Kitchen Remodel Return on Investment
When remodeling a kitchen, it is prudent to make sure your spending will yield a good return on investment. In other words, if you sell your home, a good return on investment would earn you close to what you paid for the remodelling project. For example, if your home was worth $150,000, and you then spent $10,000 on a remodeling of your kitchen, your home should be worth close to $160,000 after the improvements.
In reality, rarely does a project earn back every dollar spent. Returns on investment in the 80% to 90% are fairly standard. Of course it is possible to get a 100% return, or even more, but that is the exception rather than the rule. We'll discuss below some steps to ensure that you get the maximum return from your project.
The first consideration for your kitchen is your neighborhood. Any home that is built up more elaborately than the typical home in the neighborhood will earn less return on any investment. On the other hand, any home whose improvements bring it up to or above average for the neighborhood, will typically get the best return on investment. This is a basic principle of real estate that homes that deviate too far from the typical home in the neighborhood (either better or worse than average) will suffer in their valuation. What this means is that the kitchen should not be overdone when compared to the kitchens in neighboring homes. This doesn't mean you can't build the nicest kitchen in town, it just means keep it in the scope of the neighborhood.
Another element that will affect your return is whether the remodel involves infrastructure or is more cosmetic. If you have to replumb and rewire the kitchen as part of the remodel, you generally won't get that money back. Returns are higher for remodel items that can be seen, used and appreciated. New copper plumbing may be nice, but people won't pay more for it. New appliances and an attractive sink and faucet will do a lot better at earning back their cost. This doesn't mean you should ignore the infrastructure. If you have 50 year old galvanized pipes, its pretty likely they need to be replaced. Leaving the pipes to be dealt with later will likely cost a lot more than if they had been replaced when access to the wall's interiors was easy.
Another key element in getting the best return is style choices. While this kitchen is for you, if your tastes are wildly different than average, you will have a difficult time getting any of your investment back. For example, if your dream kitchen was to feel as though you were cooking outdoors on the beach of a tropical island, that may be a wonderful kitchen. You may love the sky blue ceiling with hand painted clouds, the palm fronds "growing" out over the tops of the bamboo and rattan cabinets with coconut shell knobs. The roasting pit may be a much better way to cook than a conventional oven. But when someone else looks to buy your home, they may consider the kitchen to be in need of a complete remodel and deduct that cost from what they are willing to pay for your home. In this case, you would get a zero percent return on your investment, regardless of how much you spent.
The best way to maximize your return on investment for remodelling a kitchen, is to select products and materials that are slightly better than average for the neighborhood, except in high end homes where the expectation may be for the best or near best of everything, within reason. The design and style should be fairly conventional, no extremes of style or color. A kitchen should have one key element that draws people's attention, something that makes them say "ooh, I really like that". Whether it be an elegant light fixture, beautiful backsplash behind the stove, decorative detail on the cabinets such as crown molding, having an eye-catching feature is worth an extra expense in a kitchen remodel.
While the return on investment may be important, so is your enjoyment of your kitchen. After all, you are doing this for you, not the next people to live in your home. Unless you are remodeling specifically to prepare a home for sale, you should make choices for your kitchen that are for you. If you want a top of the line professional style stove, while neighboring homes host a basic GE range, then do it - for you. You won't get every dollar back out of the cost of the stove, but you will get all the enjoyment.