So you’ve decided to take the plunge and redo the kitchen, or put on a sprawling new deck, or add that central air conditioning you so desperately wanted last summer. The plans are drawn, the contractor is ready to go, and you suddenly have a concern you hadn’t thought of before:

Is this a good investment?

How well a remodeling project pays back on its initial cost is dependant on a number of factors, and you need to weigh at least some of them before you make the decision to move ahead. For example, the payback on remodeling in general is better in a hot real estate market where homes are moving quickly, as opposed to an area where the market is slow. This is especially worth considering if you plan to sell your home soon after the remodeling is complete.

You also want to consider the type of project you’re undertaking, and how it relates to the homes in your area. If the market around you is particularly good for homes with two bathrooms, and you want to add a second bathroom to your current one-bath home, the return on investment will be better then if you had spent the same amount of money to add a third bathroom to your existing two. Another example of this is the danger of overbuilding. If you construct a room addition and make your house 2,600 square feet in a neighborhood of 1,700-square-foot homes, chances are that the percentage of payback versus investment will be pretty low.

If you are planning on doing all or most of the remodeling work yourself, you can typically reap some rewards by keeping the investment for the project lower than if you had hired a contractor to do it. But remember – that reward assumes that you can do a quality job. If you construct a room addition that doesn’t blend with the existing house, or do a quick and shoddy kitchen remodel with bargain-basement materials, you may actually end up lowering the value of your home.

With all that said, here is the typical percentage of payback per dollar spent for a number of popular remodeling projects. Remember – these are only averages compiled from a number of different survey sources, and may vary considerably for your particular home:

  • Minor kitchen remodeling: approximately 94 percent to 104 percent.

  • Install central heating system*: approximately 100 percent to 102 percent.  

  • Major kitchen remodeling: approximately 90 percent to 94 percent.

  • Bath addition: approximately 92 percent.

  • Bath remodeling: approximately 77 percent to 85 percent.

  • Central air conditioning*: approximately 75 percent.

  • Family room addition: approximately 85 percent to 87 percent.

  • Decks: approximately 73 percent to 83 percent.

  • Replace windows*: approximately 68 percent to 74 percent.

  • Add a home office: approximately 55 percent to 65 percent.

  • Add a swimming pool*: approximately 44 percent.

  • Add landscaping: approximately 30 percent to 50 percent.

  • Remodel a basement: approximately 15 percent.

*These items can pay back considerably more or less depending on the region of the country, and the climatic conditions. For example, adding a swimming pool in Oregon will probably not pay back as well as adding one in Arizona.

Remodeling and repair questions? E-mail Paul at paul2887@direcway.com.

***

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