| If you’re
thinking about remodeling your kitchen, or finishing your
basement, you probably want to get your investment back when
you sell your home. But when it comes to payback value of home
improvements, some are definitely more profitable than
others. As a general rule, kitchen and bathroom projects
usually get a nice return on investment, typically 90% or
more. Things like adding rooms or finishing basements tend to
pay back the least. Finishing a basement usually returns less
than 50%, so it’s not a project likely to show profit at
selling time. There are a number of factors that go into
determining how well a project will pay back. Payback value
depends a lot on the current market conditions in your
area. If the market is hot and homes are selling fast, you can
expect a higher payback value than you would get in a slow
market.
The type of project you do and how it fits in with other
homes in the area can have a big influence on payback too. If
you put your money into the wrong type of improvement, you
won’t get your money back. But if you're smart about what you
do, you can make money. The payback will be better on
improvements that are in demand and conform to neighborhood
standards. Adding a second bathroom in a neighborhood where
most homes have two bathrooms will give a high return on
investment. Building a large addition that makes your home
twice as big as the other homes on the block probably won’t
pay back very well. Likewise, the popularity of a project will
factor into how much it pays back. An improvement heavily
customized to your wants and needs won’t pay back as well as
something more common to other homes in the neighborhood.
Another factor to consider is the cost of the
improvements. If you can do the work yourself, you can save
significantly on the cost of the project and greatly improve
the chances of getting a good return on the investment.
The list below is compiled from several published surveys
and shows typical payback for some popular remodeling
projects:
- Kitchen
remodeling – 90%
- Add a
bathroom – 90%
- Bathroom
remodeling – 80%
- Install
central heating – 90%
- Install
central air – 75%
- Add a deck
– 70%
- Replace
windows – 70%
- Add a room
– 55%
- Build a
pool – 45%
- Finish a
basement – 40%
|
