Why Should You Renovate?
“Renovations.” It’s a word that can bring up a lot of emotions depending on who you ask. On one hand, the idea of revitalizing a home is exciting. You can build your dream kitchen from the ground up, create the custom bathroom of your dreams, build an addition onto your home in a way that preserves its character, and so much more. On the other hand, it’s a word that many might associate with stress, high expenses, missed deadlines, poor communication, or in some situations, even worse.
If renovations can be such a great thing, why can a simple mention of the word make people shudder? Well, renovations can be stressful. There might be a plumbing stack in the wall you wanted to remove. There might be extra challenges along the way. There might be asbestos. And especially in 2022, there might be material delays or fluctuating material costs. If all these are possibilities, why should you even bother renovating? Because you deserve to live in a home you love. You deserve to be excited when you return from work and walk in your front door. Your home should be your oasis, a private getaway from the stresses of the outside world. It should be your happy place. Despite there being potential for challenges along the way, choosing a contractor you get along with and who communicates well can make potholes feel like an insignificant bump in the road.
Are renovations expensive? Yes, the costs associated are certainly not pocket change, but when you factor in the return on your investment with the immediate bump in your homes value, it really is not as bad as it immediately seems. Kitchen renovations typically average a 75-100% return on your investment, flooring can return up to 150% depending on the type, while paint and bathroom renovations average closer to 60%. With the housing market increasing about 12% in 2021, renovation costs can be made up in as little as one year when factoring in the home’s value.
Let’s take a closer look at the numbers and examine a common scenario.
We will look at someone who wants their full house renovated and is planning on staying long-term. For this scenario, we will renovate 2 full bathrooms, one half bathroom, the kitchen, all new flooring, trim, doors, and paint. The cost of the renovations will be $150,000 on a $450,000 home, and will increase the home's value immediately to $556,900. After 2 years of appreciation, their $600,000 investment in the home plus renovations will be worth $604,600. After 10 years of appreciation, their home will be worth $840,300, just over $240,000 of profit. Alternatively, if they choose to let their house sit for 10 years and grow in the market without renovations, they will have a home worth $679,000, which is $229,000 in profit.
Numbers aside, the renovations will make a homeowner fall in love with their house. Explaining the numbers side of it is simply to point out that within a year or two, your home value will exceed the cost of renovations, and over a longer term, it actually puts more money in the homeowner’s pocket. It’s an added bonus on top of living in their dream home.
“Renovations.” Really, it’s a word that should bring excitement. It’s a way to add your unique design elements to your private oasis. In essence, renovations should make a house feel like home, and that is something every homeowner deserves.