Optimal Living Daily - Personal Development and Self-Improvement 3593: Does Remodeling Pay Off - Probably Not by Sam of Financial Samurai on Real Estate Investing
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May 11, 2025 In this discussion, Sam of Financial Samurai, a personal finance and real estate expert, challenges the common belief that remodeling adds value to homes. He reveals that most renovations typically recoup only about 65% of their costs. Instead, he advocates for expanding livable square footage to increase home value. Sam also emphasizes making remodeling choices for personal enjoyment rather than profit and highlights the importance of strategic planning and understanding the housing market.
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Remodeling Rarely Recoups Costs
- Remodeling rarely recoups 100% of its costs according to national averages.
- True profit in home renovation typically comes from expanding livable space, not remodeling alone.
Remodeling Returns Decline
- Since 2003, remodeling returns have never exceeded their costs.
- The average renovation only recoups about 65% of expenses, leading to a negative return of 35%.
Strategic Home Improvements
- Improve home layout based on market trends, such as adding bathrooms or creating open kitchens.
- Renovate old houses purchased at the right price to increase value substantially.