Purchasing a Home Renovation Part 2 - ROI
We love our homes, that is why we buy them….well that, and it rains sometimes. But, we purchase our homes with our hearts…..we say things like “home sweet home”, “ home is where the heart is” and “home, home, on the range”….what?? Sorry, got carried away. We do love our homes and they are important to our families, our way of life and….our financial well being. Yes, they are generally the largest investment we will ever make in our lives. We buy our homes and they cost so much it takes us 20 years to pay them off. But fortunately, that money is not lost and, as a matter of fact, most of us will make money on our investment. So, we buy with our hearts and with our heads…right?
When you go out to purchase a home renovation, do you consider that it is a significant alteration to your prize investment. Do you consider the renovation itself as an investment. Well; I was about to say you should…but let me rephrase this…WHY THE H*&# WOULDN’T YOU!
All the nice things that come from a home renovation are important; more room for your family, a beautiful update to a tiring home….the heart drives the renovation process too. But, please don’t forget the head. Please don’t forget that a renovation to your home is an investment in your home. If you invest wisely a home renovation will pay you back. If you invest poorly it can be a nightmare….just watch HGTV.
When we invest in anything we expect a return on that investment. A home renovation generally pays you back in 2 ways. It will pay you back in the value your family gains from the newly renovated space and it will pay you back on the resale of your home. As this is the Basement Blog, I am particulary interested in the ROI of basement renovations…..guess what; it is much higher than you think.
Remodelling Magazine, an American renovating and remodelling authority produces an annual “Cost to Value” report on standard reno projects……Basements; a whopping 77.6% on an average midrange project cost of $ 62,834. If you do that renovation today….and let me be very clear here, IF you do it well; your immediate return on investment would be $ 48,777.
Some More Math For You:
Investment $ 62,834.00
ROI $ 48,777.00
Outstanding $ 14,057.00
Your average basement renovation project has actually cost you $ 14,057….the day it is completed. Now lets take that just one more step further. Your house will go up in value on average 4%-5% annually…..
Outstanding Value $ 14,057.00
4% of project $ x 5 years $ 13,613.00
Cost of Project at 5 years $ 444.00
These values can vary from year to year, home to home, but the fact is, if you consider your renovation project as an investment in your home; you can have a breakeven investment after just 5 years.
If your renovation is well designed, well built, utilizing quality products and people it will last much longer than 5 years and require less maintenance than the alternatively lesser quallity product. You can actually make money off of your basement renovation project AND enjoy your new space for years to come.
So, invest wisely in your home, hire a professional, plan your project, design your project and have the right people build your renovation, and you will reap the full benefit of that investment.