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Factors That Determine the ROI of Your Next Home Renovation Project

Every time we complete a home renovation project – a bathroom makeover, a basement renovation, or whatever – we drive away from our client’s home with a really good feeling. That’s because we know that the project we’ve just completed will really make a difference in the life of that family.


We know that the family’s home is now homier. It’s more enjoyable for them. It makes everyday living better. That’s a value that’s difficult to measure, but it’s a BIG value.

But a home renovation project doesn’t just improve that family’s home life. It also improves the home itself, of course. And that’s an improvement that’s more easily measured in dollars and cents. But calculating the value of that improvement can be difficult.

If you’re considering a renovation project for your home, you’d like to have some idea of the value that the project will add to your home. You’d like to be able to project the Return On Investment you might realize from the project.

Here are a few tips for calculating that ROI:

Typical Factors Influencing ROI for Home Renovation Projects

Many factors influence the degree to which a home renovation project might boost the value of your home. But these are the most common and the most influential:

  • The strength of the housing market in your area
  • How real estate values have been trending recently in your market
  • The economic strength in your area (Lots of employers? Lots of good jobs?)
  • The availability of necessary services (good access to healthcare, shopping, nice restaurants, etc.)
  • The quality of local schools
  • Local crime rates

As you’ve probably noticed, these are all factors that impact the overall value of your home.

How Much Does the Project Impact Your Daily Life?

Another key driver in determining the ROI of a home renovation project is the value that the project adds to your family’s daily life.

If it’s something that your family will use and enjoy everyday – like bathroom renovations and basement renovations – then that project will return a stronger ROI than other projects, on average.

That certainly makes sense – particularly when you consider it from the viewpoint of a prospective buyer. If someone is considering purchasing your home, then it’s quite natural that improvements that impact everyday life will be valued more highly.

And that perceived value helps to boost the dollars and cents return on the investment when the house is sold.

In Truth, ROI is Difficult to Determine

Many factors enter into determining the ROI of a home renovation project. And here’s the blunt truth: you can’t really know with absolute certainty just what the ROI will be for your project.

We’d like to be able to tell you that x dollars spent will always yield x dollars in ROI. But we can’t do that. There are just too many variables involved.

That’s why the single most important factor to consider when you’re thinking of investing in a home renovation project is the impact upon your family. How that project will improve your family’s life. How it will make life more comfortable, more enjoyable.

That’s an ROI that can’t be measured in numbers. But it’s far more important than dollars and cents.

This entry was posted on Saturday, August 29th, 2015 at 11:23 pm. Both comments and pings are currently closed.

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