How to Save The Environment, Your Kitchen and Your Pocket Book!

by Mike Holman

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.

Summary

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!

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{ 7 comments… read them below or add one }

1 Mr. Cheap

Great post! I definitely agree with the idea of considering the value of what you’re pulling out when you replace something. The one thing I found when I first got into real estate that surprised me was that things are often worth more than their cost.

E.g. If you pulled out an old kitchen worth $10,000 put in new kitchen for $25,000 it *might* increase the value of the house by $40,000.

The explaination for this that I came up with, is there is a “pain in the ass” factor that people will pay to avoid. Having someone else go through all the pain of a kitchen renovation (then being able to move in and enjoy the sparkling modern kitchen), is worth more than the remodeling cost (at least this is the argument renovators will use ;-) ).

I don’t think this is an absolute (“anything I spend money on will increase the value of my house!” is a silly way to justify putting money into renos), HOWEVER I think there *are* situations where you *can* improve the value of you house beyond the cost of the alterations (this is the whole basis of “flipping”).

I agree completely with the environmental aspect (and I think the financial one USUALLY holds true).

2 MillionDollarJourney

This is a little off topic, but any idea how much more a granite is than say laminate?

3 FourPillars

Mr. Cheap – excellent point although the post was more “pro environment” rather than “pro house value”. A lot of it depends on the area – I’ll be posting on my numerous “house value” theories in the future but the situation you describe is probably accurate in a high demand area (where most people don’t live) where the demand for everything “high end” might exist.
One argument against your point is that often buyers don’t know the true cost of the renovation and will underestimate the value – so even if you do spend $25k on a new kitchen – a buyer might only give it a value of $15k – $20k.

MDJ – I’m not really sure since I’ve only ever had laminate. In our current house I think we have about 20 linear feet of laminate which cost about $600 (not installed). Installation is very easy.

4 telly

Great post Mike – my husband will especially enjoy it. He hates clutter but also hates filling the dumps with more ‘stuff’.

When we bought our house 3 years ago we absolutely abhorred both the kitchen and the bathroom. After adding a 2nd bathroom in the unfinished basement, we had planned to totally gut the upstairs bathroom (it’s tiled floor up to and including the ceiling) but I added some nice fake wood blinds, a new large framed mirror, a few small framed prints and voila…most of the ugly tile is covered up. :)

It’s amazing how used to things you get that you once thought were ugly. It’s why I suggest doing the renos after you’ve moved in…if you don’t get to them, all the better!

5 FourPillars

Telly – that’s great to hear!

While I accept that there is no “one right answer” regarding renovation I think some people make the mistake of assuming that if a room (esp kitchen & bath) doesn’t look good then it needs to be gutted and redone. In some cases this might be true but in other cases you can often just fix/change the one or two things you really hate about it, apply paint and the room will be much better.

In my opinion when it comes to adding value to your house, the key is improvement – not necessarily ending up with the best kitchen (or whatever room) possible.

Mike

6 Mr. Cheap

I’m worried I may have come across as more “pro reno” then I actually am (I’m far more in the “pro choice” camp and personally tend to fall in the “live with it how it is” position ;-) ).

You make a good point that it’s mostly the “high demand” areas that would reward you more than a $1 per $1 spent on renos…

7 FourPillars

It’s a tough call with renos and adding value – anyone who tells you they “know” exactly how to add value is full of crap.

Sometimes you have to follow the mob as well with resale – stone counters seem to be trendy to the point that some people look for granite counters in the kitchen and will ignore the flickering lights in the rest of the house.

Mike

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