Why renovate if the roi is less than 100%

Question

I see websites that show the roi is less than 100% for renovations and don't understand why people renovate besides to live in a nicer house. I would think theres a financial gain to be had but what I read says otherwise. Can someone explain this to me please?

An example is in this article here

http://www.thisoldhouse.com/toh/m/article/0,,40804...

Thanks in advance for your help

An example is in this article here

http://www.thisoldhouse.com/toh/m/article/0,,40804...

Thanks in advance for your help

Jeff Libby · Answer

it's nothing specific. I am just trying to figure out if I put $10k into a kitchen would it bring the value of the house up more or less than $10k. I guess it is a case by case scenario though.

If I buy a house that has an outdated kitchen and buy decent, but not expensive, cabinets and appliances I'll probably get a higher ROI than if I bought a house that already had a good kitchen but I want top of the line cabinets and appliances.

I think Kyle helped explain my question by stating those numbers are meant for home owners

Thomas S. · Answer

You are going to need to provide far more information for us to get some idea as to what you are trying to find out about renovating.

Is it your personal home, already a rental, a flip what are you asking about.

Jeff Libby · Answer

ok so that being said, is it a bad idea from an investor's side to renovate if it place isn't going to be a rental?

Kyle J. · Answer

The article is written from the perspective of a home owner who lives in the home, as opposed to an investor.  If a home owner wants or needs a home office, they're not likely to worry that it's going to cost $10k to put it in and they'll only get $5k of that back when they sell it (using the numbers from the article).  They're primarily concerned with making their home functional, nicer, etc.  Not the ROI.

It's just like when someone puts a pool in at their house.  Most homeowners put one in because they want to go swimming in the summertime, not because they want a ROI on the cost of the pool.