Our Money Pit

Jonathan Clements

CALCULATING THE RETURN from homeownership typically involves some mix of delusion and dubious math—and that’s never truer than when it comes to remodeling projects. On the numbers alone, it’s all but impossible to justify a major renovation. Trust me, I’ve tried.

We just finished a project that proved so expensive that, if I revealed the cost, my reputation for frugality would be in tatters. The cost was comfortably—or perhaps uncomfortably—into six figures. What if we sold our Philadelphia townhome tomorrow? I figure we might recoup half of what we just spent.

Many will claim they fare far better. These folks look at what they paid for their home and what their home is worth many years later, and boast that the increase was due to their fabulous home improvements. What about the general increase in local property prices during this period? That gets conveniently forgotten.

Before the liberal application of dollars

Indeed, the often-cited survey by Remodeling finds that most home improvements are money losers—and that assumes you sell your home within a year of completing the project. Wait any longer, and that bathroom remodeling will look increasingly shabby, and the sum you’re likely to recoup will be even less.

Shabby would aptly describe our pre-renovation kitchen. But that wasn’t what spurred our project. Instead, it all began with a vague feeling that the back of the kitchen was awfully dark. Wouldn’t it be great if we had bigger windows, so there’d be more natural light and a better view of the garden? Of such musings are empty bank accounts born.

Before we knew it, we had architectural drawings that envisioned a revamped kitchen, two new bathrooms upstairs and an expanded second bedroom. When the contractor quotes proved unpalatably large, we scaled back the project, so the cost was palatable—just. The revised plan for our home—which is perhaps 120 years old—included a new kitchen, new windows at the back of the house both upstairs and down, and new siding.

You can get some sense of the result from the accompanying before and after photos of the kitchen. Along the way, we learned some lessons old and new:

  • When you open up walls, you never know what you’ll find. In our case, we discovered there were no load-bearing walls at the back of the house. Yes, you read that right. The back of the house, which was originally a mudroom that had been subsequently incorporated into the main structure, was resting on the beams that run the length of the house. The resulting structural work added two months and 15% to the project’s cost.
  • You can live happily in 550 square feet. That was the size of the Airbnb that Elaine and I lived in for most of the project’s duration. By the end, our relationship was—I kid you not—better than ever.

    After the money fund was emptied

  • You can work from anywhere. After five months in the Airbnb, we had to move out because someone else had booked the place. To get through the next 10 days, before we could move back into the house, we rented another Airbnb in Ocean City, New Jersey, a little over an hour’s drive away. We took long walks on the beach and the boardwalk, and in between got a lot of work done. The beach in the off-season is wonderful.
  • Remodeling creates a mess. This will surprise nobody who’s ever had a home renovated. Dust found its way into every corner of the house, even places that we thought were sealed off. As part of the construction, both the dishwasher and the washing machine were moved, and ended up needing to be repaired. The refrigerator was delivered with a dent in the door. All three appliances have now been fixed.
  • The expenses don’t end when the contractors leave. Among other things, we’re looking at purchasing a new couch, window treatments and shelving. I also got the coverage on our homeowner’s insurance increased and, because we live a few blocks from a river and there’s this thing called global warming, opted to buy flood insurance as well.

Was it all worth it? As I sit here at the kitchen table, looking out on the garden, and watching the birds and the squirrels attack the bird feeder, the answer is an unequivocal yes. From a consumption perspective, the renovation has been a winner.

But what about from an investment perspective? On that score, it’s awfully hard to justify. No matter what mental gymnastics I try, I can’t cook up a story where this project constitutes a good investment in the strictly financial sense. Still, I take solace in three thoughts:

  • If I amortize the cost over, say, 15 years, it seems less unreasonable.
  • Remodeling the kitchen and undertaking the structural work would need to have happened eventually. In fact, the contractor’s lead carpenter offered the comforting thought that, if we hadn’t undertaken the structural work, the back of the house might have collapsed.
  • While I have no illusions that we’ll recoup the cost of the renovation whenever the house is sold, I do think it’ll make the place easier to sell. I’ve previously owned three homes and two were a struggle to sell, in part because potential buyers were put off by the dated kitchen and bathrooms. Of course, the longer we stay in our current home, the more dated the kitchen will look—and the harder the house will be to sell.

Are these three thoughts solace enough? Perhaps they are—because we’ve lately been musing about the remodeling we didn’t do upstairs.

When is it worth remodeling a home? Offer your thoughts in HumbleDollar’s Voices section.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X (Twitter) @ClementsMoney and on Facebook, and check out his earlier articles.

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