Calculating the Return on Your Kitchen Remodel
Entertaining family and friends in a spacious, updated kitchen is something many homeowners — and potential homebuyers — often dream of. But with so many upgradeable options, furnishings, and appliances, a kitchen remodel can easily become a financial headache. However, understanding expected costs and how to calculate your kitchen remodel’s return on investment, or ROI, can help you design a stylish kitchen that stays within your budget.
Types of Kitchen Remodels
Kitchen remodels can be broken down into a few categories according to Remodeling magazine, an industry leader in remodeling cost data:
- Minor remodels
- Major-midrange renovations
- Major-upscale renovations
If you’re looking to upgrade more than a few kitchen appliances, it’s important to understand the relative costs for each project. Before you begin, consider which upgrades make the most sense for your home and financial situation.
Other Considerations for your Kitchen Remodel ROI
Before calculating your potential kitchen return on investment, you will think about:
- Your home’s value. A more affordable home likely doesn’t require high-end, professional-grade equipment.
- Market demand. If you plan to sell your home in the immediate future, consider market demand. In other words, if your renovation goal is to generate buyer interest or increase the selling price, talk to your realtor about homebuyer demand related to upgraded kitchens.
- Your overall budget. This is often the most important piece of any renovation puzzle. It will dictate the type and extent of your project, as well as your ultimate kitchen remodel return on investment.
Potential Return on Investment
According to remodeling experts, learn about what you can expect in terms of kitchen remodel return on investment based on the type of remodeling project you choose to undertake.
During a minor kitchen remodel, you’ll be working with most of the existing kitchen’s elements. This can include replacing cabinet fronts (but not the boxes), cabinet hardware, countertops, and oven and refrigerator. You might also install a new sink and faucet, plus repaint and improve the flooring.
The national average for such a project is just over $23,000 and offers an average ROI of nearly 78%.
A major remodel that falls within a mid-range price will likely include the addition of an island, all new cabinetry, energy-efficient appliances, a new vent hood and sink, and painted walls, floors, and ceilings.
At a national average cost of about $68,000, your kitchen remodel ROI will dip to about 59% on average.
Homeowners intending to complete such a renovation should consider their long-term goals and whether or not such an extensive project is practical.
Homeowners who are more interested in a top-of-the-line kitchen with upgraded appliances and features throughout might look to this upscale version of the major remodel. This project will include many of the same elements as its mid-range counterpart, but feature more luxurious materials throughout. This can include stone countertops, ceramic or glass tile backsplashes, a water filtration system, upgraded lighting (including undercabinet LED lights), and tile or hardwood flooring.
The price tag for this major renovation project is typically not for those on a strict budget — tallying around $136,000 on average nationally. The high price tag also pushes the average ROI down to about 54%.
Though an entire kitchen makeover is an exciting idea, it’s important to first consider your home’s value and how long you plan to stay in your home. These factors can help determine if such an extensive overhaul is worth the cost.
Maximizing Your Kitchen Remodel ROI
Not every homeowner is in the position to invest over $100,000 — or sometimes even tens-of-thousands of dollars — on a new kitchen and that’s OK. A kitchen remodel presents more flexibility compared to other home renovations, and there are plenty of money-saving strategies to maximize your ROI.
- Invest in items you will not need to replace often. Installing cabinetry is a nice way to liven your kitchen, but it’s not something you’ll want to replace every few years. Look for projects like this or energy-efficient appliances that provide added longevity. This will ensure you get the most out of your investment.
- Replace hardware. Sometimes the cabinets don’t need to be replaced at all, but could use a modern touch-up to help give them a “wow” factor. Swapping out cabinet hardware or faucet heads is a quick, inexpensive way to make your kitchen feel updated.
- Update the lighting. A room’s lighting is one of the first things people notice when they enter — regardless of if it’s a family member or a potential buyer. Working with your existing wiring to install modern lighting is an effective way to update your kitchen and stay within budget.
- Apply a fresh coat of paint. Painting cabinets or walls can be an affordable way to bring new life to outdated features.
Before you embark on any home renovation project, consulting with a professional contractor can help you make the best financial decisions possible and avoid unnecessary headaches. The pros at Modernize can help connect you with trusted, local contractors who will both help you build the kitchen of your dreams and maximize your ROI.