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For instance, I've heard that there is a minimum 75% return-on-investment ("ROI") on bathroom and kitchen renovations - is that an accurate figure?

What about the other rooms in my home? Are there rooms that just aren't worth upgrading?

What are upgrades "gone bad", i.e. what mistakes should be avoided, in order to ensure maximum ROI?

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I think these numbers are very location specific. Those house flipper tv shows loved to toss them out because they make great graphics, but they are nonetheless subjective.

The only way I know how to guess the value of your home is to get comps. (What similar homes in your local region sold for recently, withing a small radius such as a quarter or half mile.) So to decide your ROI figure out your homes current resale value. Use one of dozens of home price estimators for this.

Example 100K house, estimated value after adding a bath $120K, but the bathroom cost $10K to install.

(120 / 100) - 1 = .2 or 20% increase in the home value. Increase is $20K, but since the bathroom cost $10K your ROI is only $10k. (is my math correct?)

But that doesn't tell you what new drapes, or updated carpeting will get you. Since you can't measure those numbers in any realistic way, you are stuck relying on the gut of a real estate agent, which isn't mathematical and therefore something I can't trust. For the little things, they are items that you would want to just make look and feel nice if you are selling the home.

Things I have learned:

  1. Avoid Junky Lowes or Home Depot fixtures and parts. If you buy the cheap ones then your home looks like every cruddy apartment building in your city.
  2. Hire a pro for things that need to pass inspection
  3. Get your permits. Upgrades don't count if they aren't documented
  4. Consider a big picture. I did one room at a time in my house and now the house reflects that. I should have planned the whole house stylewise, even if I only did one thing at a time.
  5. Never never never big the best or nicest house on the street. Don't be the worst, don't be the best.
  • Awesome detail, and if I remember correctly, this comes with some personal experience perspective. – Nat_Rea Jan 7 '10 at 1:21
  • +1 on the not being the best - you don't want to outprice your house for your neighborhood. Around the corner a guy built a new house, beautiful McMansion surrounded by ranches and small 2 story houses that sell under 300k. He tried to sell for 525k, and took off market w/in a year. Stupid move. – Andy Wiesendanger Aug 30 '11 at 16:23
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I've often heard that unless you are planning to sell the property soon, your primary consideration for renovations should be improving your enjoyment of the property.

The added value for most renovations, especially those related to interior design depreciate too quickly to be a major consideration if you plan on living in the home for any length of time. Styles come and go too fast.

Adding bedrooms or upgrading a bath from 1/2 to full, or increasing the square footage of the home in another way are probably your best bets for adding lasting value to the home.

  • Yes, increasing square footage is a good one. I would add a new kitchen too, that seems to be a big seller. – Andy Wiesendanger Aug 30 '11 at 16:25
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You can only guesstimate a return on investment. For example, you see that in your road that a house with a loft extension is selling for 120,000 whilst a house without is selling for 100,000. Cost of loft extension (or whatever it is) 10,000 then ROI = (120,000 - 100,000) / 10,000 = 2. 2 does not mean 200% return. A return of twice the investment means 100% return on your money.

Of course, finding houses in your street for sale at around the same time which are only different to your house in terms of whether they have a loft extension or not is not very likely. But that is the idea.

Like all these kinds of ROI quotes treat with a pinch of salt. Builders, not surprisingly, want you to invest in improvements.

Any work carried out should be of a quality which would match the aspirations of someone looking to buy your sort of house.

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