According to Zippia, Americans generally renovate their residences every three to four years. 61% of individuals who have resided in their homes for six years or more opt to remodel their current premises rather than move house. One of the primary motivations behind this preference is the fact that home improvement projects generally represent a more cost-effective alternative compared to purchasing a new residence. These ventures also feature multiple benefits when undertaken appropriately, with one of the primary advantages being an impressive return on investment (ROI) and improved overall valuation of the residences involved.
What is Return on Investment?
In simple terms, a return on investment refers to the potential profit that can be enjoyed from an investment. A high ROI means that the investment involved with a venture is worth the cost/expenses involved. It’s calculated by subtracting the final value of a project from the initial value it represented and dividing it by 100 i.e. ROI = Net Income/Cost of the Investment X 100. The valuation is usually expressed in terms of percentages. Remodeling Contractors use this valuation as a performance measure to help their clients determine whether a particular project is worth the effort in terms of value for money.
What is the Importance of ROI?
Technically speaking, the primary reason for calculating the potential ROI of a project is to ensure that one is getting their money’s worth from the intended investment. It doesn’t really hold a lot of importance when it comes to private ventures such as renovation projects unless one is planning to put their property up for sale in the future. In such cases, focusing on specific upgrades that feature significant ROIs is an effective means of enhancing the overall valuation of the residence. Improving the kitchen or bathroom, for instance, both of which can generate notable returns on investment, can increase a home’s resale value by tens of thousands of dollars. Commercial interests such as renting property are also another situation where individuals might consider the aspect of ROI, as such an approach could guide them in making upgrades that would allow landlords to raise rental prices.
Effective Ways to Enhance the ROI with Your Remodel
The potential ROI enjoyed with a renovation project depends on the particular areas involved with the venture. Working with established Remodeling Contractors is a good way to ensure that the activities involved offer the best gain on investment. Surprisingly, focusing on essential sections of one’s home such as the bathroom, kitchen or lounge doesn’t yield the highest returns when it comes to remodeling projects. Exterior projects that focus on curb appeal seem to be the leading force when it comes to such valuations. The Bankrate website published a list of remodeling projects that offered the best ROI with their application. They include HVAC conversion with an ROI of 103.5%, replacing the garage door with an ROI of 102.7%, installing stone veneers with an ROI of 102.3%, and replacing front doors with an ROI of 102.9%. It should be noted that of all the items present on this list, only the installation of electric HVAC systems represents a primarily functional purpose.
Hiring an established contractor enhances your chances of getting the best ROI with your project, so call us today! Exponential Construction, your preferred contractor!
