Whether you're in the process of flipping a house or looking to update your own home, you may be wondering whether it pays to update your closet. After all, storage space can be a huge selling point when you list a home, so having extra room and added organization in your closet could really be a draw for buyers.
The same holds true if you own a rental property. Updating its closets could be a good way to attract tenants and command top dollar for rent. But are closet renovations really a worthwhile investment?
What do closet renovations look like?
There are a few different ways you can update a closet. At a basic level, you can put in extra shelving and call it a day. But if you want to go all out, you can have custom shelving and organization systems installed, put in new lighting, and even invest in a higher-end mirror or series of mirrors.
What does a thorough closet renovation cost?
Adding some shelves to your closet may cost as little as $100, especially if you do the installation work yourself. But if you're looking to have a closet designer come in and revamp that space, you could be looking at a price tag of up to $6,300, according to the National Association of Realtors.
Are closet renovations worth the cost?
A few inexpensive adjustments to your closet -- such as extra shelving, a tie rack, or a shoe rack -- may be worthwhile. But spending $6,300 on an updated closet is generally not a great idea.
If you sink that much money into your closet update, you're likely to get just $2,500 in return when you go to sell your home. That means you'll only get to recoup about 40% of your investment. As such, you're generally better off spending your renovation dollars on a project that will translate to a much greater resale value. (With new wood flooring, for example, you'll recoup 106% of your investment, on average.) In fact, only 4% of Realtors have suggested that sellers renovate their closets before listing their homes.
That said, if having a well-organized closet is important to you and will improve your quality of life, then it could pay to make that investment for your own sake. Even if you don't recoup your investment when you sell your home, if an upgraded closet makes you happy for the next two decades, you may decide that it's worth it to you.
Ultimately, every renovation you undertake comes at an opportunity cost. Upgrade one area of your home and you'll likely have to hold off on improving another. If your goal is to score the highest return on investment, then an updated closet isn't going to help you achieve it. But if your goal is to make your living space more comfortable and convenient, then there's nothing wrong with spending money on a closet you'll be thrilled to use.