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alexandra_kassab

What's a better ROI? A Kitchen pantry or study?

Alexandra Kassab
9 months ago

I'm planning a home remodel project and planning to convert my existing small galley kitchen into something new. Currently debating between a kitchen pantry or a study / office space. What's better for home resale?

Kitchen Pantry
Study / office space
Laundry room
Keep the existing galley kitchen

Comments (21)

  • PRO
    Patricia Colwell Consulting
    9 months ago

    really. You need to post a complete floor plan to scale of the whole living space you are changing. To scale on graph paper all windows , doorways and where those doorways lead. shown. Every measurement clearly marked , post here in jpeg format, post in a comment DO NO start another post on this subject.Every question you answer every question you have all go on this post.

  • deegw
    9 months ago

    In general, I think a pantry would be better than a cramped office but without knowing about the other spaces in your house, it's hard to say. If you already have lots of kitchen storage and the office would be a comfortable size, then I would say the office is a better choice.

  • latifolia
    9 months ago

    Suggest speaking with a local real estate agent, as this depends on area. If you live far from a supermarket, a pantry would be appreciated. If you live where people work from home, then an office might be preferred.

  • chispa
    9 months ago

    No one can guess without seeing the existing plan and proposed plan.

  • Jennifer Hogan
    9 months ago

    Without context this is a really difficult question to answer. Renovations almost always cost more than you will get back when you sell, so anticipate that you will be gifting 50% of whatever you spend to the next owner. Will you be in the home long enough to make the renovation worth doing?


    https://www.remodeling.hw.net/cost-vs-value/2023/


    Only two reasons I can think of for having two kitchens is if the area has a large kosher population or if the 2nd kitchen can be part of a separate in-law quarters or rental suite.


    A random second kitchen does not make much sense.



    The other options really depend on what your home is lacking and how this space relates to the other rooms in your home and the dimensions of your galley kitchen.


    Galley kitchens are generally at least 7' wide. That is wide enough for a pantry or laundry and can be a combined laundry / pantry.


    My combo Laundry / Pantry is 7x10 - the current layout is cramped, moving the doorway to a center doorway on the 10' side to create a better pantry storage space




    My sister has the best pantry/laundry space I have ever encountered.


    the full depth refrigerator ends at counter depth, as the closet in the laundry is inset a few inches


    The backsplash along the countertop and shelving in the pantry opens so you can slide things between the kitchen and pantry (including the heavy mixer or other small appliances.

    It is considerably larger than my pantry/laundry space, but she also has a larger family.










  • PRO
    Patricia Colwell Consulting
    9 months ago

    Sorry but I see no 2 kitchen choice but we need a plan so post that here

  • PRO
    Yonder Way Design
    9 months ago
    last modified: 9 months ago

    Post a layout. But if this is ”for resale” then no remodeling ever creates more value than it costs. And kitchens are a VERY expensive to remodel to lose money on a bad design. A home is rarely improved by most of the ideas that you are having, because it creates disproportionate and awkward spaces.

  • bry911
    9 months ago

    “But if this is ”for resale” then no remodeling ever creates more value than it costs.”


    Of course they do. I rehab or remodel and resale houses all the time and typically make a decent profit. I think it is fair to say that remodels are rarely done in a profitable way, but there is far too much evidence to suggest they can’t be.

  • PRO
    HALLETT & Co.
    9 months ago

    Shame we are more invested than the op.

  • Jennifer Hogan
    9 months ago

    @bry911

    There are exceptions to every rule, but Yonder Ways and I were both warning against the HGTV mindset. Statistics show that the average home reno comes with a negative ROI.


    Profitable flipping almost always starts with finding a home that you can buy at below market price. (70% of the neighborhood market price).


    Buying a home that you plan to live in as your primary residence usually means buying the best home available in your price range.


    Since this owner is not a professional flipper they probably bought the nicest home available in their price range and not the fire sale that was grabbed before ever being listed on the MLS.




  • bry911
    9 months ago
    last modified: 9 months ago

    @Jennifer Hogan said, "Yonder Ways and I were both warning against the HGTV mindset."

    That is not what @Yonder Way Design said at all. What I actually took exception to was, "no remodeling ever creates more value than it costs." That statement is incorrect and doesn't match your claim. Which I also am not sure is correct.

    Statistics show that the average home reno comes with a negative ROI.

    That is an interpretation of the statistics, likely from data that is itself problematic. Even if we ignore the problems with the most cited source of that information, it allows for more than one interpretation. The better interpretation is that most remodels are not overly concerned with return on investment. This is the better interpretation because it allows for flippers to exist where your interpretation doesn't.

    Profitable flipping almost always starts with finding a home that you can buy at below market price. (70% of the neighborhood market price).

    This has not been true in any sense for at least ten years and largely never was. This seems like a misunderstanding popularized by those staged television shows. I recently helped a relative buy a HUD home. If you are not familiar with HUD homes they have two offer periods, (1) Owner-occupants only, and (2) investors. We submitted in the owner-occupant period and the listing agent let me know that on the first day of the investor offer period she had more than twenty offers submitted (which is about what I expected). This was in a town of 2,250 people, which is five minutes away from a town with 17,500 people and an hour away from any city large enough to have more than one department store. Because of the rental/investor landscape there just aren't properties selling under adjusted retail, most are selling for more than adjusted retail.

    It was never really that true. Flippers don't get the section 121 exclusion, or long-term capital gains, and have to deal with self-employment taxes. So let's do some math using your 70% number. Suppose I buy a home with comps at $400,000 for $280,000 (again, that isn't very likely unless it had a fire). I then spend $100,000 rehabbing and sell it for 20% over comps. So I have $380,000 in a home that I am selling for $480,000. Assuming I only move a few houses each year, my tax burden will be a bit over $49,000 and I will clear $51,000 (once I clear more than $160,000 in income and profit my self-employment tax goes down so taxes could be as low as $38,000). There is no renovation that I can do for $49,000 less than the original owner or even $38,000. There never has been.

    Flipping is, and always has been, about adjusting your goals for a property and doing things for financial reasons and not because of personal preference.

    ----

    Here is the reality of the OP's situation and every OP in this situation. What projects have a good ROI for your home are dependent on your home and the specific area it is in. Using broad statistics to answer specific questions is folly, as is asking this question on an internet forum.

    The best thing the OP can do is ask a real estate professional in their area about improvements to their specific property or just ignore financial ROI altogether.

  • Jennifer Hogan
    9 months ago

    @bry911  I can usually follow your logic, but I honestly have no idea what you are trying to say.

  • bry911
    9 months ago
    last modified: 9 months ago

    @Jennifer Hogan - If you say "remodel" and "selling" in the same paragraph posters will race to say that you shouldn't do it. Without ever bothering to think about the question asked.

    In this case the OP is moving a kitchen (I think we can assume they are not removing the kitchen completely as the pantry would be kind of moot then). They are asking about the better ROI between two alternative uses for that space. They didn't ask a question about the ROI of the entire project.

    I strongly suspect that either of these options will have a positive ROI, because they are likely not going to just rip out the kitchen and leave the space demolished. Once you have removed all the cabinets and fixtures, removed the mechanical and electrical components, repaired and repainted the drywall, and replaced the flooring I don't think there is a lot of marginal cost to adding a desk or shelves.

    Additionally, statements like "renovations never create more value than they cost" are incorrect by any objective measure. Also, the fact that the average home renovation has a negative ROI, is only material if the purpose of the average home renovation is a positive ROI... It isn't. Flipping homes clearly shows that when the goal is making profit, it is available.

  • Jennifer Hogan
    9 months ago

    This was a much more easily understood explanation.


    I guess I am a bottom line person.

    If you look at each individual task you may have some tasks that have a positive ROI and some with a Negative ROI, but I don't care. I am going to look at my overall ROI.


    If you consider the project in segments.

    Addition of the new kitchen - negative ROI

    Demo and repair of existing kitchen - negative ROI

    Completion of the prior kitchen space - possibly a positive, negaitive or wash. . . hard to tell. It is not adding sf, so it needs to add some benefit that would make a buyer want to spend more for the home than they would have if this was not finished and just left as a blank slate.


    So the question remains, what is the best use of the space.


  • bry911
    9 months ago
    last modified: 9 months ago

    @Jennifer Hogan - If you look at each individual task you may have some tasks that have a positive ROI and some with a Negative ROI, but I don't care. I am going to look at my overall ROI.

    For this to be an effective evaluation tool the project must have a singular goal. Which doesn't have to be true at all.

    Let me give you an example from my personal life. We were adding a shed dormer and a bathroom to the back of a Cape Cod that we owned. The bathroom was necessary because the two bedrooms on that floor had no bath and it needed one. However, since we were already building a shed dormer on 25% of the roof, the marginal cost to extend the shed dormer significantly and enlarge the bedrooms was pretty low.

    My metric for extending the shed dormer was basically increased resale value (my kids didn't need the extra room). So the best use for that space was a financial ROI, which is a fine use for a space. You are allowed to make a decision about your house for financial reasons. However, the financial ROI was not my metric for adding the bathroom at all. The bathroom's ROI was strictly the suitability of the home for my family. Any single metric would likely lead to a bad decision.

    The OP may be in the same situation, the kitchen remodel was undertaken to improve their quality of life but maybe they don't see themselves utilizing the former space in any way and are just looking for the best ROI.

    ---

    This leads into why people are consistently incorrect about their remodeling to sell advice. You can't use the ROI of the average remodeling project to explain why you shouldn't remodel a home you are getting ready to sell.

    I will use a bad analogy to explain the problem again. I have never played cornhole, but I looked up the official distance between cornhole boards and it is 27'. So the average player probably throws a 16 oz cornhole bag around 30'. That doesn't mean the average person can only throw a cornhole bag around 30', It just means that most people are aiming for a target about 30' away.

    Likewise, you can't use the ROI on the average remodel to know if a remodel to sell is profitable. They are different targets. If I remember correctly you work with stats and that is clearly a selection bias. Fortunately, there is a group of people who remodel only for profit, typically known as flippers, and they seem to be able to remodel for profit quite well.

    ---

    I firmly believe the best answer to this question is, and always has been, it depends on your specific home and your specific market.

  • Jennifer Hogan
    9 months ago

    Before going into statistical analysis for Healthcare I spent years working for a real-estate attorney and selling real-estate.


    We have some really successful flippers in my home town. They buy run down older row homes replace doors and windows, add LVP, paint, make them look pretty and sell for huge profits.

    The homes they buy never hit the MLS or get listed on Zillow . . . they are snatched up by investors.


    Price increase of $167 k


    After reno pics





    3rd bedroom - aka attic


    I knew one of the kids that grew up in this home and 40 years ago it was pretty awful. If it wasn't fixed up over the past 40 years I can only imagine how bad it was.


    2 more from the same general neighborhood


    200k increase in sales price





    They didn't touch the attic in this one . . . might give you a clue as to what state of repair the rest of the home was in when it was purchased.




    81 K increase in sales price - pretty awful flip







    To me this is very representative of flips I have seen These flips are dumps that most people would be afraid to tackle as a reno project. The intent is to make a profit.


    It is very different than the people who are buying a home to live in, live in it for years and decide that in order to sell they should renovate the outdated kitchen and baths. They are starting with something that functions and is generally in decent repair, but isn't the open concept white kitchen with granite countertops that everyone seems to want.


    That renovation will almost always generate a negative ROI.


    In the case of this OP choosing to create an office, laundry or pantry probably won't make a difference in the sales price if all three are equally suited to the placement in relation to the rest of the home. None of them are going to provide her some massive change in the selling price.


    You are correct that every neighborhood is different and every situation is different, but if you have a reasonable amount of experience with real estate and renovations you can make some pretty good generalizations that are going to be true for 85 or 90 percent of the people you are addressing.

  • littlebug Zone 5 Missouri
    9 months ago

    Lots of good discussion here. I’ll offer this - the OP didn’t say s/he was interested in making more money on the resale than the remodel cost.

    S/he asked what was best for resale, which is impossible for us to know. We don’t know what the rest of the house consists of nor what the real estate market in that immediate area is like.

  • Mrs Pete
    9 months ago

    This is a stab in the dark: Everyone needs to store food. Not everyone needs an office.

  • chisue
    9 months ago

    I've voted for a laundry room, guessing the present equipment is in the basement.

  • Helen
    9 months ago

    This discussion certainly has meandered.


    In terms of the actual question, no one can answer it without knowing what is being converted.


    As to ROI, I think that anyone who is an amateur is NOT going to get any ROI for renovating a kitchen or bathroom. These are projects that should be done because the person who is living in the house wants to enjoy them without regard for whether it makes economic sense in terms of an "investment".


    The people who make money are able to do so because they are in the business and so they are doing it for "wholesale" versus what it would cost most homeownrs. And a lot of the profit is when the home is purchased - my friend flipped - he was a broker; his wife was a designer and he had a crew that he was able to give enough work for and he was very familiar with construction so he was his own GC. And he typically bought homes that needed gut remodels in good neighborhoods - the ones that had been lived in for 40 or 50 years with no upgrades and since he was a broker, there were no commissions that he had to pay except possibly to the buyer's agent down the line.