Will A New Kitchen Increase Your Home Value?
Q: Gerald, my wife has been on me about renovating our kitchen. How much will a new kitchen increase our property value?
A: Hi Doug, that’s a great question & it’s a question that I hear all the time. While it’s certainly true that if your kitchen is outdated or run down it will make your house much less desirable to buyers, however, it’s a bad idea to think of a home renovation like a new or updated kitchen as an investment-because as investments go, it’s a bad investment, because the returns are negative. When you make an investment, you normally want more money back than you put in, so if for example you invest $1, you’d like to get more than $1 in back return. When you renovate a kitchen, even during the 1st year after the renovation, when your return is highest, on average it’ll only return you about $.65- $.70 in home value for every $1 you put into it. Also, bear in mind that the added home value will decrease every year after the renovation has been completed. That’s not to say that you shouldn’t renovate your kitchen, because it’s part of your house and you and your wife will enjoy the benefits of a new kitchen. Also, if you’re planning to sell your home, if your kitchen is very old and outdated, renovating your kitchen may be a necessary minimum requirement to make your property attractive to home buyers. However, as I said, a kitchen renovation generally will not increase your property value, and on a dollar for dollar basis is a bad investment because you’ll spend more money than you’ll recoup in additional home value even in the first year the renovation is done. Thanks for your question, Doug. Good luck. For more real estate tips and for information on my real estate coaching program, visit performanceproperty.com. I’m Gerald Lucas and I’ll see you again soon.