In home renovations, the return on investment reflects the increase in home value in comparison to the amount of money spent on the Improvement. When you remodel a kitchen there is often a higher return on investment because it is one of the key areas that a potential home buyer will focus on.
A kitchen that has been well remodeled can cause a significant price increase on the housing market.
What to Know About Kitchen Remodeling Costs
It needs to be understood that there is no singular cost you can expect to pay when remodeling your kitchen. A kitchen remodel can cost anywhere from $20,000 all the way to $50,000, and a high-end kitchen remodel can go for much higher.
Costs that are typically associated with kitchen remodels include labor, building materials, as well as design expenses. The scope of your remodel, be it a minor update or a complete structural overhaul, will greatly impact the cost.
Identifying High-Value Kitchen Upgrades
To yield a strong return on investment during your kitchen remodel, you will likely want to make some high-value upgrades. For example, updating your countertops and cabinetry can improve the aesthetics and functionality of the kitchen. Such improvements can increase your home’s market value as long as you make sure that top notch craftsmanship is employed.
Investing in high quality fixtures such as stoves and dishwashers can also add return on investment, but any appliances that you would take with you in a move do not add value.
Interpreting Cost vs. Value Report Data
Having a cost versus value report will provide you with detailed insight into how much return on investment your kitchen remodel will have. It takes the average cost of renovation with the resale value that those renovations had.
This helps homeowners have a comprehensive number with which to gauge the financial impact of the remodel. This data is invaluable for setting realistic expectations for how much value a kitchen remodel May bring.
It will also help homeowners to prioritize the upgrades that will offer the highest return on investment.
The Impact of Kitchen Remodel on Home Resale Value
As previously stated, a kitchen remodel can have a substantial impact on a home’s resale value. In fact, a kitchen remodel may have a higher return on investment compared to other home renovations. For example, a mid-range kitchen remodel could recoup up to 70% of its cost upon resale.
Higher and remodels may offer slightly lower percentages, but could yield greater overall value in a high demand market. Updating appliances, adding storage options, or optimizing a kitchen layout can attract buyers thanks to the improved functionality.
How to Budget for Kitchen Remodeling
First thing that needs to be done when you create a budget for your kitchen remodel is to set clear goals such as improving functionality, aesthetics, or increasing the sales value of your home. You need to break up the budget into different categories such as labor, materials, and an emergency fund for unexpected costs.
You may want to put the most money towards high impact areas such as countertops, cabinets, or energy efficient fixtures. Savings can be made in other less visible areas such as your lighting fixtures, as well.
By carefully planning your budget, you are ensuring that the project remains financially viable while offering the maximum amount of return value.
Keeping Up with Current Kitchen Remodeling Trends
Trends in kitchen remodeling are in constant flux. That does not mean that keeping up with current trends cannot have a positive impact on your return on investment.
Current popular Trends include open layouts, energy efficient appliances, and bold color schemes. These are things that can be seen as evergreen, and less likely to go out of style.
When remodeling your kitchen you want to strike a balance between keeping up with trends while also incorporating timeless design to ensure a long-term appeal. This will help ensure that there is a decent resale value.
Weighing DIY vs. Professional Kitchen Remodeling
When remodeling a kitchen it can be tempting to take the do-it-yourself approach as a money-saving tactic. DIY projects can reduce costs and they can give you a degree of personal control over the timeline of the project. However, if you do not possess the necessary skills to take on the remodel, you may find that you spend more money in the long run correcting mistakes.
It is advisable to hire a professional to handle significant structural changes, plumbing, or electrical work to ensure that the remodel meets all necessary building codes. This will help to maximize the value and return on investment of your remote.
Choosing the Right Materials for Your Kitchen Remodel
One of the most important decisions that needs to be made as early as possible in your remodel is the range of materials that will be used. You want to choose durable and sought after materials such as granite or quartz for your countertops as they have a high return on investment. ]
When you select building materials, be it for cabinetry or countertops, you want materials that have longevity, aesthetic appeal, and practicality.
Materials that have a timeless look and high durability will typically offer you the most return on investment as they will be appealing, stylish, and functional for a longer period of time.
Financing Options for Kitchen Remodeling
In order to cover the costs of the kitchen remodel a homeowner may choose to look for financing options such as home equity lines of credit, personal loans, or even refinancing. There are pros and cons to each of these options.
For example, home equity lines of credit typically offer lower interest rates and text deductible interest. But they require homeowners to have sufficient equity in their homes to qualify.
A personal loan may provide faster funding without the need of home equity, but you will often deal with a significantly higher interest rate. If lower mortgage rates are available, then refinancing may be a better option. However, this process involves appraisals and closing costs.
You need to choose the financing path that best works with your budget, project size, and personal financial situation.
Conclusion
Taking on a kitchen remodel requires an understanding of return on investment. Knowing the different factors at work, it’s just the scale of three model, building materials, and the difference between DIY and professional work can have a major impact on the aesthetic and financial value added to the home.
Homeowners need to carefully consider their circumstances, including their budget, the current condition of the kitchen, and their long-term plans for the home.
Sources
- Bankrate. (n.d.). Home renovations that return the most at resale. Retrieved from https://www.bankrate.com/homeownership/home-renovations-that-return-the-most-at-resale/
- Angi. (n.d.). How much does a kitchen remodel increase home value? Retrieved from https://www.angi.com/articles/how-much-does-a-kitchen-remodel-increase-home-value.htm
- Credit Karma. (n.d.). How much value does a kitchen remodel add? Retrieved from https://www.creditkarma.com/home-loans/i/how-much-value-kitchen-remodel
