Return on investment is important consideration

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Q: My husband and I are going to have some major remodeling completed in the next year, on our home of 30 years. We have had an architecture firm do some drawings and produce ideas based on what we have told them we wanted. Now we are in the process of getting some pricing from general contractors on the drawings that have been done.

The pricing has been coming back much higher than two architects have estimated, and now we must decide whether to move forward or scale down the work. I’m a little concerned about our return on investment, and there are no homes in our neighborhood that are as high as what we will have invested in this home if we move forward.

Should we throw caution to the wind and not pay any mind to return on investment? Jonathan

A: Return on investment is a very important consideration when investing any sum of money into anything, including your home.

Here are a couple of things to consider when thinking about ROI in your remodel project. According to industry publications, the typical return on a mid-range project on your home is typically around 81% after a few years of living there. Mid-range projects will always beat out high end projects every time they are compared, but that doesn’t stop consumers from wanting the nicest, trend-setting features they can afford in their renovation projects.

Yes, it is to your best interest to do your homework. What are houses selling for in your neighborhood, and with the planned remodeling work, what will it likely sell for? How long you going to live there makes a big difference to whether it will be worth it to you overall. Most of the time, higher end projects are completed for homeowners who know what they are looking for, and are expecting to live with it for a number of years. Also, as time goes on, appreciation of your property will occur, making it worth more money in the future.

I remember a project not too many years ago, that was over the ROI equation by a

lot. They went through on the job and shortly thereafter the homeowner was transferred out of state. I asked him how he felt about the added cost he had to ask for their house and he responded that their house sold within a week of being listed, and he attributed it to the remodel project, that their house had features that none of the other houses in the neighborhood had.