Mike's Blog


Remodeling Your Home? Think Like an Investor!

Walk in to any big box home improvement store and you'll be faced with tons of magazines about remodeling your kitchen...your bath... your garage... your whatever they think they can make money on. Seriously....if you're considering remodeling your home...think like an investor.


Most of us remodel our home because we want something more modern, more comfortable, more functional or just more appealing to our friends. But remodeling has an big financial impact on the values of our homes.  There are tons of national magazines touting return on various remodeling projects. Typically- they tell you kitchens and baths bring the biggest return. In fact...usually they say the average bath remodel will cost somewhere around $5,000 but the value added is about $5,800. It looks great on paper...wow a 16% return in just a few weeks. Let's start rolling!!


But what you don't understand is that magazine is trying to sell ads to home improvement product companies who obviously want you to take on that expensive remodel project.


So how do you think like an investor when deciding where to spend money in your home?


Bring Your Home Up to Par

When investors look for a home- they look for the ugliest home on the block. Then they bring it up to standard with the rest of the neighborhood. They don't over-renovate because they know that making the house toooo nice wont add to the incremental value.


The lesson for homeowners...look for improvements where your home is below standard. And bring it up to standard. Don't overspend with the hopes of recouping that cost when you sell.If youre in a neighborhood of four bed two bath homes...and your home only has one bath...spending to add that second bath makes a lot of sense.



There are many cases where your home is in an older neighborhood that is seeing a resurgence. Investing in modern touches such as Paperstone countertops or dual flush toilets can make your home appeal to a whole new crowd. This is especially true in Urban historic areas that are experiencing an influx of young hip buyers looking for luxury at affordable prices.


The Numbers

Another way to look at remodeling from an investor standpoint is to analyze the potential returns of your project compared to your desires. If that new kitchen is going to cost you $30,000 but will add $20,000 in value... then you just got your shiny new kitchen for a net cost of only $10,000. The question you have to ask yourself is...is this kitchen really worth an extra $10,000 in costs for you? If that answer is yes...then go for it!


Check with your REALTOR

One thing investors have learned... a good REALTOR is worth their weight in gold. Notice I said GOOD. Investors rely on their REALTOR to help them understand a neighborhoods standards. What improvements will add value and which one will not.


Even if you're not considering selling anytime soon- a REALTOR is always ready to start a new relationship and will gladly share their knowledge of the neighborhood and give you advice on which remodeling projects make the most sense. With the help of an experienced real estate agent, you can make much better investments in your home. And the great thing about these investments...you get to enjoy them every day. Happy Remodeling!



Mike Hogan

Associate Broker

RE/MAX Commonwealth





Comment balloon 6 commentsMike Hogan • August 17 2009 06:06PM


I have a real estate agent that I often use when I am looking at a potential investment property.  My realtor was an appraiser and has had contractor experience. 

Posted by Charles Perkins (Charles G. Perkins, CPA) over 9 years ago

Great post, Mike. Talking renovation costs and future worth is something that many of us in New Orleans have (for good or bad) become very good at! But yes, you're right, it's the GOOD Realtors that help steer their clients though those murky waters.

Posted by Troy Jowers, New Orleans Realtor (Pogo Realty, LLC) over 9 years ago

Hi Mike, ran across your post and just wanted to say what a great idea. I actually wrote an e-book on the subject. I have a check list that I pass out to sellers explaining that it is the little things that go a long way.

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) over 9 years ago

Charles- That REALTOR is a great asset. Thats a ton of experience that comes in handy for an investor.


Troy- I imagine many people have gotten really good at estimating costs in New Orleans.


Charles- Send me the link to your e-book- Id love to see that.

Posted by Mike Hogan, MBA (The Hogan Group at Keller Williams Realty) over 9 years ago


Thinking like an investor will keep your emotions in check and help you focus basically on what is needed and practical. I'll reblog this one.


Posted by Esko Kiuru over 9 years ago

Esko- You are exactly right. That was the premise I was going with...think practically and logically...leave the emotions at home.

Posted by Mike Hogan, MBA (The Hogan Group at Keller Williams Realty) over 9 years ago