Filed under: SpendingWatching real estate flipping TV shows can make the process seem messy but glamorous and profitable. According to a new annual report from Remodeling Magazine, a trade publication for builders, the romance of the entertainment industry is a far cry from the realities of construction and selling a house.
In fact, the smallest and cheapest fixes often can deliver the biggest return for your home. As for that $50,000 kitchen revamp? If you're not a gourmet chef, you might want to hold off.
The top remodeling project, in terms of percentage of the cost recouped, was replacing a steel entry door. The average cost of such a job was $1,230, adding additional resale value of $1,252, or 101.8 percent. From that point on, none of the 36 remodeling jobs analyzed paid for themselves. Here are some others that offset at least three-quarters of their cost:
- Adding a manufactured stone veneer (92.2 percent recovery on $7,150 cost).
- Replacing a garage door (88.4 percent recovery on $1,595 cost).
- Replacing fiber-cement siding (84.3 percent recovery on $14,014 cost).
- Replacing vinyl siding (80.7 percent recovery on $12,013 cost).
- Adding a wood deck (80.5 percent recovery on $10,048 cost).
- Minor kitchen remodel (79.3 percent on $19,226 cost).
- Wood window replacement (78.8 percent on $11,341 cost).
- Foam-backed vinyl siding replacement (77.6 percent on $15,184 cost).
- Converting an attic into a bedroom (77.2 percent on $51,696 cost).
As Not Seen on TV
So why do the payoffs on the TV remodeling shows always seem to top 100 percent? The reason is, as Remodeling puts it, the "laughingly low" costs of the projects because manufacturers often provide free product for promotional consideration. Unless your local building supplier is willing to similarly subsidize your efforts, chances are that you're not going to see your remodeling pay off, at least in home resale value.
Resale value should be only one reason to consider remodeling. If you need more space or are unhappy in the house as it is, changes might provide satisfaction, if not financial incentive. In some cases, there may be additional fiscal payoff if the change somehow lowers other costs of living, like adding insulation to reduce heating or air conditioning expenses.
If you do want to woo a homebuyer, focus on the projects that make the outside look better, one reason why front entry and garage door replacements or new siding can have a strong payback. Inside, try changing the tile on a sink backsplash or swapping out cabinet hardware. And for the cheapest high-impact project, clean the interior so people can see what is there.