Now that summer is fully upon us, the renovation season has begun. Last month, I replace the carpet in my condo with hardwood floor more for cleanliness purposes than anything else (I find its less dusty and lightens up the room up given I have a north facing exposure). Next month, assuming that the trades actually do what they are suppose to when they are suppose to, I am supposed to get my kitchen cabinets repainted and counter-top replaced (that sucking sound you hear is money flying out of my wallet- there isn’t a lot of thickening going on in my wallet these days). For those renovating with an eye to increasing their property value, or those investing in real estate to flip, I found this handy tool that allows you to asses what items to renovate to maximize increasing the resale value of your home.
I noticed that it doesn’t matter how much money you put into the tool, it gives you a consistent potential return on investment. I ran six potential upgrades and here are the corresponding returns on investment expressed as a % of the initial investment (in decreasing order):
Kitchen Reno: 75%-100%
Roof Shingle Replacement: 50%-80%
Flooring upgrade: 50%-75%
Paint (interior and exterior had the same return): 50%-75%
Landscaping: 25%-50%
Adding a swimming pool: 10%-40%
I am not surprised by the kitchen reno figure; everyone who comes over remarks on my country-style wood cabinets in the kitchen and how they need to be replaced. All my friends shopping for homes also remark how their wives immediately comment on the state of the kitchen in every houses they see and how it is a large factor in whether they like the house or not. Thus, a good kitchen is high on the “wants” list of many home-buyers. I am a little surprised by the swimming pool and landscaping figure; I suspect that some homeowners do not want to maintain these items.
My one criticism of the tool is that a lot of renos seem to fall in the 50%-75% return. It seems to be a default response. Have a try with the tool and feel free to share your comments.
June 11th, 2007 at 11:44 am
How much did it cost to get the cabinets repainted? I did this myself twice and it’s a crappy job.
Those reno estimates are almost useless. There are so many other factors involved ie if you have a crappy kitchen and put $10k into it, you’ll probably make 100%+ of your investment. If you have a reasonable (but not new kitchen) and put money into it, then your return will be much lower because you are removing value with the old kitchen.
However in general terms they give an idea of where u should and shouldn’t put your money.
June 11th, 2007 at 11:52 am
Thanks for the post. The tool, as you quite accurately point out, leaves a little to be desired but it is a good gauge of what renos to do if you are looking for the largest ROI. I just found it funny that you could put $1,000 or $100,000 and the results came out the same. I would have thought that putting in $100,000 in a new kitchen would have greater ROI than $1,000. It is what it is one supposes.
With respect to the kitchen, I am now weighing repainting them and replacing them all together. I have been told this morning I have to completely strip off the finish and repaint to do it properly and it may be about the same price (and less time consuming) to replace them altogether. I’ll keep you updated. I was also told that I should get in line- the trades are too busy to do anything this month.
June 11th, 2007 at 12:44 pm
Interesting.
Your comment – “I would have thought that putting in $100,000 in a new kitchen would have greater ROI than $1,000.”
Did you mean the other way around? I would expect that smaller outlays should have greater ROIs.
June 11th, 2007 at 1:41 pm
Sorry. You are right.
June 24th, 2007 at 10:30 pm
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