Hannah Desmo…, Renter in Fort Lauderdale, FL

What kind of return is there on remodeling jobs?

Asked by Hannah Desmond, Fort Lauderdale, FL Wed May 22, 2013

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7
Hannah,

Do you work for Trulia? Your profile is incomplete and you seem to ask a lot of seeded questions.

Chad
1 vote Thank Flag Link Mon Jun 17, 2013
I recommend talking to an appraiser or visiting your States Association of Realtors website. They usually have a breakdown of cost vs value in specific areas of your state when it comes to remodeling.
0 votes Thank Flag Link Fri Jun 21, 2013
Kitchen upgrades are probably this best at paying one back in my opinion.
0 votes Thank Flag Link Sun Jun 16, 2013
Another good pointer is keep the painting with neutral colors.
Flag Sun Jun 16, 2013
That depends entirely upon the current value of your home and the extent of your remodeling job. If the house is a wreck but is in a neighborhood of very high priced homes, the remodeling will probably return a high percentage of the original expenditure.

For example, a home I recently worked with was a mess, with the owner's belongings all over the floor, and the original kitchens and baths. The house, which was in a great neighborhood, looked neglected.

In the current condition it was in, it was worth about 50% less than comparable homes in the neighborhood, which was around $350-$375,000.

They spent about $30,000 to redo the kitchens and baths and do a general clean-up. They sold the house for $350,000 and recoupled every penny of their expenditures.

This is an extreme case. Most homes are not so decrepit.

If your home was built in the 1970s, for example, and you have done nothing to it since then, its age will show, even if you have kept it up perfectly.

But if the difference in selling price between your home, with no fix-up, and a comparable home in your neighborhood that has been totally refurbished is less than $50,000, it probably does not pay to do anything beyond cosmetic clean-up, such as cleaning or painting areas that look tired.

That's because the cost of redoing a kitchen with new cabinets and granite counters may cost you from $15,000 and up, and the cost of redoing two or three baths may set you back a similar amount or more.

So before you do extensive renovation to a home you're planning to sell, look at the price difference between what your home is currently worth and what a neighboring home that has been fixed up is asking or has recently sold for,

Rarely do you get back 100% of the cost of repair--unless as we mentioned above--your home is currently worth half or less of what a comparable fixed-up home in your area sold for or is asking as a list price.

Marc Jablon, The Jablon Team
RE/MAX Complete Solutions
JablonTeam@gmail.com
561-213-6139
http://www.JablonTeam.com
0 votes Thank Flag Link Sat Jun 15, 2013
Hannah,

I assume your question means "a return" that a remodeling contractor can make on his/her work. Then, that depends on how careful the contractor budgeted his material and labor costs and they usually end up with an average of 30 - 35 % gross profit.

If you are referring to you, Hannah, as a real estate investor, who bought a flipper house or condo, then there are so many variables that it is very difficult to answer. Some of those variables are: the location of your property. If you buy a property on the beach or near the beach or on water canals, those properties are the most desirable and they can give you a nice profit even if you just fluff up the house and flip it over. Or, if you are a pro and know how to frugally budget your costs and can cleverly make a Home Depot Special to appear as if it was designed by Perla Licchi, then, you can make a great profit. However, many armatures think they can remodel a house but they have not considered the whole picture and they have over improved a property. They put it up on the market at the price they have invested plus a profit but the property will not sell until they sell it at a loss.

If you are considering to enter the remodeling arena, be careful.
0 votes Thank Flag Link Wed May 22, 2013
There is no simple answer for this:
If you put a $50,000 kitchen in a $600,000 house, you may see $60,000 increase in equity.
If you put that same kitchen in a $200,000 house, it will not return the $50, maybe not $20,000!

If you are doing this for yourself, and you will continue to live there; do what makes you happy and just enjoy it.
If you are doing this for the next owners, and you are going to sell; I would advise not doing it.
0 votes Thank Flag Link Wed May 22, 2013
Depends on how much is being remodeled and which rooms are being remodeled. A kitchen remodel will usually yield more return then a bedroom remodel.
0 votes Thank Flag Link Wed May 22, 2013
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