Aurora Mortgage Information

Will Your Home Remodel Pay Off?

Remodeling certain areas of your home is a great way to increase your property value – or so you may have thought. Not all projects are created equal when it comes down to how much of an increase you are looking for.

Think Before You Build
The return on investment or ROI of the remodeling project that you are planning is dependant on the local market, the residential real estate market and its condition when the property is sold and the overall craftsmanship of the renovation. On average, there are certain projects that yield a higher ROI like a wood deck, an updated and upgraded kitchen and bathroom as well as window replacements no matter where the property is located or how the market is responding.

Consider Your Location
When considering any type of remodeling project, you need to make sure that any improvements made are appropriate for not only your home, but the neighborhood as well. Buyers are attracted to a particular area because of the services located nearby and because houses are in that buyer’s price range.

Additions or finishing off the basement or attic as well as fixing structural issues will add value for much longer than projects like updates to kitchens and bathrooms or technological improvements, such as new air conditioning systems, because these do become outdated over time.

Project Returns on Investment
Of course the ultimate reason behind remodeling is to enjoy living in an updated home. Secondary is the ROI that may be had on the particular remodel.

If you are interested is finding out if the project you are planning, below is a quick look at ROI for the most common projects.
This should give you a broad idea of which projects have the greatest probability of returning a bulk of the project cost at sale. Differentials in average recoveries are explained by the scope and quality of work performed, with smaller, less-useful projects being on the lower end of the range.

Project	Avg. Recovery %
Wood Deck Addition	80-85%
Siding Replacement	75-83%
Minor Kitchen Remodel	75-83%
Window Replacement	75-80%
Bathroom Remodel	70-78%
Major Kitchen Remodel	70-78%
Attic Bedroom Remodel	65-76%
Basement Remodel	65-75%
Two-Story Addition	65-74%
Garage Addition	60-70%

 

Improvements, such as office and bedroom remodeling had the largest recovery ranges: from 50-70%. The large spread is due to differences in the size of the renovations and the importance the room has on the overall design of the home, such as guest bedroom versus master suite.

Conclusion
When contemplating any remodeling project, the most important consideration is the value you will receive from the improved home over any cost recovery that may be forthcoming from the sale of the home. If you are concerned about the ROI, be sure to research local real estate guides to determine which projects are most likely to pay for themselves.

Remember that bigger is not always better, and spending more does not always ensure a greater amount of value creation. Home prices will always reflect the tastes of local property buyers and the amounts that buyers are willing to pay in a particular neighborhood or subdivision.

If you are looking to fund a remodeling project, the government offers a 203 loan for this purpose.  Call me today at GSF Mortgage in Aurora for more information about this loan product!