There is a saying often coined on home remodeling tv shows like HGTV’s Fixer Upper– “buy the cheapest house in the best neighborhood.” The reasoning for this is simple and proven time and time again. The cheapest house in a desirable neighborhood has the largest opportunity for growth or “expansion potential”. Simply put, the remodeling investment made in homes that fall into this category tend to see the greatest ROI and resell faster when the time comes!
Maximizing Your Home’s ROI
Even if you are not on the hunt for a fixer-upper, spending the right amount on a remodel can be the difference between a highly sought-after home when on the market, and a home that is overpriced for the neighborhood. You tend to see the best return on a medium remodel project that will in turn appeal to the widest range of potential buyers in the future. You might have heard hard and fast numbers like $10,000 remodel for a bathroom and $25,000 for the kitchen. However, these numbers are meaningless if the value of the home is not taken into consideration. To account for this, the best method is to consider your remodeling budget as a percentage of the cost of your home overall.
As an example, let’s imagine you are considering your kitchen. Should you remove the countertops, cabinets, and floors and completely remodel? Is anything salvageable? What should you spend? One website uses the following as a detailed example.
“Let’s say you bought the house for $1,000,000. It has three bedrooms, two bathrooms, 1,800 square feet of living space, and a 5,000 square foot lot. A property’s value is made up of land value and building value. In your case, the split is 50/50. If you include the kitchen, living room, and laundry room, the house has a total of eight rooms. The value of each room is therefore around $62,500 ($500,000 building value divided by 8 rooms). You can consider $62,500 as the max you would ever spend doing anything to a room.” (Financial Samurai)
While this is useful information, not all rooms are equally worthy of the investment. Generally, the kitchen is the first place people look to remodel, and this is because there are costly appliances, plumbing, and materials used within this space. Further, many home buyers regard a remodeled kitchen as the #1 must-have when on the market for a home. The master and guest bathroom in addition to the master bedroom are other rooms that rank highly on the list of home buyers when deciding which house they will purchase.
It is also worth mentioning that the kitchen and bathrooms do generally cost the most to remodel and other rooms like family rooms and bedrooms can appeal widely to buyers simply with a fresh coat of paint, updated flooring, and light fixtures! Be sure to consider, as mentioned, the percentages involved in your remodel to ensure your remodeling projects best align with the value of your home.
How Rossi Construction Can Help
We have years of experience in construction, from crafting blueprints, sourcing quality materials to helping establish budgets to maximize the resell value of your home. Reach out to us today to learn more about what we can do for you and your home!