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Kitchen Remodeling - Adding Value to Your Home Real Estate Value
It is very important to determine a budget for any home improvement project, and kitchen remodeling is no exception.
A word of caution: I spent several hours researching kitchen remodeling cost and budgeting on the internet to gather data for this article. I ran into a couple websites that gave square footage pricing for kitchen remodeling. Although I commiserate with their attempt to find a simple method to figure out remodeling pricing, this type of advice is not based in reality. Remodeling jobs in general are so specific to the conditions of the building and tastes of the homeowner that no square footage pricing will ever be realistic. I also ran into many sites that did not give you any real information about establishing a budget but basically interpreted Hanley Wood's Remodeling Cost vs. Value report which is published each year. You are much better off visiting the Cost vs. Value report online and evaluating the results for yourself.
Like anything else in this world a kitchen remodel is going to cost more than you thought it would and the sky is the limit on what it can cost depending on your tastes. There are multiple factors that go into determining a remodeling budget.
There are several places online you can go to help you establish a basic budget number to start with. My personal recommendation is Remodeling Magazine's Cost vs. Value Report which is released by region and major city each year. The really nice thing about this report is that it gives a description of the "average" project so that you can gauge if your kitchen remodel is going to fall above or below the benchmark. I also find their average pricing to be an accurate reflection of the pricing for our company, so by recommending to clients before I even meet with them that they investigate this report they are more likely to establish a realistic budget we can work within to give them a fantastic kitchen.
Custom Hutch built with Semi-Custom Cabinets
While Remodeling Magazine's report is very helpful, it is still a very one size fits all approach to establishing a budget. Keep reading if you'd like to try to hone your numbers a bit.
Get out a pad and paper and jot down a few notes about each factor as you go through this list:
Factor 1 Home Value- Consider not only what you think your home is worth, but also the value of similar homes in your neighborhood that already have updates. My favorite website to check home values is zillow.com, simply enter your address and you get an interactive map with home values and other information listed right on the map. Take note of which homes are of similar size to yours, have been purchased more recently, but have a higher value, then peek in their windows to see what the house looks like. Ok, seriously, I was only kidding. If you don't know them perhaps it's time to meet the neighbors and ask for a quick tour.
Factor 2 Wow! - This has everything to do with your goals and motivations. Write down each motivational factor which is important to you in a kitchen remodel. Here are some possible examples: Kitchen is falling apart. You love to cook and the layout doesn't suit you. You love to entertain and want to open up the kitchen as a place to gather. You want a kitchen that wows your guests. You are getting ready to sell your home and the kitchen is a sticking point with buyers... Now that you have your list, evaluate which motivations are most important and relist them in motivational order. Imagining your budget starting in "the middle" take note of which factors might move the budget up or down...i.e. wanting to remodel to encourage a sale might move the budget down, remodeling to wow guest might max it out...etc.
Factor 3 Did someone say AGA? - List any "must haves" for a kitchen remodel to be worth it to you. Possible examples: granite counters, an island with an extra sink, a second dishwasher, a commercial quality gas range, etc.
Factor 4 Longevity- Determine to the best of your ability the length of time you plan on owning the home.
Factor 5 Size Matters- Determine what percentage of your home your kitchen encompasses. A sampling of over 100 modern home floorplans of 1000 to 3000 square foot homes revealed the average kitchen square footage to be 7% of the home's square footage. If your kitchen is larger or smaller than this average you may need to increase or decrease your budget accordingly.
Factor 6 Layout- if you already know you're going to want the sink moved, an island sink added, an interior wall moved and an exterior door added, then you need to add money to your budget well beyond what a basic facelift would cost.
Tricky layout: the decorative column conceals a sound wrapped drain pipe
Factor 7 Funding- Determine the maximum amount of money you could afford to spend. If you are financing your project you can calculate what a lender will likely lend you. Lenders want to see a debt to income ratio(DTI) of.36 or less. Your DTI is established by taking all your monthly debt obligations (credit card payments, auto loans, mortgage, etc.) and dividing by your monthly income. To determine your maximum safe monthly debt multiply.36 times your monthly income. Now subtract your existing monthly debt from this number and you have a monthly budget maximum. Here's a link to a calculator that will do the math for you: mortgage calculator
Putting it All Together
The key to determining your budget is finding the percentage of your home's value you should use as a budget guideline. While researching this article I ran across recommendations to use percentages ranging from 10% to 25% of home value. For a kitchen remodel of any substance that includes new flooring, appliances, cabinets, sink/faucet, lighting and bringing electric up to code I find anything less than 15% to be a very dubious number. I suppose on a million dollar house 10% would be a workable budget, but on a 200k house a 20k budget is marginal at best for a full blown kitchen remodel.
If resale value is important to you it is wise to keept the cost of your kitchen renovation project within 20% of the current value of your home. Staying within this range insures that a majority of the new kitchen's cost is recouped in increased home value immediately, and the remaining cost should be recouped within 5 years as your home appreciates.
Ok, let's run through an example. Keep in mind, there is no exact formula here. We are simply doing our best to be as informed as possible and make a wise decision about how much to spend on our kitchen remodel.
For our example let's use my house. It's a 50's cape cod with a modest square footage of 1500.
Factor 1 value: Zillow gives me an estimated value of $167,500, however, I notice zillow hasn't yet updated and accounted for the single family homes which were recently built in the field behind us with a starting price of $270k. Zillow also has our square footage listed at under 1200. Looks like the previous owner did a little remodeling without a permit. I'm going to base my budget on a price of 180k which is similar to other houses in the neighborhood that are the same size.
Factor 2 Goals: My wife and I love to entertain guests. To make a kitchen remodel worthwhile for us we need to lose an interior wall to open up the kitchen and dining nook to the living room. I'm going to add 1% to budget for this.
Factor 3 Must Haves: As a former chef two must haves for me are a new oven and a really nice propane range(no natural gas service here), preferably a commercial range modified for home use (real commercial ranges don't have insulation around the oven, critical for home safety). I'm going to add another 1% to my budget to make sure there is enough money to get me my range and propane installation.
Factor 4 Longevity: We plan to stay in our house a minimum of 4 years. As a rule of thumb it takes 5 years for most remodeling to appreciate and recoup all of its cost. Since we will likely be here at least 5 years I'm not going to penalize the budget, but since there is a good chance we'll move right around 5 years I'm not going to increase it like I would if we were staying much longer.
Factor 5 Size of Kitchen: Our kitchen is about 140SquareFeet(SF). That's over 9% of the SF of the house, 2% above average. Obviously this kitchen is going to require some extra material and cabinets. I'm going to up the budget 1% for this, I hope it's enough.
Factor 6 Layout: We are going to change the layout of our kitchen pretty extensively. We currently have a cooktop peninsula. The range is going to go on a differnet wall and the dishwasher will move to the peninsula, though we might ditch the peninsula, move the fridge and add an island instead. About the only thing that won't move is the sink. I'm going to add another 1% to my budget, again hoping $1800 (1% of our 180k value) is enough to cover the electrical and plumbing changes.
For my base I'm going to use 20%. As I mentioned before, there are going to be people who will argue with me on that, but going lower often doesn't leave you with workable budget numbers for full blown kitchen remodels. I'm adding 4% based on my factors listed above. I adjusted my zillow.com estimated home value to 180k based on the comparable square footage and value of other homes around me. This gives me a working budget of 24% x 180k= $43,200 When I compare this to the Cost Vs. Value report I see that in the Middle Atlantic Region a Major Kitchen Renovation is $59, 098. It looks like my budget could be bit low, especially since I really would like granite countertops and the Cost Vs. Value specs call for laminate tops. On the other hand my kitchen is significantly smaller than their 200SF benchmark, so I think I'll go with my budget number and see what my contractor can do for me in that budget.
The Best In Kitchen Remodeling
Kitchen remodeling is among the most popular of remodeling projects each year, as kitchens have become the center of activity in the home. Kitchen remodeling is the home improvement job that adds the most value to your house. Because kitchens have become the center of activity in the home, kitchen redesigning is among the most popular of remodeling projects each year.
A kitchen remake is one of the most desirable home improvement projects for many Houston area homeowners. A Kitchen remodeling is one of the best investments you can make when it comes to home improvement and often adds more than the cost of the project to the value of the home. Specifically, a kitchen remodel provides the highest return on value of any form of remodeling. Kitchen remodeling is a lot of work, but the results can be spectacular.
Remodeling your kitchen can be a very large job, and there are many important aspects to take into consideration when remodeling. By remodeling your kitchen you can add value to your home, and at the same time save money with energy efficient kitchen appliances, or by replacing your drafty kitchen windows. Redesigning your kitchen can be expensive, especially if you hire a contractor to the work, but a new kitchen can greatly increase home value. Remodeling costs will vary depending on the number of new appliances (and their price level), and price quality of cabinets, type of counter tops, and labor to do the job. Remodeling any room of your home takes a lot of creativity and commitment.
Remodeling your kitchen can not only add to your home's value, it can give you additional storage and work space. Remodeling your kitchen is no small task and there are many important considerations, but the end result is worth the commitment especially if you make wise choices along the way. Remodeling your kitchen is a great way to give your home a face lift.
Real Estate Value Enhancements
A real estate agent can be a good resource when considering how extensive a kitchen remodeling project to undertake. Even if you are not considering moving, but rather want to remodel for your own satisfaction, Real Estate Agents are usually quite aware of how much previous clients have spent on remodeling and how much the value of the home increased as a result, and how much would be too much. In the past, "home remodeling" simply meant repair jobs, but modern trends and increased home improvement options have fueled a demand for homes that are customized to individual needs.
Contractors usually charge by the hour for their labor plus the cost of materials. Contractors that understand the business know that fulfilling the needs of the customer is what gets the deal. Contractors can eat up a large portion of your budget. Contractors that specialize in kitchen remodeling are far more experienced in working with the kinds of plumbing, gas, and the electrical issues that can arise during a kitchen remodel.
Appliances are expected to blend in with the rest of the room and to work diligently but quietly. By remodeling your kitchen you can add value to your home, and at the same time save money with energy efficient kitchen appliances, or by replacing your drafty kitchen windows. Appliances usually come in fairly standard sizes, so they won't be difficult to replace once your kitchen remodeling is done and you've had time to save up some more money. Appliances can be one of the most costly items to replace in a kitchen so it is a good idea to look carefully at what features are of greatest importance to you. Appliances today are sleek, flexible, and offer more convenience than ever before.
You will want to make sure you are choosing the right kitchen remodel for your home and your budget. Depending on your needs, your wants, and your budget, the costs can vary widely. Budget kitchen remodeling is a challenging task that requires you to have a creative bent of mind and come up with your own innovative ideas that also suit your pocket. A kitchen planner/designer's focus should be to design for the way a person lives, and asking the right questions will ensure your finished kitchen fits you and your budget. Whatever your budget, there is a large variety of cabinets and counter tops available that will fit your taste and budget.
Kitchen remodeling is worth your expense, provided your kitchen is in hands of experienced kitchen contractors. Kitchen remodeling is a great way to help transform your house into your dream home. Kitchen remodeling is limited only by imagination and your budget. Kitchen remodeling is one of the best investments you can make in your home.
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