You're Not Getting Your Money Back: Investing in a Home Remodel

Everyone is so worried about resale!

Don’t be afraid to go bold. One of many bright, fun colors we offer.

Homes have turned into an investment vehicle first and a place to live second, and I think that’s malarkey. Let me explain. There are many factors contributing to the rise in this sentiment, but part of it comes from the remodeling industry itself. Kitchen and bath designers like to send client the “Cost Vs Value” report where pundits lay out what it costs for a kitchen remodel and what it does to your home’s resale value. You’ll see that a minor kitchen remodel with midrange finishes can recoup 82.4% in Denver, 94.3% in the mountains, and 96.1% elsewhere. It makes it easy to sell higher margin products and services like re-facing and refinishing. For a major kitchen remodel with luxury finishes, you’re talking about recouping 29.9% of your investment. You’d do far better off buying bonds or contributing to your retirement account!

But that’s only the case if you’re treating your home as a financial instrument. We don’t work with real estate investors for a reason: we build for our clients. We want to help our customers live better lives by making their homes beautiful and functional. If your first thought when making your remodeling design choices is resale value, I worry that you’re missing something crucial. Don’t neglect your own needs, passions, preferences, and lifestyle for some hypothetical future homebuyer’s bland tastes. Do you love the bright red high gloss? Let’s do it. There are a million greige and white boxes on the market if that’s what a future buyer wants.

In the luxury market especially, the first thing many new homebuyers do to a home is completely gut it. I couldn’t tell you how many really nice kitchens I’ve thrown in a dumpster or donated simply because they weren’t in line with the new buyer’s tastes. Many of these items, like a 48” subzero refrigerator for instance, are hard to re-home for several reasons. First, the kinds of homes that have room for such an extravagance don’t want a used appliance. It’s not worth any potential cleaning it may need and the risk of it failing prematurely. Then the people who want a used refrigerator and happen to have room for one are scared off by the potential repair and maintenance costs they may incur down the road. I can’t say that I blame them either. I regularly see luxury appliances worth $3-5,000 needing a $1,000 part. If the owner wants to make the investment, they still have a used appliance even after the repair. Many times these are either given away or hauled to the dump destined to be replaced by a $1,000 new appliance of inferior quality.

In short, if you want to make an investment, talk to a financial advisor. If you want a home that you’ll love raising your family in, call a contractor, designer, architect, or better yet just call us.