TAMPA CENTRAL Blog

How to Calculate Return on Investment

Commonly referred to as ROI, a return on investment helps you to measure how favorable the cost-to-performance ratio will be for an investment or project. While you can work with a contractor to better understand your future savings and have an accurate assessment of the service or product, knowing the calculations yourself is a great tool to have. This can help you become more familiar with your spending versus savings.

First, you need to be able to find the Net ROI. This can be calculated by taking the final value of investment (FVI) and subtracting the initial value of the investment (IVI). Then, take this difference and divide it by the Cost. When you multiply the result by 100%, you have the final ROI percentage. You can learn more about ROI benefits and how to find the numbers you need for the equation in Investopedia’s article here.

5 Renovations That Have Great ROI Potential

Small Remodels

It’s far too often that homeowners get caught up in the “go big or go home” mentality for home renovation projects. While you may believe that getting major renovations out of the way will save you time and money, taking care of everything at once doesn’t necessarily give you the savings you may be looking for. Instead, it’s important to make functional changes first as opposed to focusing on aesthetics and adjustments that are purely for appearance.

Minor remodeling initiatives in places like your kitchen or the bathrooms can provide a much better return on investment. For example, basic remodeling jobs in the southeast of the United States can end up recouping over 50% of the cost on average. You can start with these simple ideas:

• Touch up the paint instead of going for a full redesign.
• Upgrade necessary appliances like refrigerators, washers and dryers, or dishwashers.
• Consult agents on buyer trends in the area to make informed decisions on your updates.

Replace Windows

If you’re set on improving the aesthetics of your home, replacing windows can be a great way to enhance the appearance of the facade while also improving air sealing, insulation, and durability. As you take the time to improve this area, you have several options to improve the ROI with your highest return typically coming from vinyl or wood replacements.

While wood replacement is most sought after in classic-style homes, vinyl is considerably easier to maintain. These vinyl options also typically have a higher return on investment in the southeast of the United States! If you're prioritizing energy efficiency to help save on energy costs, the Department of Energy has a guide to their Energy Star standards and essentials for making an environmentally friendly adjustment.

Air Sealing

To improve the indoor air quality of your environment and reduce air leaks, update the air sealing throughout your home. This can help your household reduce heat loss through the small gaps, cracks, and openings throughout your building envelope. These problematic holes typically come from general wear, weathering, or pest infestations and can allow outdoor pollutants, allergens, and air to flow freely through a house. While most homeowners can handle minor air sealing adjustments and repairs, it's important to consult an industry expert to inspect for areas that could be hidden or taken for granted.

While your home's windows and doors are the most common culprits for air leaks, there can be more openings in the walls, along the ceiling, in the attic, and in many other places that have outside access points. The EPA estimates that having your home properly air sealed and insulated can save homes on average 15% on heating and cooling bills.

Insulation Material

Insulation and air sealing are two sides of a similar coin and work hand in hand to help regulate temperature, reduce air leaks, and improve the comfort and safety of your home. If you find that one material needs to be updated, it’s likely you’ll need to evaluate the other as well. Insulation works to regulate the temperature throughout the house and maintain climate control by regulating heat transfer, which is how easily heat moves through a structure.

The material helps to keep out unwanted heat in the summer and traps desired warmth throughout the winter. In doing so, it helps to reduce heating and cooling costs, energy usage, and the strain put on your HVAC system to maintain a comfortable environment. It's important to regularly evaluate the insulation throughout your home to find old and deteriorated material, check for air leaks, and keep an eye out for moisture or pest damage.

New Garage Door

A common suggestion for a great ROI project is to replace your garage door. However, this may seem in direct contrast with our earlier suggestion to focus on minor remodels. While it’s true that a new or upgraded garage door is going to be more costly, it’s going to be one of the best ROI adjustments you can make with an average of 80% recoup of the cost - this will vary depending on your climate and weather patterns.

Similar to window replacement, this upgrade can focus both on functionality and aesthetic purposes without greatly affecting the cost of the return. In cases where you can reuse the motorized opener that’s already attached to your current door, you’re more than likely to increase the recouped cost. Consult a real estate professional for what kind of styles and trends buyers are looking for in your area to ensure you’re making a quality decision.

Make Informed Decisions with Local Experts

Koala Insulation of Tampa Central is dedicated to improving our community and helping our neighbors make the right choices for their homes. With cost-effective and energy-efficient options, we can detail your home’s current condition with our free evaluations and provide you with the right materials that meet your home’s needs. You and your household will be able to take into account your current schedule and budget while targeting pain points that need to be done sooner rather than later. Contact Koala Insulation of Tampa Central today to schedule your free evaluation and learn more about how insulation and air sealing can reduce your monthly energy costs.