 | Michael Gatschet is the owner of Heartland Home Improvements, which opened in 2000, but has 15 years experience in the construction remodeling industries. He is one of only two remodelers in Kansas recognized by the National Association of Home Builders (NAHB) as having earned the designation of a Certified Graduate Remodeler (CGR). Michael is also recognized by the NAHB a Certified Aging in Place Specialist (CAPS). He believes in a well educated work force to provide the kind of service that clients deserve. You can reach Michael at (316)-264-7744. |
Home Improvement
2006-12-01 09:28:00
Improvements that help your wallet
What type of home improvements yield the greatest return on investment?
ANSWER: This is probably one of the toughest questions for any remodeling professional to answer without a firsthand analysis of a particular project at hand. There are so many variables which need to be answered before you will have your answer. Remember, your home has always been a solid investment, and in most households the number one investment. For many homeowners, home improvement projects often pay for themselves through a comparable increase in the home’s value. The decision to protect a very solid investment by improving its marketability is generally always a good decision when done through a thoughtful process with consultation of professionals.
When evaluating if a particular project is a good project for “return on investment,” we must look at many factors. When someone calls on for a service, they need to know a little about the project itself and to what extent the client has in mind. They have to know an address and they also consider the area that the home is in. The location of the home gives them the opportunity to look at comparable real estate prices in the area. Recent real estate sales help give them some indicators to the basic value of your home. Knowing the area of town or neighborhood you are in, and based on experience, they can identify how your house is constructed, architectural style, the age of your home, and the traditional marketability trends in that area. They need to know how long you have lived in your home and how long you plan to stay. They also need to know what you have done to it so far to improve it. These are all questions they can prepare for prior to a consultation. Their goal as a professional is to provide a solid recommendation to help determine the best plan of action in your decision.
Let me give you an example of why there is no perfect answer, across the board, if a remodeling project will yield a high return on investment. Let’s say you are planning to sell your home or at least market it in the next year or so. Your home is in a neighborhood of similar homes where most homes have 2.5 bathrooms or more. Your home has 1.5 baths, so you are considering adding a bathroom. The typical “return on investment” in the Wichita area averages between 57% to 60%. By adding a bathroom to your home in this situation certainly could greatly change the amount of return. Before this improvement, prospective buyers would probably never even look at your house. Now, the addition of a bathroom brings the house in line with prospective buyers’ expectations. Likely the home could now sell at a price that would be more than the project cost to complete.
Incidentally, the top remodel projects that currently give the most return on your investment in the area are projects such as siding replacement, vinyl windows, and projects that add aesthetic value as well as energy efficiency. Other top performing projects such as adding an Attic Master Suite with a bathroom, Kitchen Remodels, Two Story Additions, and Bathroom Remodels are all top performers. Keep in mind, these are based on averages and don’t necessarily take into consideration the individual variables for your particular home.
The last consideration, and maybe the most important, is to consider if the improvement will make your life, happiness, lifestyle, and comfort in your home more valuable than the difference in the monetary value not recouped.
Remodeling Magazine, in cooperation with Realtor Magazine, provides an annual report titled: Remodeling Cost vs. Value report 2006, which details 25 common home improvement projects in various markets nationwide. The report is used to compare construction costs with resale value nationwide and for 60 specific markets nationwide, including Wichita. The report details a total of 25 projects which are all specified consistently so that survey results can be evaluated consistently. For more information on the Cost vs. Value Report 2006, go to remodelingmagazine.com and click on the prompts to view the report.
For any project, keep in mind that resale value and marketability depends on the condition of the rest of the house also. The value of homes nearby and the rate at which property values fluctuate in the area can greatly impact resale value and cost recouped. When resale or cost recouped are major factors in the decision to remodel, ask an experienced Realtor about home prices in the neighborhood. And, by all means, consult with a Professional Remodeler about project costs.
