Unless you have recently purchased the home of your dreams, there are probably areas in your home that you would like to remodel. If you are doing this project for yourself, and you are planning to stay in your home for an extended period of time, it may not matter what you spend. Unfortunately, if you are planning to move in the next couple of years, and you are hoping to recover the money you have invested in your remodel, there are some projects you may want to avoid. This is because not every remodel project is a good investment.
Understanding The Return On Your Investment
Because every real estate market is slightly different, the only real way to evaluate the potential profit that your remodel project may bring you is to evaluate the return on investment it may produce. Return on investment, or ROI, in the most simplistic terms is the amount of money you gain compared to the amount of money you spend. This is normally shown as a percentage that is derived by dividing your gain by your cost.
For example: If you were to complete a remodel project that cost you $10,000 to complete, but it only added $6,000 to the value of your home, the ROI of that project would be 60%. On the other hand, if you spent $10,000 and your project added $12,000 to your home's value your ROI would be 120%.
If you do not feel strong or passionate about the remodel project you are getting ready to undertake, you may first want to calculate the ROI you will see.
Four Projects That May Not Be Worth Your Time
Sunroom Additions - Sunrooms, sun porches, or solariums can be wonderful sunlight spaces that give your home a lot of natural light. They can be designed to be a great formal, or informal space within your home. Before you decide to add one to your home, or convert an existing space into one, you may want to check your numbers.
The average cost of adding a sunroom is $75,726 and it is estimated that you will only see an increase in your property value of $36,704. This project will only give you a return of 48.5%.
Home Offices - Just because you work from home does not mean that your future buyer will have this luxury. While you may convert one of your empty bedrooms into a comfortable office space you may want to be careful how much you spend in doing so.
A home office remodel currently has one of the worst ROIs on the market. An average of $29,066 is being spent on these types of remodels, and they are only adding $14,155 in home value. That is a 48.7% ROI.
Bathroom Remodel - You would think that everyone would be willing to pay for an extra bathroom. Unfortunately, while everyone may be looking for an extra one, they are not always willing to pay what it will cost you to add one.
The average cost of a bathroom addition will run you a projected $39,578, of this amount you will only realize $22,875. This is a ROI of 57.8%.
A Back Up Generator - This is one of those projects that could be worth its weight in gold, or be a total waste of your time. It really depends on where you live, if you are exposed to regular storms, and how often you are without power. In remote areas that experience frequent storms or power outages your return may be much higher than indicated, but in other areas you may not hardly see any return at all.
It is estimated that you could spend approximately $12,135 to install a whole home back up power generator that is hardwired to your home. Of this amount, it is projected that you will only see an increase of approximately $7,263 in your home's value. That is an ROI of 59.9%.
These figures are just prices based on national averages. The amount you spend on your remodel, as well as the value that it adds to your home will vary by where you live as well as the quality of the job. A remodel expert, such as Century Roofing Company Inc, will be able to give the exact cost for your area.
Remember the ROI is not the only deciding factor. You need to engage in projects that will make your home more comfortable for you and your family. While these projects may not produce the best potential profit, if they are what you and your family want or need, they are worth whatever you pay for them.