Make your new kitchen a viable investment!
Realtors, HGTV, and home magazines often quote numbers on the financial return homeowners receive on their home improvements. A 70% or 80% return on investment (ROI) for kitchen renovations is a commonly quoted figure. Be careful, simplistic formulas placing values on renovations are misleading. The kitchen remodel ROI can be exceedingly high or low depending on the renovation and the selections made.
Let’s examine why these numbers are meaningless using a few examples:
A beat-up kitchen that’s 30 to 50 years old was designed in an era when kitchens were usually small and overcrowded with tall cabinetry. Typically, they didn’t have enough countertop and had soffits built over the tops of the wall cabinets. Installing new cabinetry, countertops, and appliances, without updating the kitchen’s floor plan will probably not make your home much more attractive to prospective buyers. Often the new owners would plan on gutting the room you just renovated. They would remove walls and soffits, or moving doorways, to change the outdated floor plan you reinvested in. In this case, you would most likely get very little of your investment back.
Another example is when homeowners select a style or type of wood that’s very unpopular.
Oak cabinets, cabinet doors with arches, or white thermafoil doors are presently so unpopular that any kitchen remodeled in these styles will recoup almost nothing. Outdated stains and paint colors will also severely limit how much of your financial return you get back when you sell. Choosing a pink color kitchen cabinet would obviously be unpopular. Choosing a Burgundy stain on a raised panel cherry cabinet might not be obviously out of fashion to people other than kitchen designers. But since that color and style is identified with the 1980’s and 1990’s it also has less resale value.
What types of renovations pay off?
Transforming a kitchen by removing a wall, adding part of another room, or making other major design changes is much more than an update – it can fundamentally change your home.
Even simpler but less substantial changes like moving a doorway or raising a window to allow cabinetry and countertop below make dramatic changes in a kitchen. When Main Line Kitchen Design designers eliminate serious problems in prior kitchen layouts, it is common for Main Line Kitchen Design customers to get over a 300% kitchen remodel ROI.
Any additional construction costs for the new floor plan that make a kitchen space work have little impact on what people spend on their complete kitchen. Instead, nearly all overspending occurs on cabinets, appliances, and countertop decisions that break a budget while having a smaller effect on how much a prospective buyer actually likes a particular kitchen.
Being a good kitchen designer means understanding the value of design changes and helping your customers maximizing the impact of the more expensive materials used in their renovation.
Less experienced designers and non-professionals tend to focus on what matters less, often placing great importance on subtle color differences, brand names, or design preferences that don’t work in a particular space.
Kitchen design is a challenging and complex profession. Much like Julia Child felt rewarded sharing her love of cooking and fine food, it’s very rewarding creating kitchens that transform homes, maximize their value, and improve the lives of the people using them.
Hoping your kitchen renovation is the best it can be… and of course…
Bon Appetit!
Paul, Julie, Chris, Ed, Lauren, Jeremy, Juliet, Camilla, and Mark
Main Line Kitchen Design
See how long a kitchen remodel should take. Post Below:
5 Replies to “What’s the ROI on a kitchen remodel?”
James Robert
Thanks for your blog post. It impressed me with information and in-depth analysis ! Wonderful post.
Pete Walker
In 22 years, over the course of 5 houses and two husbands, I helped my sister (she of the flawless taste in houses but not men) with the renovations.
I’m the guy who helped with the functional aspect of things, though she is no slouch at things like office and closet organization. She did the the majority of the color and material selections.
At the time of sale of each of the houses, in variable market conditions, she got “more than asking price, first offer” on all the houses. There were (according to square footage and “style” the one-size-fits-all real estate metrics) many “similar” houses that never sold or had to take reductions from asking price.
The point here is the one I believe Paul is making: DESIGN is what moves real estate. Unfortunately, there are a lot of people who think they are designers, and they’re just not. One of the most interesting challenges is to convince a client that when I stand in the middle of the room waving my arms and acting creative, it’s not the same as when someone else does it; unfortunately it boils down to the one thing that people are actually paying for: what goes on in my head while I’m flapping my arms around.
At the end of the day, it’s the ability to synthesize a concept, ensure it functions and looks great, is affordable (not cheap, simply something the client can afford) and so on.
People who replace the cabinetry in an existing layout aren’t designers. The whole point of renovating is to IMPROVE things.
As is sometimes said: Run with the big dogs or stay on the porch. If you’re going to tear your house apart and put it back together, you might as well do it right.
Of course, the difficulty is to start with the right criteria for a design, and I don’t really have an answer as to how a client can know the difference between me and the wannabe at the local home center, unless I’m more articulate, more knowledgeable, more reasonably priced for the value I produce, more organized, have better product, etc etc.
OH, wait. I’m there already…
So, I guess I just worry about my own clients and let the others have theirs.
Return on investment? What, we’re buying a stock? Hello, idiot MBA robots: this is a quality of life thing, not an investment. Focus on making something great, it’ll sell for more than you can imagine. Start with money as a guide, and your renovation will just look cheap.
OH, by the way, Paul – nice before-and-afters…
pmcalary[ Post Author ]
Thanks Pete. You actually touched on another topic with your sister’s home. And that’s that since good design is so under rated real estate agents usually encourage home sellers that created a great space through creative renovations to list their homes for too little. We have had more than a dozen of the homes we redesigned for a kitchen renovation sell in a day or two at the asking price or above it. When this happens it means you weren’t asking enough for the home.
Theresa Franklin
This applies to good kitchen design in general.
pmcalary[ Post Author ]
Very true and also any part of a house or the landscaping if dramatic improvements are possible can have huge returns on investment. I have even encouraged a couple of home sellers not to renovate their kitchens to sell since there weren’t great alternate designs. Instead I encouraged them to paint and landscape. If a great kitchen isn’t possible because of existing issues too expensive to fix it then is better to leave that project to the imagination of the buyer. They will often envision a great kitchen that just isn’t feasible when someone puts it on paper or on the computer.