Everyone loves a designer-quality chef’s kitchen — and it shows in the real estate market.
According to a 2021 report released by Zonda, a California housing data and consultancy firm, remodeling the kitchen was ranked third in home upgrades that bring homeowners the greatest return on investment (ROI) during resale.
“You don’t always get a dollar-for-dollar return on investment,” says Elizabeth Gomez, co-owner of Bridge City Contracting, a contracting company that specializes in remodeling homes in Battleground, Washington. “However, a kitchen remodel can update the freshness of your home, making it more pleasant to live in, even while giving you a way to add a little more to the resale value.”
But kitchen upgrades come with a price tag. The average cost of a kitchen remodel can easily reach five figures, meaning most Americans need time to prepare. If you’re thinking about a kitchen upgrade, here’s what you need to know about estimating a kitchen remodel cost — as well as getting the best bang for your buck.
Average cost for remodeling a kitchen
Pinning down the cost for your kitchen remodel can be tough, and even more so because of the recent global supply chain disruption. Zonda’s “Cost vs. Value” report indicates that a minor kitchen remodel is likely to cost right around $26,214.
There’s a huge range of costs that can go into the cost of a kitchen remodel, says Mindy Jensen, host of the BiggerPockets Money Podcast, licensed real estate agent, and experienced home flipper. “You can easily spend $50,000 on cabinets, or just as easily spend $10,000,” Jensen says. “Flooring can cost more than $20 per square foot or as little as $0.99 per square foot. It all depends on the materials and finish you choose.”
With everything right now, says Gomez, it’s realistic to spend $60,000 on a kitchen remodel for a typical 10 foot by 10-foot space. This includes “environmental testing and dumpster rentals, plus materials, like new cabinetry and countertops, and the labor to install it,” she says. “Just make sure you compare bids and look at what makes sense for you as you figure out how to pay for it,” says Gomez.
Here are more examples of what you might pay for:
Depending on where you live, there might be additional costs, says Gomez. For example, in the Pacific Northwest, where Gomez works as a contractor, mold and mildew testing is required before kitchen work even starts. The cost for environmental testing often starts at $1,200, Gomez points out.
Disposal of Materials
Not only that, there may be other expenses many are not aware of. “You usually have to rent a dumpster to sit outside your home, and that can cost $600 to $800 per month,” Gomez says.
In addition to extra details, you can expect to pay anywhere from $350 to $20,000 to get the appropriate permits for the work, says Gomez. A smaller remodeling project might have a fairly low permit cost, while it can cost tens of thousands of dollars to obtain the permits if you want an addition to your home as part of the remodel.
Don’t forget about professionals you might need as part of the remodel. Jensen says that if you need to move or add plumbing and electrical, you can expect to pay about $100 an hour for professionals to do the work for you.
Installation is often an additional cost, Jensen points out. When getting an estimate, confirm whether it includes all the expenses, including installation.
Avoid estimating your budget based on the quotes you see on popular home renovation TV shows. Instead, ask your contractor for a range so you know the lowest and highest possible amounts.
Budgeting for a kitchen remodel
Deciding on a budget for your kitchen remodel requires that you take a step back and think about your circumstances.
Jensen suggests getting a feel for the cost by visiting a big box retailer like Home Depot or Lowes. “Talk to the kitchen people. Bring pictures of your current layout and talk about what you want to do differently,” she says. “They should be able to give you a decent estimate, but it will be a range. They won’t be able to give you a set price, due to changes in supply chain and the uncertainty of work.”
Know What You Want
Be sure about what you want before you get started, says Gomez. Changing the fixtures in your kitchen after the process has begun can result in long waits for new items, plus restocking fees for the original order reduces cost efficiency. Gomez suggests looking into repurposed wood from other projects and checking warehouses and second-hand sourcing to find lower-cost materials that are still high-quality.
“Backorders are expanding, and the longer we’re on a project, the more it costs the customer,” Gomez points out. “Know what you want on the front end and make sure it’s in stock before you start. If it takes time to get what you want, you can delay the start of the project and reduce your cost.”
Jensen suggests figuring out what you can do on your own and what you might be able to salvage from the original kitchen. With planning, it’s possible to reduce costs by reusing what you already have, as well as completing the simpler tasks on your own.
“Are your cabinets in great shape, and just ugly? If so, it can cut a huge expense by simply painting the existing cabinets,” she says. “If the layout works for you, a total remodel might not be necessary. Change out the 1970s hardware with something fresh and get a whole new look for a lot less.”
Set Realistic Expectations
Finally, Gomez warns against using popular TV shows to get an idea of your remodeling budget. “A lot of those shows get items for free or a reduced cost, and that’s reflected in the smaller list of expenses they claim,” she says.
Adding value to your home
The best way to get the best return on investment for your kitchen remodel cost is to appeal to the masses, Gomez points out. She suggests thinking about what a homebuyer might want in a kitchen and try not to make it too personalized to your tastes.
“Create something a lot of people can enjoy,” Gomez says. “If you get that hibachi grill, you might like it, but it’s expensive and won’t really add to the resale value.”
Gomez says her own kitchen remodel resulted in a sale price of $70,000 more than similar homes in the neighborhood because people liked the kitchen.
“People always look at the kitchens, bathrooms, and main bedroom closet,” she points out. “Keep a neutral color palette and make sure everything is convenient and accessible.”
HELOC vs. Cash-Out Refinance for Funding Home Improvements
When deciding how to pay for your kitchen remodel cost, here are a few options.
A home equity line of credit (HELOC) is based on your available equity. It has a draw period (when you take out the money) and a repayment period (when you pay it back). You only borrow what you need, and you can make payments similar to a credit card. Jensen recommends using a HELOC for short-term projects, unless you’re able to refinance to a significantly lower interest rate.
Cash Out Refinance
On the other hand, a cash-out refinance can provide you with a lump sum upfront. You replace your old mortgage with a new mortgage that’s larger than the amount you still owe on the home. You get to keep the cash difference between the new mortgage and what you owed on the old loan. A cash-out refinance is basically financing your kitchen remodel over 30 years, or for as long as you’re paying the mortgage,” Jensen says.
Alternative Funding Methods
0% APR Credit Cards
A credit card with a 0% intro APR on new purchases allows you to pay off home improvement costs over time, and some offer rewards on your home improvement spending, too. Before choosing this option, just make sure you have a plan in place to pay down your balance in full before the intro period ends, or you’ll take on interest at the card’s regular APR.
Here are two credit card options to consider:
- Bank of America® Customized Cash Rewards Credit Card: 0% APR on new purchases for 15 billing cycles after account opening (13.99% – 23.99% variable APR thereafter), plus tiered bonus category cash back rewards.
- Wells Fargo Active Cash℠ Card: 0% APR on new purchases for 15 months, followed by an ongoing variable APR of 14.99%, 19.99%, or 24.99%. You’ll also earn 2% cash back on every purchase.
“Another option is a store credit card. With a relatively small project, you can get a 0% APR and pay it off before the promotion expires,” says Jensen. Popular home improvement stores like Lowe’s and Home Depot both offer retail credit cards with promotional financing offers on eligible purchases.
It’s important to note that these promotional offers are for deferred interest. Unlike a 0% APR intro period on a general credit card, which will only begin to accrue interest on any balance leftover after the period ends, deferred interest means you’ll take on interest going all the way back to your purchase date if you don ‘t pay your balance in full before the promotional period ends.
Gomez points out that you might be able to use a personal loan for home improvements, and that smaller community banks and credit unions often have flexible products that can be low-cost and convenient. Just be sure to check all applicable fees, including origination fees and early payoff fees.
Home Improvement Grant
Gomez recommends looking into home improvement grants. Some federal, state, or local governments issue funds to help homeowners upgrade their home. Check the US Department of Housing and Urban Development for programs and qualifications.