I'm watching HGTV, and as is often the case, they are excited about renovations that are bringing in a % return on investment.

I don't get it.

For instance, right now they were most impressed with a $40K kitchen that gave an 80% return on the investment when it came time to sell.

Um, in my book that is a 20% LOSS.

Isn't it better to *make* money on an *investment*?

<scratches head>

You would think so. It's not an investment if you only get part of it back is it? It's a loss.

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The political system is broke and it's a joke.

My novice opinion is that you never get 100% back on any home improvement so they are showing who did the best of the 3 featured with the materials, design, colors, layout, and functionality. Kitchen and bath renovations return the most overall versus other rooms. They are typically the most expensive as well.

An investment is something you put out there and take a chance with. After that, it's either a gain or loss.

And of course, with real estate, it's all subjective based upon the buyer / seller and market situation.

While I enjoy the shows, I find it humorous that they always find a great deal on almost everything they buy - and the ones that always come in a few dollars under "budget".

dl

Well, you're not selling it new. You're getting some use out of it before you sell. It's similar to talk about the resale value of cars. It can be useful to consider that car A's resale value is 80% of the original cost after 3 years, but car B's is only 50%. If car A and car B sell for the same price new, you're better off buying car A.

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If this is going to be a Christian nation that doesn't help the poor, either we have to pretend that Jesus was just as selfish as we are, or we've got to acknowledge that He commanded us to love the poor and serve the needy without condition, and then admit that we just don't want to do it.

- Stephen Colbert.

I don't watch those shows but could they be talking about 80% return on the investment of the house price as opposed to 80% return of the cost of the improvements?

The way I understood their explanation was that they put in a $40K kitchen and upped the value of the house by $32K.

When we were first married, we bought a 100+ year old house for $32K, gutted and re-did the kitchen and converted a small bedroom into a large bathroom (and made the original bath into a first floor laundry). We spent about $10K on materials and did the vast majority of the work ourselves, and ended up selling the house for $75K. Market conditions were certainly different, and we did buy during a 'low', but the changes we made had a big impact on the profit we turned.

That's why I can't wrap my mind around the idea that it's a good 'investment' to do what they do on those shows... but I thought perhaps there was some factor I didn't 'get'. I guess if the property has already appreciated considerably and that upgrade is what would help it move in a down market, it might be a good thing. Otherwise... I don't get it.

If your intention is to continue living in a house I could see it but if your intention is to sell right away then you're absolutely correct. It makes no sense to do something that you can't recoup. Let the next owner renovate.

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The political system is broke and it's a joke.

I don't think most of the people are looking at selling right away, at least that's my feeling watching these shows.
Most updates to a home won't give 100% return. These homeowners want to spend their money on what will give them the best return in the end. That's where the real estate agent comes in. They know the market for that area and can give their opinion on what will be the best project to do for the money.
Judy