glass, stone, and quartz. If you're thinking about replacing the flooring, go for hardwood. It has a far larger following than tiling or engineered wood.


Even something as simple as investing in a high-end faucet may make a significant difference. "Choosing a faucet that makes a statement and looks unusual may add value, provide a personalised approach, and demonstrate attention to detail," H-Millard explains. "These are the luxury moments that you can add to your room to make it seem exceptional and provide you a return on investment."


Bottom Line: Depending on the size of the project, you'll recuperate 54 to 77 percent of your investment.


The Washroom

Do you want to replace your tub with a typical shower? Hold your horses. You don't want to lose money on your purchase. According to the NKBA survey, high-end improvements are more likely to include large bathroom projects like worktops and cabinets, as well as labor-intensive additions like tilework. Over $4,500 master bath projects included 90 percent more countertop enhancements and 70 percent more tiling than those under $4,500.


In some circumstances, adding a new bath is less expensive than remodelling your present one. According to Remodeling magazine, a midrange bathroom addition costs $49,598, with a 54 percent return on investment. The average cost of an upmarket makeover is $67,106, but you'll earn a little greater return if you go all out: 56.6 percent. If you're planning to sell your home, use materials that are in the middle of the price range. The average cost of a makeover like this is $21,377, but the return on investment is 64 percent.


Pay attention to the aspects that make people go wide-eyed: "The days of little showers and tubs with jet streams are long gone. Now, it's all about luxury and efficiency, with features like a larger shower, more body sprayers, and unique tile on the floor with inlays for particular details "H-Millard expresses his opinion. "You receive a spa-like experience in the comfort of your own home."



An Addition to Your House

Adding a new master suite to your home? According to the NAR 2019 Remodeling Impact Report, it costs $150,000 and has a 50 percent return on investment. However, if you're strategic about your expansions, remodelers have seen it considerably higher.


"We just completed a two-story classic house extension for a customer. A master bedroom and bath were added, and the laundry room was relocated to the main level "According to Theunissen. "It yielded an 89 percent return on investment and made the property more appealing to Baby Boomers who didn't want to climb stairs as frequently. A market was created as a result of the initiative."


Refinished Basement

One option to maximise your home's footprint is to convert unwanted space into habitable space, but don't anticipate a huge return when it comes time to sell. According to the 2019 Remodeling Impact Report, you'll receive a 64 percent return on your investment. However, Theunissen reminds out that what's done in the basement has an impact on how valuable the investment is when it comes time to sell.


"The question is, why are you adding the gap in the first place? If you're converting the basement into a recreation area, it can be similar to another room you currently have. Maybe there's greater benefit in building a home office or bedroom, for example "Theunissen makes a point. "People desire specialised office space, which is one of the major trends we're seeing. It is not a good idea to use a corner of the kitchen or a bedroom as an office."


Living Room

Renovations to the living room include upgrading or increasing the space, as well as pulling down internal walls to create an open floor plan. These developments result in the open areas that are so common in freshly built homes.


According to Theunissen, "entertaining in the house promotes a desire for open space." "It's not very marketable if you have a great property with separated spaces."


Deck

New wood decks, according to Remodeling magazine, are one of the greatest projects for ROI, with a 72.1 percent return on investment. According to the NAR's 2018 Remodeling Impact Report: Outdoor Features, they also increase market value to a property. Michael Beaudry, executive vice president of the North American Deck and Railing Association, isn't surprised (NADRA).


"Outdoor living is exploding right now," Beaudry adds, "and you're seeing people build larger decks, using low-maintenance materials, employing concealed fastener systems so there are practically no screw or nail holes, and they're receiving a 100 percent return on their investment." "You'll get your money back if you invest $20,000 or $50,000 on a deck. There's no way to overestimate the amount of money you'll make."


What recommendations does he have regarding deck makeovers? "Make sure you have a sturdy framework before you resurface or dress up the deck," he says. "It's asking for trouble to put new materials on a deck that's 20 years old and doesn't have a solid base." One of the most cost-effective renovations is to improve the structure, after which you may spend your money on materials, lighting, stairs, and other enhancements." Whether homeowners build a new deck or repair and renovate an existing one, he says they should expect to see a return on their investment.





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