Like others, I’ve been known to get sucked into watching a marathon of one of those HGTV shows that at the end totes some pretty profit numbers, showcasing how a couple made more money after investing in some remodeling in their home before listing it. While I love seeing the morphing of a neglected home into a bright, efficient and fun new abode, I’ve doubted the reality behind those green numbers (this is worthy of another blog, another day). The question I aim to answer today is where reality about profits after renos sits, specifically for our area. We can look at national numbers on the actual return on such investments, which is fun, but that won’t really tell us what is likely for us here in Moscow given our supply and demand of homes and our cost of remodeling or replacements is not typical of small town America.
Lucky us, a magazine named Remodeling has posted a recent study based on the 29 most common remodels/replacements that shows us both the national numbers and what we can expect for our region. Unfortunately, I do not have permission to post the actual numbers but I can give you the basic rundown.
If you’d like to see those numbers in detail, though, go to this link. The study is a free downloadable and will give you numbers nationally as well as regionally. When/If you read the study, you will likely notice our region is associated with Boise. A natural question to come to mind is how does Moscow’s market relate to Boise. As a local agent, I have noticed how Moscow’s real estate market acts more like a coastal market with higher demand and lower supply. This will mean our return on investment will likely be equal to higher than what you see posted in the study for Boise. The one variable that can count against us is cost of materials. Being somewhat out of the way, materials can run higher for us than in more populated areas where interstate highways intersect.
The lowdown on what rehabs pay good dividends…
There is more money to be made back in exterior upgrades than in interior. For instance, both on the national level and even more so for our region, replacing the front door with a nice, updated version will bring you more than 100% of return for your money. Another outdoor update with great return is adding a stone veneer to the house. These veneers have come a long way, imitating the real thing for less and can fetch a nice return on your money, more so regionally than nationally. Another outdoor feature you may consider replacing is the garage door. This one can bring a nice return on high-end homes.
Now the interior is not to be left behind as there were numbers to note here. One was choosing a good, current paint color (this year specifically being the new color of gray dubbed greige, a gray/beige color). You’ve read my thoughts on what paint can do for a home, so I will not drone on about it here. Another is overhead–the attic insulation. Upgrade it and you may see more than 100% return on your money. One more is upgrading the windows to double pane, energy efficient windows will bring your dollars back to you at a nice rate.
Some more general rules of thumb the study pointed out:
- Big projects with big price tags generally don’t pay off. (Sorry HGTV. Our suspicions are proven true here.)
- Conversely, smaller projects that cost less tend to be more likely to pay off.
- A big remodel that speaks to specific a style you may have taken to cannot be guaranteed to appeal to all buyers. And, as mentioned in the above point, this would automatically be a big project which will shrink the odds of you seeing that money come back.
- You may have already noticed, but in case you didn’t-replacements win over remodels when it comes to return on your dollar.
Of course, when you are not planning on moving anytime soon, then what likely matters more than the rate of return on your remodeling expenses is how the update makes you smile. . . and doesn’t drain your wallet of all ya got, naturally. But if you think you may move in the next five years, looking into some of these replacements and updates can help you fetch a better price for your home when you list it. Who wouldn’t smile at getting more for their home thanks to some replaced 80’s features?