Most people who want to remodel their kitchen wonder if it will be a good investment. Maybe that’s you, too. You’ve been living with your drab, inefficient kitchen with its dated cabinets and countertops for years. Now you’re ready for something fresh.
Sure, you could just sell your house and buy one that already has everything you’d want in a dream kitchen. But perhaps you love your neighborhood. Or don’t want to go through the bother of moving. So, updating and upgrading your kitchen seems like the right decision.
But before sinking a lot of money into it, you want to know if remodeling your kitchen will in fact be a good investment.
We’ve all heard that when people are looking at houses the most important rooms are the kitchens and bathrooms. These are the rooms that sell the house. A freshly remodeled kitchen or bathroom will attract buyers and make the house sell faster.
And that makes sense. These are the most expensive rooms to upgrade. So, investing in making your kitchen to make it a welcoming, efficient space will pay off, right?
The short answer to that question is maybe, it depends. Here’s why.
Do Kitchen Remodels Add Value?
Four factors come into play when determining if your kitchen remodel will add value to your home.
The first factor involves how extensive your project is. In other words, whether you undertake a minor or major remodel will impact how much of your money you’ll recover when you sell your house.
A major kitchen remodel is precisely that—significant changes to your existing kitchen. Major remodels often involve gutting part or all of your kitchen. You will most likely change all or nearly all of the entire room. The layout and flow might be completely altered. Typically, appliances, flooring, cabinets and countertops are replaced, as are backsplashes, paint and lighting. You might even add or enlarge a window.
A minor kitchen remodel is considerably smaller in scope. The original layout and flow of the kitchen will remain the same, or only be lightly modified. So, for the most part, the footprint of your kitchen will not change.
While many of the existing elements of your kitchen will remain the same, others will be altered. So, you might replace your flooring, refrigerator and the hardware on your cabinets, and finish with a fresh coat of paint. Or you might retain your floor but install quartz countertops. In other words, you might do some, but not all, of the work involved in a major remodel.
The second important factor is the quality of the materials used in your project and the appliances you select. Whether you choose upscale quartz countertops at the high end of the price range, or something similar in the midrange, this will have an impact on what you’ll be able to recoup when you sell. But those choices may not have the impact you think.
What is the ROI on a Kitchen Remodel?
According to a study done by Remodeling Magazine as presented in their 2020 Cost vs Value [link: https://www.remodeling.hw.net/cost-vs-value/2020/] report, you will at best recoup 78% of your investment. This means, for example, if you put $40,000 into your project, you won’t be able to add more than $32,000 to the asking price of your house.
The 78% ROI they report is for a minor remodel using midrange materials. Major remodeling projects did not provide that much of a return. Remodels that were major in scope that used upscale materials had an average return of 54%, while those using midrange materials were slightly better, at 59%.
But can you count on even that much? Estimates vary. Some real estate agents believe that on average the ROI on a kitchen remodel is 60%. Other sources estimate between 50 and 85%. Another study showed that the kitchen remodel did not increase the value of the home at all.
With such different statistics, how can you estimate what value a kitchen remodel will add to your house?
A third factor to consider is the current condition of your kitchen. If it is well-laid out with plenty of storage, appliances less than five years old and finishes that aren’t dated or worn, then a remodel won’t add a lot of value to your house.
On the other hand, if your floors are worn, you have chipped granite countertops, old appliances and dated finishes, then a remodel certainly will add some value.
The fourth factor is the standard of kitchens in your neighborhood. If you have the least efficient, most dated kitchen on the block, then an upgrade will assuredly have a positive effect on your house’s value. If you have a kitchen that is the envy of all your neighbors, then enhancing it won’t allow you to increase your asking price.
To Remodel or Not to Remodel?
When answering this question, keep in mind why you want to remodel your kitchen. Most people undertake kitchen remodels for themselves, not hypothetical future buyers. These homeowners can’t stand certain features of their kitchens and want to change them. They are doing the remodel so they can enjoy using their kitchen, not simply to make some extra money when they eventually sell their house.
What Should You Not Do in a Kitchen Remodel?
When you do decide to go ahead with your kitchen remodel, it’s easy to get caught up in creating your dream kitchen. There are a few mistakes that can end up being very costly. And while you’re not expecting an unrealistic return on your investment, you want to plan so that you get the most return possible.
There are a few common errors that people make. You can easily avoid them by following these tips.
1. Don’t sink a lot of money into your kitchen, thinking you will get 100% back when you sell. The only way this will happen is if your kitchen is horribly outdated with aging appliances. And even then, it’s not likely.
2. Don’t over improve. Make sure the end result will be in line with other homes in your neighborhood and price point.
3. Set a realistic budget for what you can afford. Don’t count on making a profit from this remodel. And don’t get fixated on having everything you’ve dreamed about. Prioritize the most important features and be willing to let a few of the others go.
4. Think ahead. If you’re not planning on selling for several years, select appliances that have a long life. You won’t want to buy new ones just before you leave.
How Can You Save Money on a Kitchen Remodel?
Proper planning and budgeting will help you keep the cost of your kitchen remodel within your means. Then you won’t feel pressured to get 100% return on your investment.
The first way you can save money on a kitchen remodel is to do your research up front. This isn’t just the fun part of looking at pictures of kitchens and dreaming about the features you want. It’s also important to have an idea of what things will cost, just to have a good sense of what money you’ll need for the new countertops or cabinets.
One way to do this is by checking out kitchen remodel cost estimators, like this one [link: https://homeguide.com/costs/kitchen-remodel-cost]. A tool like this, for example, will tell you that you can plan on spending between $250 and $350 a square foot. If you want all high-end finishes, then you can expect to spend at the upper end of this range. But don’t forget, using a formula can only give you a general figure of what your project might cost.
The estimator tool can also give you an idea of what new cabinets, countertops, flooring, appliances and other features can cost. Bear in mind that these are just estimates to help you with your initial planning. The estimate your contractor calculates will be based on the actual plan and finishes you choose. If you make major changes to the plumbing, for example, your cost will be much higher. And it will take into account the prevailing wages and costs in your area.
Once you have a ballpark estimate of what your remodel could cost, you need to set a budget.
If the estimate is more than what you’re willing to spend, think through what’s most important to you. And discuss it with your contractor. They’ll be able to help you figure out where you can trim some of the expense. For example, there are different grades of quartz countertops. Or you can choose a less expensive flooring material.
Then you’ll have to decide what your priorities are in planning your kitchen remodel. You will get more life out of higher quality materials. But you’ll get a lower return on investment when you sell. So, you’ll need to decide why you are remodeling: to get a financial return, or to create a kitchen you love. Or perhaps some of each.
In any case, being willing to give a little on less important features and putting your money in your highest priorities will help you save money on your remodel. And since you end up with the majority of what matters the most, you’ll be happy with the end result and have saved some money at the same time.
A great contractor will help you figure out which items will maximize your return on investment. They’ll know the condition of the houses in your area and will be able to guide you to make choices that will be in line with the neighborhood.
The Intangible Return on Investment of a Kitchen Remodel
Remember that remodeling your kitchen isn’t all about the money. Unless you’re planning to sell in the next year or so, you’re upgrading the kitchen for you.
Think about what bothers you about your kitchen. You don’t live in your house to be frustrated by an inefficient, outdated kitchen.
Consider how happy the remodeled kitchen will make you. If you can’t stand cooking on an electric stove, then changing to gas will be a good investment in your quality of life. If your dream is having an herb garden in your kitchen window, then that’s what you need. If you’ve always wanted a wine cooler in your kitchen, maybe you should go ahead and have one installed.
And there’s no reason not to build your dream kitchen if you can afford it. Just don’t count on getting all the money back when you sell your house. There’s no telling what you’ll get in terms of dollars and cents when you actually sell.
But you can make sure you’ll enjoy your kitchen as long as you stay in your house. Consider what it’s worth to create a space you’ll love cooking in, creating meals and memories for family and friends. When you think about it that way, the return on investment for a kitchen remodel can be priceless.