From The Detroit News | By Ken Calverley and Chuck Breidenstein
DETROIT, May 2, 2024 ~ Everyone has a budget.
Whether buying a Porsche or a Pinto, maximizing value and function are critical components of the transaction.
Part of the value consideration in any purchase includes return on investment, ROI.
Some such investments are more obvious. If I purchase a stock for $10 a share that later nets me $50 a share, the ROI is fairly easy to calculate.
But the issue may not be so clear when I purchase a new water heater or front door.
Luckily, a nationally recognized group assembles information that the remodeling industry and homeowners can use to assist in making buying decisions.
The data is assembled by professionals on the forefront of the industry including builders and Realtors.
While builders contribute project specification and cost information, Realtors track buyer preferences, comparable features, pricing and demand in the market.
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The idea is to track initial costs and then compare them with project value at resale of the property.
The information is assembled and published every year, so it not only allows for real time analysis of various types of projects, but it also provides trending information that can be valuable for manufacturers and suppliers.
The data considers geographic location throughout the country to assure it is not skewed by markets with unique pricing.
One caveat that attaches to the information is that DIY projects are not considered. Market pricing and professional installation is critical for many reasons that include a presumption of complete projects that are within code compliance and in which a measure of safety is considered.
An interesting trend that has emerged over the last many years is that typical high return projects are smaller in scope and pricing and are likely to be exterior improvements rather than interior.
Five of the top six such projects from 2023 were exterior improvements.
Garage door replacement, with a cost of $4,302, offered a ROI of nearly 103% at $4,418, while entry door replacement, at a cost of $2,214, returned $2,235 upon resale for a net gain of nearly 1%.
Asphalt shingle roofing replacement, with a cost of $29,136, outpaced metal roofing replacement, with a cost of $47,414, by over 12% on ROI, coming in at just over 61%.
Certainly, the ROI is not a stand-alone consideration for most property owners.
A minor kitchen remodel has a high ROI of nearly 86%, but the beauty of such an improvement is that the owner gets to enjoy the investment while still in residence.
The same thinking applies to items like midrange bath remodels that return nearly 67%.
Kitchens, baths, and owners suites are some of the most lived-in spaces in the home, so it helps to understand that a professional upgrade will not only contribute to greater enjoyment of the amenity, but is also likely to return a large portion of your cost when the home is sold.
The Guys talk about curb appeal every spring. A home that looks great on the approach can be an ego reward at the end of a hard day. It is nice to recognize that such care will also result in faster sales at a higher price.
Buyers entering a home with a run-down exterior tend to carry that negative impression throughout the interior, regardless of condition or amenities.
Vinyl siding replacement, at a cost of $16,348, returned almost 95% on resale while premium siding replacement netted nearly 86%.
For several years running, manufactured stone veneer has shown a great return, last year coming in at more than 2% above initial cost.
For the aging-In-place market segment, upgrading the exterior with maintenance free product adds great value and even the Universal Design Bathroom showed a return of 46% of cost.
While the survey does not offer any guarantees, it does establish some benchmark investment data that both builders and homeowners can use as they assign budget numbers to their own annual to-do list.
And who is better than a professional at understanding cost and value. Professionals like those you’ll find at InsideOutsideGuys.com.
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For more advice, listen to “The Inside Outside Guys” every Saturday and Sunday on 760 WJR from 10 a.m. to noon or contact them at InsideOutsideGuys.com.
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