Prioritizing Remodeling Jobs: Best Return on Investment
LESLIE: OK, next up is Karen from Rhode Island who finds The Money Pit on WPRO. What can we do for you?
KAREN: Oh, hi guys. Yes, I caught your show and I have some questions. I have a couple of remodeling jobs that I need to do and I didn’t know which way to go to get more bang for my buck. Like I have a bathroom remodel I need totally done; gutted. I have a basement that’s finished that got flooded in October so that’s all torn apart. And then of course the kitchen. And I wasn’t too sure – I know the kitchen and bathroom add money but I don’t know which one to go first if I don’t have a lot of money to do.
TOM: Karen, you know there’s a website that Remodeling Online maintains that has something that’s called the cost versus value report. And I find it to be a very valuable resource. Basically what they do is they do a survey every year to try to figure out which home improvements have the best return on investment. And all three of the improvements that you’re tackling have a great return on investment. In fact, they’re so close it’s probably, you know, not worth even considering what’s going to give you the best because they’re all going to give you good returns on investment.
For example, you mentioned that you’re working on a bathroom, a kitchen and a basement. A bathroom remodel, national average you get 102 percent return on investment if you sell the house within a year. So in other words, you basically get dollar for dollar on a bathroom. Yeah, it seems like you actually make money doing a bathroom.
You want to talk about doing a kitchen; say a mid-range kitchen remodel? Ninety-one percent return on investment. And a basement is 90 percent return on investment, so …
KAREN: Oh, I got all good – three good projects.
TOM: All good projects. Exactly. So no matter which one of those you do you’re going to get a great return on investment as long as, you know, you don’t go overboard and get too crazy. Generally you want to do things that add value and not get too personalized and too sort of out of the ordinary. You know, if you choose all of that really wacky wallpaper for one of those rooms, I don’t know, maybe you’ll be down below those numbers but on average you get a great return on investment for all of those rooms. So I would say, Leslie, pick the one she wants to do the best.
LESLIE: Yeah, or the one that’s in the worse shape or the one that needs the most help. And I think they’re all going to be good for you.
KAREN: The basement wasn’t supposed to be done but then we got flooded out back in October in the rain storms. The whole finished basement got totaled. So now we have to throw that in the loop. It’s all, you know, demolished.
TOM: Did you get insurance money on that?
KAREN: No, we don’t live in a flood area.
TOM: Oh, that’s too bad.
KAREN: It was just the rains – 10 days of rain in Rhode Island and I never had rain and water in 20 years.
TOM: Oh, boy.
KAREN: Yeah, I mean luckily I had team – I had mold, you know, had to get removed. And a lot of people got – I didn’t get a team in here for almost 10 days because they were all booked up.
LESLIE: It seems to me that the basement might provide the most beneficial earnings to your sales. Because especially if you bring in – if someone brings in an inspector or home inspector they’re going to look down there and they’re going to see, “Oh, what was this flood? What was all of this from?” and then it might deter them a little bit from pursuing a little bit more of your house; whereas something that’s just stylistically not pleasing, you know, you can think beyond that. But if something seems like it could be a huge problem …
TOM: Well, it sounds to me like the basement is the one that’s really bothering you the most so go ahead and tackle that. I agree, Leslie, that’s probably the best place to start. OK?
KAREN: Sounds great. Thanks a lot, guys.
TOM: Thanks so much for calling us at 1-888-MONEY-PIT.