REMODELING YOUR HOME? IN ORDER TO MAXIMIZE YOUR INVESTMENT, YOU MIGHT WANT TO KNOW WHICH RENOVATION PROJECTS BRING THE HIGHEST RETURN ON INVESTEMENT (ROI), AND WHICH FALL SHORT.
THE BEST RETURN ON INVESTMENT MOST OFTEN COMES FROM HOME RENOVATIONS THAT CAPITALIZE ON BUYER’S EMOTIONS.
HOME BUYERS SWOON OVER REMODELED KITCHENS AND BATHS. BECAUSE KITCHENS AND BATHS SELL HOMES, THE RETURN ON INVESTMENT FOR KITCHEN AND BATH REMODELS IS HIGH – ESPECIALLY AS YOU COMPARE THEY TO OTHER HOME RENOVATION PROJECTS.
*KITCHEN REMODELS CAN BRING 80-85% RETURN ON INVESTMENT IN SOUTH FLORIDA (70% NATIONALLY).
*BATH REMODELS IN SOUTH FLORIDA CAN BRING 70-85% RETURN ON INVESTMENT.
APPRAISED VALUE ON THE PROPERTY TENDS TO INCREASE AS WELL, WITH EITHER OF THOSE TWO RENOVATION PROJECTS.
BUYERS EXPECT THE HOME THEY ARE PURCHASING TO BE FUNCTIONAL (UNLESS THEY ARE BUYING IT FOR PENNIES ON THE DOLLAR). THEY EXPECT THE ROOF TO BE WATERTIGHT, WITH A FEW YEARS STILL LEFT ON IT. (REPLACING A ROOF WILL BRING 40-50% RETURN ON INVESTMENT – WHICH IS LOW – BUT I THINK IT IS LOW BECAUSE A ROOF LACKS ANY REAL EMOTIONAL COMPONENT). IN THE SAME VEIN, BUYERS EXPECT AIR CONDITIONING, ELECTRICAL, & THE SEPTIC TANK TO BE FUNCTIONAL… AND AGAIN, ROI COMES IN FAIRLY LOW ON ANY OF THOSE RENOVATIONS.
IN CERTAIN AREAS OF SOUTH FLORIDA, BUYERS EXPECT A POOL. A POOL CAN MAKE THE DIFFERENCE BETWEEN SELLING …. OR NOT … ESPECIALLY IN AN AREA WHERE EVERY NEIGHBOR HAS A POOL, BUT THE RETURN ON INVESTMENT FOR THE HOMEOWNER IS TYPICALLY BELOW 40% ON ON POOL INSTALLATION. (I KNOW THAT CONTRADICTS WHAT I SAID ABOUT THE “EMOTIONAL COMPONENT”, BECAUSE A POOL CERTAINLY HAS THAT!). REGARDLESS, THE COST OF ADDING THE POOL (WHICH COULD EASILY RUN 20,000 – $30,000 OR MORE IN MIAMI) DOES LITTLE OR NOTHING TO BOOST THE ACTUALLY SELLING PRICE OF THE HOME.
IN FLORIDA, HOMEBUYERS ARE LOOKING FOR HURRICANE PROTECTION (IMPACT GLASS OR SHUTTERS). SHUTTERS AND IMPACT GLASS OFFER SECURITY AND PEACE OF MIND, BUT THERE ARE INSURANCE BENEFITS (REDUCTIONS) AS WELL: INSURANCE RATES ARE LOWER ON HOMES WITH IMPACT GLASS OR HURRICANE SHUTTERS. THE RETURN ON INVESTMENT WILL BE WELL BELOW YOUR INSTALLATION COSTS . A BUYER MAY WELL CHOOSE A HOUSE WITH IMPACT GLASS OR HURRICANE SHUTTERS OVER ONE WITHOUT, BUT THE SALES PRICE WON’T LIKELY DIFFFER ALL THAT MUCH BETWEEN THE TWO.
CURB APPEAL: THE ENTRANCE , THE FRONT DOOR AND LANDSCAPING ARE THE FIRST THINGS TO MAKE AN IMPRESSION…. POSITIVE OR OTHERWISE. BECAUSE OF THAT, SPENDING MONEY ON CURB APPEAL CAN GIVE A HOMEOWNER A SUBSTANTIAL RETURN ON INVESTMENT.
EXTERIOR PAINT CAN BRING AN ROI OF 90-100%. CHANGING THE FRONT DOOR, ADDING LANDSCAPING AND ADDING TO CURB APPEAL CAN BRING A RETURN ON INVESTMENT OF 100% +/-
IN SOUTH FLORIDA, THE HIGHEST RETURN ON INVESTMENT SEEMS TO COME FROM OUTDOOR RENOVATIONS … GARDENS, OUTDOOR ROOMS, SUMMER KITCHENS, COVERED PATIOS, CANOPIES, PERGOLAS, TREES, PLANTINGS, AND DEFINED, UTILIZABLE OUTDOOR SPACES… POTENTIALLY BRINGING WELL ABOVE THE AMOUNT SPENT. ROI ON OUTDOOR RENOVATIONS IN SOUTH FLORIDA CAN BE AS HIGH AS 100-200% … ONE OF THE TOP RETURNS ON INVESTMENT.
THE 2010 RETURN ON INVESTMENT FOR HOME REMODELING PROJECTS NATIONALLY IS SPELLED OUT IN REMODELING MAGAZINE .
THESE STATISTICS ARE COMPILATIONS TAKEN FROM CNNMONEY AND ABOUT.COM AND REMODELING MAGAZINE’S “COST VS VALUE” REPORT. I SPECIFICALLY GEARED THE “EXPECTED RETURN ON INVESTMENT FOR HOME RENOVATIONS” IN THIS BLOG TOWARD THE SOUTH FLORIDA REAL ESTATE MARKET FOR MiamiRealEstateCafe.com
IF YOU ARE CONSIDERING BUYING OR SELLING PROPERTY IN SOUTH FLORIDA, AND LOOKING FOR AN EXPERIENCED LOCAL REALTOR TO ASSIST YOU, WE WOULD BE PLEASED TO TALK WITH YOU. YOU ARE MORE THAN WELCOME TO SEND US A NOTE HERE, OR GIVE US A CALL AT 305-793-1365 OR 305-632-0164 – CELLULAR NUMBERS FOR THE RESTIVO TEAM.
