Remodeling and Return on Investment

Remodeling and Return on Investment – Is it worth it?

As a homeowner, you may often wonder how much is too much to invest in your home and what kind of return on investment (ROI) you can expect. This is a common and valid concern, especially when considering major remodeling projects.

At KBF Design Gallery, we understand this concern deeply. To gain a clearer insight into ROI for home remodels, we conducted a thorough analysis of our past projects. Typically, our clients are remodeling a home they plan to enjoy for years to come. However, occasionally life takes them in another direction, and they’re forced to sell. We discovered that 5 out of 7 homes that underwent remodeling and were sold afterward broke one or both records for their neighborhood in terms of price per square foot or highest sale price *as of MLS February 4, 2024. This data highlights a significant trend: high-quality remodeling projects not only enhance your living experience but also maximize your home’s value when you decide to sell.

So, what does this mean for you? Here are key takeaways:

  • Enhanced Lifestyle and Enjoyment: First, how many opportunities are there in life where you get as much enjoyment and use out of something that you can actually see a return on? Remodeling, first and foremost, should be about you and how upgrading the space and functionality is going to enhance the way YOU live. ROI should be perceived as an added benefit unless you’re flipping houses. At any rate, these case studies showed us that remodeling your home with quality materials, knowledgeable designers, and skilled craftsmen allows you to create a space that enhances your lifestyle and daily enjoyment. You get to live in a beautifully designed home tailored specifically to your unique needs and preferences.
  • Maximized Resale Value: When you decide to sell, a well-executed remodel ensures you achieve the highest possible price for your home. Buyers are willing to pay a premium for move-in-ready homes that exhibit quality craftsmanship and thoughtful design.
  • Long-Term Investment: Investing in your home is not just about immediate returns. It’s about creating a long-term investment that pays off when you decide to sell. High-quality remodels stand the test of time and continue to add value to your property.
  • Strategic Planning: If ROI is at the forefront of your mind, then it’s essential to approach remodeling strategically. Focus on areas that offer the best ROI, such as kitchens, bathrooms, and curb appeal. Consult with experienced professionals who can guide you on making the best choices for your home and budget.

At KBF Design Gallery, we pride ourselves on delivering exceptional remodeling services that not only enhance your living experience but also ensure a substantial return on your investment. If you’re considering a remodel, let us help you transform your home and maximize its value.

Conclusion: The answer to how much is too much to invest in your home lies in the quality of the remodel and the time spent with your home, but let’s take a look at the math.

Case Study: Enhanced Remodeling Impact on Home Value Over 12 Years

Client Profile

  • Remodel Investment: $300,000 into the kitchen and main living areas.
  • Initial Home Value: $950,000
  • Post-Remodel Home Value: $1,100,000 (adding $150,000 in value *this immediate impact to home value is correlated to how in need or not in need your space is of being remodeled)

Immediate Impact

  • Increase in Home Value: $150,000 (from $950,000 to $1,100,000)

Long-Term Appreciation

  • Annual Appreciation Rate: 4.5%
  • Duration: 12 years

Future Value Comparison 

Scenario 1: No Remodel

  • Initial Value: $950,000
  • Future Value (After 12 Years): $1,611,087.36

Scenario 2: Post-Remodel

  • Initial Value: $1,100,000
  • Future Value (After 12 Years): $1,865,469.58

Value Difference After 12 Years

  • Remodeled Home Value: $1,865,469.58
  • Non-Remodeled Home Value: $1,611,087.36
  • Difference: $1,865,469.58 – $1,611,087.36 = $254,382.21

Total Value Increase

  • The $254,382.21 is the total increase in value, factoring in both the initial $150,000 increase and the appreciation over 12 years.

ROI Calculation

  • ROI = (Total Value Increase / Remodel Investment) * 100
  • ROI = ($254,382.21 / $300,000) * 100 ≈ 84.79%

Analysis: By investing $300,000 in remodeling the kitchen and main living areas, and assuming an initial increase in home value of $150,000, the homeowner not only improves their living conditions but also substantially increases their property’s long-term value. After 12 years, the remodeled home is worth $1,865,469.58 compared to $1,611,087.36 for the non-remodeled home, making the remodeled home $254,382.21 more valuable with a return on investment of approximately 84.79% over 12 years. This analysis does not factor in the depreciation in value of the un-remodeled home 12 years later.

With the right approach, your home can become a haven of comfort and a lucrative investment. At KBF Design Gallery, we’re here to guide you every step of the way. Contact us today to start planning your dream remodel.

Picture of Adam Vellequette

Adam Vellequette

Co-Principal/Owner, KBF Design Gallery