Home Repair and Remodeling Projects that Have the Best Return
by Don Kennedy
President, ProMaster
ProMaster Home Repair and Remodeling – Call 513-322-2914
Every year, I review Remodeling Magazine’s Cost Versus Value Report for Cincinnati area home repair and improvement projects. I then analyze and share my findings and recommendations to better help our clients make wise home repair and improvement investments.
The 2015 report contains no surprises and substantiates my long-held view that in today’s housing market, large, expensive remodeling projects yield poor returns on investment. Homeowners are better financially served by keeping their homes updated and in good repair.
Here are some of the highlights mixed with my assessment from this year’s report.
Best Home Repair or Remodeling Projects
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The best investment a homeowner can make in their home remains an updated entry door. This year’s report shows a 73.7% recovery during resale for the cost to replace a door. From what realtors tell me, the entry doors create the “first impression” of a home. A rotted, dated or neglected door can really start a showing off on a bad foot. Even if you can’t afford to replace the door, repair the trim and ensure the door has been freshly painted before you list the home.
Another solid home repair investment continues to be window replacement. Wood windows returned 70.1% while vinyl windows returned 68% of the cost at resale. After taking thousands of calls from homeowners I can attest to their appreciation of having updated windows in the home. In addition, one of the most common issues I see during home inspection reports are rotted or malfunctioning windows. These windows either disrupt a home sale or cost the seller a lot of money to save the deal versus a proactive approach to fixing or replacing problematic windows beforehand.
Worst Home Repair or Remodeling Project
Effectively tied for one of the worst projects for returns on investment are home office remodels and backup generator installations. These projects confound me, personally, as I highly value both. It seems to me that most people would like a home office, as it affords a functional space to pay bills and manage one’s affairs—even if they don’t run a small business or work from home. Yet, for some reason, home buyers don’t value a home office, as the data for Cincinnati this year shows only a 39% return. Maybe you can comment below this article and help me understand why that is!
The backup generator data really breaks my heart. To me, this is a really important feature to have with the common electrical outages our above-ground power grid experiences here in Ohio. Yet, it returned only a 39.1% return at sale. Maybe this is a result of the relatively quiet weather we’ve had in Cincinnati as of late. If we get another ice storm or rash of wind storms folks will change their tune.
If you want to buy a backup generator, I think that’s great… you just might want to consider a portable unit that you can take with you when you move. That’s what I do. I have an adapter on my electrical box that I can plug the portable unit into and it feeds the whole house. While it doesn’t automatically come on when the power fails, this system cost me under $1K and supplies 8,000 watts of power.
What About Kitchen and Bathroom Remodels?
No discussion about the Cost Versus Value Report would be complete with mentioning Kitchen and Bathroom Remodels, as this is one of the most common questions homeowners have. In general, these projects return from 51% to 63% of their cost. So if you decide to remodel a bathroom or kitchen, do so because the lifestyle improvement justifies the expense, not because it is a guarantee to pay for itself when you sell the home. Often, the best use of your budget is to devote it to home repairs that will show the potential buyer you have cared for the home.
The typical midrange kitchen remodel in Cincinnati last year cost about $55K, while a minor kitchen remodel ran almost $19K.
Adding a bathroom cost a Cincinnati area homeowner about $38.7K in 2014 while a remodel ran just over $16K.
A great deal of money can be saved by avoiding a full remodel and focusing instead on updating fixtures, repairing walls and paint, fixing tile and replacing worn cabinetry. Often, such a remodel can be done for under $5K, yet look like a brand new kitchen or bathroom.
Bottom Line on Home Improvement Repair and Remodel Costs
My best recommendation is don’t spend more than 10% of the value of your home on a remodel. Hence, for most of my listening audience here in Cincinnati, you should budget $15-30K for a kitchen remodel.
Think about it this way: Monetary inflation notwithstanding, at a 2-2.5% market price appreciation rate, for a $200K home with a $20K remodel you will break even in 4 to 5 years. So when you are arguing with your inner-parent for permission to spend the money on that kitchen or bathroom you really want, simply ask yourself, “am I going to live here more than 5 years?” If the answer is yes, and you can afford the project, do the remodel. If you are certain you may relocate before then, save your money and do some targeted kitchen and bath updates and general home repairs instead.
If you would like to read Remodeling Magazine’s entire report for the Cincinnati area, you can do so here: http://www.remodeling.hw.net/cost-vs-value/2015/east-north-central/cincinnati-oh/
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