13 Things Rich People Won't Tell You by Jennifer Merritt

Author:Jennifer Merritt
Language: eng
Format: epub
ISBN: 9781621451037
Publisher: Readers Digest

Who Knew?

Worth-It Renovations

Realtor to the rich Serhant says wealthy homeowners tend to spend quite a bit on renovations and customizations. “To them it’s more about making the home their own than the investment they make on renovations,” he says. That means they’re not thinking foremost about a return on the money they put into a home, partly because they bought shrewdly to start.

But for most homeowners who would eventually like to sell their homes, adding value while personalizing a home requires a mix of dreaming and common sense—lest you end up with a big-ticket renovation with little or no return down the road.

How to know? Here are the projected returns on investment (ROI) for some popular renovations, according to Remodeling magazine’s 2013 “Cost vs. Value” report. The value of various improvements depends on where you live—basements add more return on investment in some parts of the country, while attic bedrooms offer more in others—as well as the value of homes in the region and how much buyers in an area look for certain features (what they are willing to fork over extra money for).

Expanding Living Space with a Basement or Attic Renovation

Turning an attic into a bedroom or remodeling a basement into a living space have higher-than-average returns. You’ll likely recoup 72.9 percent of an attic conversion’s cost and 70.3 percent on a basement renovation when you sell. In Washington, D.C., that attic bedroom has a massive ROI of nearly 92 percent, and the ROI is 83.3 percent for the basement remodel. But in Cincinnati your ROI sinks to just 62.7 percent on the attic and 55.3 percent for the basement project.

Remodeling magazine’s report points out that these projects have higher average costs—$47,919 for the attic and $61,303 for the basement—but “are still the least expensive way for homeowners to add living space.”

If Only We Had Another Bathroom . . .

A mid-range bathroom addition costs $37,500, on average. But the return on investment averages only 54.8 percent, so you will want to carefully consider how badly you want and need the extra room. The payoff depends partly on how many bathrooms you already have: going from one to two bathrooms in a 3-bedroom house will return more than going from three to four bathrooms. And location counts—in the Midwest, ROI slips to just over 43 percent.

But remodeling an existing bathroom costs less and pays more. On average, a basic job costs just $15,780 and returns 65 percent—more if you’re going from, say, one and a half bathrooms to two full baths in that 3-bedroom home. But a bathroom remodel in New Haven, Connecticut, will have a lower ROI, of just 51.4 percent.

Overhauling Your Kitchen

A minor kitchen remodel, such as replacing cabinet fronts, countertops, hardware, and appliances without making any major structural changes, nets one of the highest returns on investment, about 75.4 percent. That’s a great deal, considering the relatively low cost: an average $18,527 nationally, according to the report. ROI shoots up to over 99 percent in San Diego, California, but is far lower—66.

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