More and more homeowners are remodeling these days, with the number of residential remodels up 40 percent since the end of the Great Recession. While a lot of this activity has to do with homeowners feeling like they need to remodel in order to sell at top dollar or deciding to put some serious money into their homes in order to enjoy them now that finances are not so tight, the remodeling trend can indicate to investors areas of the country where they should anticipate a need to do a serious remodel before they flip a home. Here are the top cities for remodeling that are “off the charts” according to a recent “BuildFax” study:
In these top three cities, more than one in every 10 homes total was remodeled last year! The National Association of Realtors (NAR) produces a series of studies annually on what types of remodeling tend to affect homeowners and buyers in the most substantial ways: either by producing “joy,” measured by a “joy score,” or buy appealing to buyers, measured by quick sales time, viewings, and ROI. For homeowners planning to stay in place, adding a bathroom, renovating the kitchen, adding/re-doing the master suite, putting in hardwoods, and installing new wood floors all created at least a 9.5 joy score. Interestingly enough, the exterior renovations that brought about the most joy included a new front door, which netted a 9.7 joy score.
When it came to buyer appeal, many of the same things that bring homeowners joy also bring buyers flocking. Kitchen renovations scored particularly well, since 67 percent of cost was recovered immediately upon resale and buyers not only loved updated kitchens, but felt 9.8 points of joy about them as well. The best recovery rate was hardwood floors, 91 percent of the cost of which was recovered immediately upon resale and which had a low renovation cost and extremely high buyer appeal and joy (9.5).
If you’re investing in a market where remodeling is the mode of operations, you better be prepared to compete. Evaluate what types of renovations best fit your budget, your deal timeline, and your buyers in order to best adapt to remodeling madness.
Point to Ponder:
According to the NAR, new roofing is the best renovation project if you want to more than recover your costs at resale (105 percent recovery rate), followed by hardwood finishes on your floors. These do not seem particularly “glamorous” as far as remodeling projects go. Would you put your money in a roof or somewhere else?
Thank you for reading REI Today’s News & Networking Section!
Your comments and questions are welcomed below.
Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.