Remodeling is a Waste of Money

Before you even start the thinking stage, let along the planning stage, of remodeling, there is something you should know. You will lose money. Even in the good old days of the go-go housing boom, very few remodeling projects made money. Now that we are all suffering with a declining housing market, the chances of making money off your remodeling project are slim.

The Frugal Yankee is not advocating not doing repairs or never upgrading. No, just be careful and understand what you are doing. You want value for your project. Here are some facts gleaned from several sources on what a remodel job would cost and the expected return if you sell your house.

Kitchen (minor) • $20,000. Return 83% or $16,600. You lose $3400
Bathroom (minor) •  $15,500. Return  78%. You lose $3300
Kitchen (major) • $55,000. Return 78%.  You lose $12,100
Home Office • $28,000. Return 57%. You lose $12,040
Roof, asphalt • $18,000. Return 67%. You lose $5940.

The Frugal Yankee word of caution is simple, don't think you'll make money on remodeling. However, maintaining and improving your house is an excellent idea. Be sure the reasons for remodeling are clear, understandable and within your means.

The first question to ask is, does your house need any necessary improvements in the 'bones'? The bones are the structural issues within a house. This means electrical, plumbing, heating, cooling, sills, joists, roofs, water issues and the like. Keeping these items up to snuff will make you safer and more comfortable. If you sell your house, these items will not be red flagged by house inspectors. Remodeling money should always be geared for these items first.

If you're thinking of selling your house and are looking for enhancing your sale, this is another matter. Start off by having several real estate agents check your property and make recommendations. Several recommendations will give your a clearer and broader picture of your house. It will be geared for your market and lead you to your action plan for selling. A general rule of thumb is to make your house as generic and clean looking as possible. Fresh paint, clearing away clutter, storing personal items will go a long way to make your house more appealing.

A few areas where you may want to remodel are the kitchen and the bathroom, but don't go overboard. Again fresh paint and some new fixtures could be all you need. This is a minor investment which could yield good results. Major upgrades will not be worth it. Be savvy
and thrifty with whatever you decide to do.

The main reason for a major remodeling is your own personal taste. Not seeing a return on your money is one thing Your happiness is an entirely different matter. For example, a home office can mean more time with the family. Your financial return is 57%, but playing catch with your son at a moment's notice, well, as the commercial says, that's priceless. Same thing with kitchens, if you're a cook who loves to putter and create, a new kitchen could have you humming a happy tune. Backyard porches, upgraded bathrooms, additional living spaces, cellar conversions all have their place. If it helps the family, is done with value in mind then it's a good deal.

Bottom line, the Frugal Yankee says don't do it for the money you think you may get when you move because you won't. Do your remodeling if the house really needs it and/or it will make you and your family happier.

The next time, the Frugal Yankee will have some tips on how to save money within the remodeling process and keep the frustration level down to a minimum. You can always find out more, by heading over to our site, www.FrugalYankee.com

Sources used in this article: This Old House, Kiplinger's Personal Finance, Smart Money, the Wall St. Journal, Money Magazine.

From traditional tips to savvy perspectives, the Frugal Yankee knows how to enjoy life and spend less. Find out more by going to FrugalYankee.com.