Remodeling Return on Investment 101
A home remodel or renovation is a huge investment, and if that's not stressful enough, making the wrong decisions on what you remodel and how you remodel it can cause financial strain in the future.
There are three different kinds of homeowners we work with on a regular basis:
- The "Forever Homer's" - those who go through major remodels and
even structural changes in order to create their dream home. These homeowners usually plan on staying in their home for upwards of 10+ years and typically design spaces to meet their unique needs and lifestyle. Due to the time expected to remain in the home, immediate return on the investment is less important to these owners. - The "ROI Homeowners" - everyone would like a Return On their Investments, and a remodel can be a huge investment. ROI Homeowners are looking to update their homes in a financially efficient way, because they may only plan to live in their homes for the next 3-7 years. These homeowners often want to make educated, timeless decisions during their remodel to get a good financial return on a potential sale.
- The "Prep-to-sell" homeowners either want or need small affordable updates and fast - in order to make their home marketable for an immediate sale.
In this blog post, we want to focus on the "ROI Homeowners" and offer some direction on how to make educated, future-focused decisions to get the best return on investment; while also following your own personal style and creating a space that speaks to your needs.
The Best Investments:
Some of the best investments you can make to get a good Return on Investment for your home remodel or renovation are:
- Front Doors
- Bathroom Remodels
- High-Value Kitchen Updates (high-quality materials and a remodel focused on functionality)
- Bathroom Updates
- Exterior, Face Value Additions & Upkeep (outdoor maintenance, painting, trim and siding replacements, deck rebuilds)
- Preventative Remodeling and Code Compliance Renovations (repairing and preventing water damage, bringing your home up to standard building code)
- Flooring Changes
- Millwork & Trim Updates
- Profitable Architectural Changes (opening up cramped spaces)
- Natural Lightning Upgrades (adding windows, skylights, etc.)
- Artificial Lighting Upgrades (adding can lights or track lighting)
- Energy Efficiency Remodeling & Upgrades (energy saving items that don't include heavy maintenance such as doors and windows)
ROI Approach to Design:
Another determining factor for getting a good ROI falls to the design of your remodel. If you are planning on selling your home in the future, 7-10 years, but want to make it yours right now there are many design approaches that can give a nod to your own personal style and give a new homeowner a blank slate to work with once they purchase your home. Some things to keep in mind are:
- Keep your large design decisions fairly simple (changing walls, tile, flooring, etc.) Extremely personalized colors and layouts can deter potential buyers later in the market
- Keep all finishes and fixtures similar throughout the home
- Try to keep your design choices timeless and stay away from design trends that might go out of style by the time you are ready to sell (read our blog post "Trends End - How to Create a Timeless Remodel" here)
Some things you can ABSOLUTELY personalize:
- Paint and Wall colors - normally a real estate agent will recommend painting your home just before selling, so painting an accent wall or a bright room is a wonderful form of self-expression in your new space until it's time to sell.
- Utilizing furniture to its fullest extent to express your style
- Using art and decorations to personalize your space and showcase your design preferences
- Unique lighting fixtures - lighting fixtures are easily interchangeable and provide a great way to express your design style, just be aware that changing them out for something more mild may be required before selling the home, and touch-up painting might be required to switch them out.
The Most Important Factor:
The most important factor of getting a good ROI on your remodeling project is to hire a licensed and skilled professional to do the work. If you hire an unlicensed and inexperienced contractor who cuts corner or fails to comply with proper permitting requirements on their work, you will most likely have to pay again to fix their mistakes prior to selling your home. To make sure you are hiring a licensed, insured and trustworthy contractor we always recommend reading their online reviews, looking at photos of their work and looking up their company name on https://secure.lni.wa.gov/verify/ to assure that they meet all proper qualifications to work on your home.