Can you remember your last big home renovation project? It probably started with a few casual discussions and ideas about how your home life might be improved. It may have evolved out of a certain annoyance with part of your home, and a desire to re-imagine that aspect of your home. Gradually, plans began to firm up. You started reaching out to contractors for a bid on the project – or you decided to do the project yourself, and performed all the necessary research in order to make that happen.
Eventually you settled on a contractor, signed an agreement, and the work took place as planned. Hopefully the timing, scheduling, and financial aspects of the project all went according to plan as well. The work was finished to a high standard, signed off, and the whole project was complete.
Somewhere on this journey, you probably asked yourself whether or not your renovation would add market value to your home. After all, the home is the financial center of life for a lot of people. Keeping a safe, strong and well-maintained home is one of the keys to long-term financial health. Part of this involves making smart upgrades when the time is right.
Let’s take kitchens as an example, since kitchen renovations continue to be (and will always be) so popular amongst homeowners in America. The kitchen is arguably the “center” of the home, with constant activity and usage throughout the day. Without an intelligent and attractive design, your time spent in the kitchen won’t be nearly as enjoyable or productive. These are the “lifestyle” reasons for renovating your kitchen, and they’re a big factor in deciding whether or not to invest in these upgrades.
But the financial side of things is also important. According to HomeAdvisor, the average American spends around $20,000 on a full set of kitchen upgrades. Obviously, this number can be quite a bit lower or higher depending on the options you select, and the size and scope of your kitchen – but either way, kitchen renovations are a real investment. People want to know if you’re going to recuperate their money when it comes time to sell or refinance the home.
The honest truth is that in most cases, you won’t see a “dollar to dollar” recovery of the initial investment – or if you do, it will be difficult to determine exactly how strong the return on your investment was. For example, you may have put $20,000 into kitchen renovations in 2010, and the result was still fantastic. Meanwhile, the value on your home has since increased by $30,000. Is this entirely because of the kitchen, or could market conditions and other factors have been responsible for the increase in value?
You should be able to count on a kitchen renovation adding significantly to your home’s market value, but the added value will (in many cases) be less than the investment itself. It’s good to speak with a real estate agent in your area if you want to find out exactly how kitchen renovations could affect your market value, but one thing is for absolute certain – whatever your reasons for renovation your kitchen, finding a rock solid professional with a good reputation is essential to the long term success of your investment.