How Do You Determine Return on Investment (ROI) for Home Renovations?

Categories:
Updating A Busy Family Kitchen

By Rick Goldstein, registered architect and co-owner, MOSAIC Group [Architects and Remodelers]

Trying to determine what constitutes a good return on investment for home renovations? It’s generally best to have conservative goals. Over time, factors such as inflation will raise the value of most well maintained homes, even without big-ticket remodeling. During the planning stage, it is certainly acceptable, even advisable, to investigate the market by talking to local real estate agents, checking the sales price of houses with similar amenities, and learning the value of the most expensive homes in the neighborhood. This information should help you set appropriate investment parameters for the area.

Small Kitchen Remodel

You can increase the likelihood of higher ROI by concentrating on the two aspects of home renovation shown to offer the best returns: kitchens and bathrooms. Further down the list are porches or decks, basements and landscaping. Smaller projects that could pay off include enhancing the curb appeal, which is especially important when you’re planning to sell the house quickly. Window replacements, though, may not pay off for several decades and should not be the first target for renovation–unless absolutely necessary–if the turnaround time is relatively short. While new windows will be more energy efficient, an energy audit could identify other problems you could more easily address to improve comfort and reduce your utility bills.

While you should always consider ROI, don’t feel compelled to abandon an improvement project that would make your home more comfortable but not necessarily generate a big payoff. If you want to splurge on a heated bathroom floor that would help you get every day off to a good start, the psychological boost would be worth the investment.

Check out more expert advice from Atlanta area home improvement professionals.

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