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A small kitchen remodel project can be a great investment for your home. Resurfacing kitchen cabinets, changing their hardware and making other minor improvements can boost your home's value enough that they come close to paying for themselves.
Small kitchen projects earn a return on investment of more than 83%, according to the latest Cost vs. Value report from Remodeling magazine. That means for every $100 spent on the upgrade, a home’s value increases by $83, on average. That’s a much better return than many owners get from other home projects, including basement additions, bathroom upgrades and even replacing the roof.
You could also consider replacing one or two appliances with new ones that have high energy-efficiency ratings, updating your floor or countertops and applying a fresh coat of paint.
Such upgrades have many benefits. You’ll enjoy your kitchen more, bump up your home's value and maybe even command a higher price when you’re ready to sell your home. Overall, there’s a good chance that updating a kitchen will make you a happier homeowner.
Major vs. minor
Minor updates shouldn’t be confused with major kitchen upgrades, which can involve replacing all appliances, the sink, the countertops, the flooring and vents and adding an island. Such major overhauls can cost up to six figures for some upscale kitchens, says Peter Grabel, managing director of Luxury Mortgage Corp. in Stamford, Conn.
A major upgrade would increase the value of your home, too, but that increase may not come close to the amount of money put into the renovation, Grabel says. This is especially true if other homes on your street don’t have updated kitchens. “You’d want to do a major remodel more for personal reasons than financial ones,” he says.
By contrast, the average cost of a minor kitchen remodel is about $20,000, according to the Cost vs. Value report.
Know your neighborhood
If you’re planning to update your kitchen design, it’s a good idea to first contact a few real estate experts in your community to see how much your home value might increase after a kitchen renovation, says Jim Amorin, an appraiser in Austin, Texas, and president-elect of the Appraisal Institute trade group. Talking to local real estate agents can help you know how much of your cost you can expect to recoup if you make specific changes to your kitchen. “You want to bring your kitchen up to the standards in the community, but you don’t want to price it out of range,” he says.
You’ll also want to have a good idea of what other homes are selling for in your neighborhood, says Diane Saatchi, an associate real estate broker in East Hampton, N.Y.
That way, you’ll know the potential limits to how much buyers would be willing to pay for your home, regardless of the kitchen upgrades, she says. “It’s OK to spend money to upgrade your kitchen, as long as what you’re doing is consistent with the rest of the house and the houses on your street,” she says.
Other minor home improvement projects with major ROI
A minor kitchen remodel isn’t the only home renovation project that can give you a good return on your money. Here are some other small projects that offer a big payback:
Adding attic insulation. Improving your home’s insulation can pay for itself and then some, letting homeowners recoup an average of 116.9%.
Replacing the front door. Homeowners can expect to earn an ROI of up to 91.1% of the cost to replace a standard entry door with a 20-gauge steel unit.
Replacing the garage door. Replace a 16-by-7-foot garage door with a new four-section door on galvanized steel tracks (but keep the existing motorized opener), and you could recoup 91.5% of the cost, on average.
How to pay for a kitchen remodel
You have several options for funding your kitchen remodel or other home improvement project. Paying for it from personal savings is always a good option, Grabel says. You could also consider refinancing or opening a home equity line of credit to fund the upgrades. “You’ll just want to be sure to pick home remodel projects that give you the most value,” Grabel says.
If your home needs upgrading and you’re deciding on a worthwhile project, consider a minor kitchen remodel. By completing this small renovation, you could enjoy a more beautiful kitchen and recoup a large portion of your investment.
Image via iStock.