by Taylor Kovar, KovarCapital.com
Hey Taylor: Are there any home improvement projects that actually “pay for themselves”? I never believe contractors when I hear that pitch, and yet I keep on hearing it so I’m wondering if it’s true in some cases. Can I break even with new windows or a better HVAC?
Hey Jeremiah: Can’t blame you for not taking every contractor at their word. However, I will side with some of them on this issue; if you buy the right product at the right time, you stand to get your money back over the course of a few years.
There are a lot of different variables, but you should start by considering these elements.
1. Utility savings. Naturally, whether or not an upgrade pays for itself will depend on the type of upgrade. If you install solar panels, you will save money on your electricity bill. Assuming you have a medium or large home and use a fair amount of electrical appliances, it’s not uncommon to save upwards of $200 a month. That means you’ll save around $10,000 in just four years ‑ and that’s not including the tax rebate you might be entitled to. You mentioned new windows, and the math can be broken down in a similar way. If you get quality, energy-efficient frames, most experts say you can reduce your utility bill by about 30%. If you live somewhere with extreme weather, cutting your utility bills by ⅓ makes a big difference and adds up over the course of a year.
2. Resale value. It can be misleading to hear that something “pays for itself.” That phrasing makes a lot of people think the upgrade will be free and that’s definitely not true. However, a new HVAC unit, a remodeled kitchen, a renovated bathroom and any other home improvement projects should be viewed as investments. Once your house is paid off, it’s an asset, and the better it looks and functions as a living space, the more it’s worth. As long as you’re not getting swindled or paying for bad work, renovations can retain their value.
3. Maintenance Reduction. An ounce of prevention is worth a pound of cure, right? Paying for metal roofing that won’t need repairs after each storm doesn’t exactly pay for itself, but it could save you from countless repair payments that cost a fortune over time. The value of an upgrade often depends on what’s being replaced; don’t lose sight of that as a contractor or salesperson pitches some fancy, expensive renovation.
You aren’t being lied to every time someone says a renovation will save you money in the long run. Sometimes it’s not the case, but you shouldn’t dismiss the notion right away. It just depends on what you need fixed. Hope this helps!