When you think of remodelling your kitchen you usually think of a full tear-out and remodel – a pretty significant process. It doesn’t have to be a massive project to have a big impact on the cost of your home. Changing out counter surfaces, adding different knobs and handles, or even painting the floor can all have a big aesthetic impact on your kitchen. They could boost your home’s value and at the very least cover the amount of money you spent on the remodel.
In the most recent Remodelling Magazine, it is estimated that small kitchen projects can earn an ROI (return on investment) of more than 83%. If you look at this in real dollars then for every $1 you spend on remodelling you’ll make an extra 83 cents on the cost of that dollar. This is a higher return than many other projects including attic extensions, bathroom upgrades and even replacing the whole roof.
If you’re looking for an easy way to modernize your kitchen you could replace one or two appliances with something that matches your remodel. You will enjoy your kitchen more after the upgrade and could get a better price for your house if you come to sell it. This means there are multiple benefits to upgrading your kitchen.
What’s The Difference Between Major and Minor Updates?
In this article we’re talking about minor upgrades. These shouldn’t be confused with major upgrades which could be entirely replacing all the cabinets and appliances, the floors, the vents, and work surfaces. A major overhaul. If you are paying for a luxury kitchen you could be spending up to six figures from some kitchen retailers. You’re more likely to spend five figures but you shouldn’t underestimate the costs of upgrading your kitchen.
A major upgrade, like a minor upgrade, will definitely increase the value of your home but be careful – it might not come close to increasing in value to the same amount you spent. You should look carefully at what other houses on the street have done – do they also have renovated kitchens or are they all original. If you do a major remodel to your kitchen you should do it more for personal reasons than for increasing the value of your home. The 2022 Cost vs. Value report indicates that the cost of a minor kitchen remodel is still about $20,000.
Know Your Neighbors and the Neighborhood
Before you dive into a kitchen remodel it would be worth speaking to a couple of realtors to get an idea of how much a new kitchen might increase the value of your property. They will have a good idea of what other kitchens in the neighborhood look like and whether they actually increased the value of the home or were more for vanity or personal reasons.
If your kitchen remodel is for financial reasons then you want to bring your home up to the same standard as other kitchens in the area, but no better. Buyers in the area will not pay a premium if they can find a similar property that still needs some work.
Don’t Overcapitalize!
You also want to have a good idea of how many properties in the area are selling for. If you bought the place for $300,000 and want to add a $40,000 kitchen then you know you’ll want to sell the house for at least $340,000 (ideally more if you want to make money). If you then look at comps in the neighborhood and the most expensive place is selling for $330,000 then you know that you will probably lose money when you come to sell the house. Either way, you will know the upper limit when you come to sell your house (if you want to sell).
What Other Minor Renovations Have a Large Return on Investment?
There are other renovations that you can do that will have a large ROI. The kitchen isn’t the only one that can have a big impact.
- Adding Insulation – if you can incase the amount of insulation your house has then this can have a big impact on the cost paid. Not to mention reducing your energy bills when you’re living there. On average homeowners will make back 117%.
- Changing Out The Front Door – If you replace an old door with a more secure one then you can epect an ROI of up to 90%.
- Painting the Walls – A new coat of paint can have an oversized impact on the property.
How Can I Finance My Kitchen Renovations?
There are a number of options to finance your home renovation projects or any home project for that matter. You should always start by seeing if you can finance it with savings – this will be the lowest-cost way to do it. You could also look at a HELOC (Home Equity Lines of Credit) or personal loans to finance these renovations. If you’re borrowing money to pay for these renovations you want to have a fairly good idea of how much your house will increase after the renovations are done.
