Are you the type of person who has to have everything updated in their new house? Do you shudder at the thought of having laminate counters in your kitchen and not stone? Do you throw out perfectly good cabinets and replace them with expensive new “modern” cabinets? Do you toss out modern white appliances and replace them with stainless steel ones?
If so, then this post is for you! I’ll discuss two reasons why you shouldn’t be replacing parts of your house that are still functional – one is the environment and the other is your pocket book.
Most renovations are not good for the environment
Environmental effects of renovations are pretty major. Lots of energy gets used to make new materials like drywall sheets, kitchen counters, tiles etc. so if you are throwing out perfectly functional kitchen counters then you are not doing the environment any favours. Another problem is that the disposal of demolition material takes up a lot of space in landfills. It’s one thing to replace an item that is broken or in a state of disrepair but to redo a bathroom because you don’t like the colour of the tiles is a bit of a waste.
Renovations don’t always add to house value
At this point if you are thinking that you would be willing to fork out some money for a Prius but you are not going to give up your dream kitchen for the environment then let’s take a look at the effect of renovations on your house value. A lot of people assume that any money they put into a house automatically gets added to the value of their house. So if they buy a house for $400k and spend $30k on a new kitchen then the house must be worth $430k right? This assumption is a bit of a stretch, however let’s say for the sake of argument that it’s accurate. If that assumption is true, then the opposite must also be true – if you remove anything of value from the house then the value of the house must go down as well. Typically when you buy a house that is in half decent condition then you are paying for all the various parts of the house. If the kitchen is in reasonably good condition or even if it’s not that great but still functional then you paid some $$ for that kitchen when you bought the house. If you were to remove the kitchen and then put in a new one then you have to subtract a value for the removed kitchen.
Let’s look at a hypothetical example:
Let’s say you buy a house for $400,000, the kitchen was remodeled about 20 years ago and is in fairly good shape but it looks a bit dated in your opinion. The new kitchen you want will cost $25,000. Let’s assume the value of the existing kitchen is $10,000. We’ll also make the assumption that your house value goes up or down with any money invested in renovations or demolition (removal of value).
In this case the added value of the new $25,000 kitchen will be:
$25,000 – $10,000 = $15,000. Considering you paid $25,000 and went through a lot of hassle for the new kitchen you didn’t get a very good return on your investment.
So how do you help save the environment, get your money’s worth from renovations and still have your dream kitchen?
I suggest two different alternatives:
1. Try to buy a house with a kitchen that is in the poorest condition possible. The more rundown the kitchen is, then the less value it has and the negative effect of removing it will be minimized.
2. Lower your standards a bit. Consider repainting the cabinets instead of replacing them. The repainted cabinets might not be quite as nice as the new ones but for less than 5% of the cost you might have a much better value. If the appliances aren’t too old then hang on to them and decorate the kitchen in such a way that they fit in. Bottom line is to try to only replace items that need replacing and just fix up/paint everything else.
Whether you are thinking of the environment or your pocket book – try not to remove items of value when you are doing renovations. Use as much as you can of the existing room.
If you have to gut a kitchen/house then buy one that is about to fall down, that way you aren’t throwing out anything of value.
And remember – it doesn’t matter how much you spend on your new kitchen – the food will still taste the same!