Home Improvement ROI – Lessons Learned from Renovations Completed 30 Years Ago

When I was 5 years old, my parents bought their dream home.   It was almost brand new, but had been extensively renovated by the prior owners.  Though located in a mid-market suburb, the home had a beautiful view, and was remodeled with a SubZero and Corian kitchen, indoor hot-tub, bar area and a beautiful pool with a massive deck and low maintenance landscaping throughout the property.

Now that I work with renovation professionals and research so many home improvement related topics, I can see few clear lessons from how our family chose to maintain and renovate their home after purchase.

  1. 30+ years ago, all of the recent (and expensive) renovations didn’t add much value to the purchase price of the home.  This was because my folks bought at a time when home sales were slow, interest rates were high and the renovations probably just helped the home sell a bit quicker.  When demand is higher, renovations will have a much greater impact on home prices and ROI.  Many of the improvements were not well suited to their neighborhood either so there would have been a mismatch in buyer expectations.
  2. That said, the highest quality renovations have lasted – our family reaped the benefit of a kitchen that is still functional and has been kept up to date with minor improvements.   So while the ROI wasn’t there for immediate resale, the choice would have been easier if the previous owners were planing to live in the home for a couple decades.
  3. Home maintenance is a key priority and should be budgeted into your total cost of home ownership.  Before we completed any renovations, we looked at key maintenance life-cycles and planned out whether we could prioritize aesthetic or lifestyle oriented improvements.  With maintenance costs averaging up to 2% of the value of your home annually, they probably won that battle 90% of the time.

Now that my folks are thinking of moving out of their home, their renovation goals are different.  Their focus should be on ROI and only completing what is necessary to meet their goal of maximizing the potential returns from selling their house.  Any projects outside that goal are lifestyle projects that they will not benefit from:

    • They could benefit from a home inspectors report to identify any repair issues and they should work with their real estate agent (who knows their market best) to prioritize improvements that will help the home to sell (curb appeal).
    • I don’t recommend basing your renovation choices on national averages for ROI because the data varies so much by region and there are so many variables in each project.  That said, you will find fairly consistent advice that your home’s kitchens and bathrooms are excellent starting points and can be key decision points for buyers.  Surface improvements including replacing wood or resilient flooring, tiles, paint and fixtures throughout the home can go a long way too.

Sometimes difficult decisions revolve around the home assets that you spend the most time maintaining.  Neither the pool nor the hot tub have been used much in the past 10 years and the cost to make them functional might never be recovered.  In the Pacific Northwest,  it will likely be more cost effective to fill in that pool and hope that the pump and parts can be used towards getting their hot tub working.

But working through challenges with pools is a whole other blog entry ;)

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