Considering Return on Investment (ROI) for Home Renovations

Putting a fortune into a home renovation doesn’t necessarily mean you’re going to recoup your costs when it comes time to sell. Some home renovation projects yield a high return on your investment (ROI) while others won’t net you anything. A costly  renovation could also price your home out of the market or your chosen upgrades may not fit buyers’tastes.

Overall ROI is Decreasing

Renovating your home’s kitchen and bathrooms might have produced an ROI of 100% (or more) 5 – 10 years ago. Today, due to rising real estate and construction prices, these projects (that once paid for themselves) don’t add as much value. Remodeling Magazine’s Cost vs Value report for 2018 found that, on average, homeowners will earn back only 56% of their renovation investments. During the previous two years, the average was 64%. All of this means that doing a major renovation just to sell might disappoint when it comes to resale value.

Current Highest ROI

Minor and midrange remodeling projects are currently resulting in the highest ROI. According to Remodeling Magazine’s Cost vs Value report for 2018, a midrange bathroom remodel will likely result in a 70.1% ROI and a minor kitchen remodel will result in an 81.1% ROI, whereas a full kitchen remodel will likely only net a 65% ROI.

Personal Tastes / Resale Value

Remodeling to suit your unique tastes probably won’t help resale value, but if you plan on keeping your home for many years to come, ROI may not matter. If a remodeled kitchen or full bathroom renovation will make you happy, then you should look beyond ROI and consider the project. However, if you’re interested in selling in the near future, look at homes in your local market to ensure your home checks all the boxes with potential buyers. If you are considering a renovation to help with your resale value, invest in upgrades that will give you the biggest bang for your buck.

Trust Your Renovation to 5th Generation

At 5th Generation Contracting, we are mindful of price trends and knowledgeable in all aspects of the Atlanta real estate market. We are also experienced in every area of interior (kitchens and bathrooms to additions and basements), exterior, and whole house renovations. We will provide you with daily communications about your project and constantly perform feasibility studies throughout the project to be sure it is staying on budget. Partner with us to take the stress and guess work out of your renovation process—contact us today.