By Jeff McKinney
The Cincinnati Enquirer

Gary and Louise Bruemmer spent $65,000 to remodel their 27-year-old Miami Heights home, but they didn't make the repairs simply with the idea they'd reap big profits when it came time to sell.

The Bruemmers' real joy will come from having their kitchen, bathroom, dining and living rooms remodeled, making the first floor of the two-story colonial home more useful for family and friends.

Specifically, the couple expanded their 1970s-looking kitchen from a "handkerchief size" to one that now adjoins the dining room and functions as an entertainment center. The kitchen has extra space for countertops, a pantry and a double oven

The Bruemmers, who work as pharmacists on Cincinnati's west side, acknowledge they probably won't get back the cash they spent on the major upgrades as a short-term investment.

But they won't have to shell out the $300,000 they figured it would take to buy a home with the size and amenities they want in a neighborhood they might not like. They bought their home in 1984 for $86,000 and it's now worth about $200,000.

"There's more to life than just getting your money back on the investment, though we thought about that," said Louise Bruemmer. "We had the work done because we're more concerned with improving our lifestyle and being more comfortable with where we are."

Welcome to the wonderful world of remodeling, where you may not be able to get out of a home all the money you sink in to beef up its appeal.

Return on remodeling

The Bruemmers' philosophy - comfort now versus harvesting big bucks later from a major remodeling - holds up well against the return on investment often realized by homeowners in the Tristate.

That's because, while return on remodeling in Greater Cincinnati compares favorably with similar-size Midwestern metro areas, it does not fare too well when compared with national averages.

Take for example a midrange kitchen gutting and rebuilding project with the works - a 200-square-foot kitchen with new cabinets, countertops, an island, flooring, new appliances and a stainless-steel double sink. Nationally, the project will cost an average of $43,213 and bring a resale value of $28,760, or a 67 percent return on the investment, according to Remodeling Online's 2002 Cost vs. Value Report. Kitchen remodeling is one of the most popular home upgrades. Remodeling Online is the Web site for Remodeling Magazine, an industry trade publication.

In Cincinnati, the same remodeling job would cost $42,505 and reap a $23,867 resale value, or 56 percent return, the report says.

The online analysis of 15 major home repair projects in 35 of the nation's largest remodeling markets is based on remodeling sales. The survey was launched in 1986 and Cincinnati joined the list last year.

The analysis, designed to provide guidance on the cost of major remodeling jobs and how much they might boost a home's value if the property is sold a year later, also found:

• Of the five most popular remodeling projects - major kitchen upgrade, bathroom remodel, bathroom addition, master suite remodel and window replacement - the average cost in Cincinnati was lower in three of the five categories (all except bathroom remodel and window replacement). Yet when it came to return on investment, Cincinnati had a lower return rate in all five categories, ranging from 10 percent to 20 percentage points lower than the national average return on those projects.

• When compared with major cities, Cincinnati did not fare well. For instance, on a midrange kitchen remodeling, the average cost in metro New York was $45,785 and cost recovered $40,345, or 89 percent. The same project in San Francisco cost $48,495 and recouped $44,600, or 92 percent. In Cincinnati, that remodeling job cost $42,505 and had a return of $23,867, or 56 percent.

• Cincinnati does much better in a comparison with its regional neighbors. The average cost for a midrange kitchen revamp in Columbus was $42,364 and yielded a return of $16,618, or 39 percent. The same upgrade in Indianapolis cost $42,564 with a return of $18,000, or 42 percent.

Supply and demand

Why doesn't the Queen City perform favorably against other national metro centers? Supply and demand. Real estate in cities such as Los Angeles, New York and Atlanta is appreciating at a faster rate than Cincinnati, said Jim Cory, a senior editor at Remodeling Online and author of the 2002 Cost vs. Value Report. The 2003 report is expected to be publicly available in mid-November at remodelingmagazine.com.

"When you see a run-up of housing prices in a given market, that means any type of improvement in the property makes it that much more valuable when it changes hands," he said.

In contrast, in markets such as Cincinnati and Columbus, where rising home appreciation often is concentrated in the suburbs instead of across an entire market, the overall rise in home values is lower, thus major remodeling projects often bring lower rates of return, Cory said.

Still, if you get an itch to modernize your home, here are the five remodeling projects in Cincinnati that are likely to bring the best return, according to the Remodeling Online report:

• Upscale bathroom remodeling. Average cost: $22,274. Value at home sale: $19,167. Cost recovered: 86 percent.

• Adding a second story to a home. Average cost: $69,708. Resale value: $55,701. Cost recovered: 80 percent.

• Master suite (upscale). Average cost: $131,096. Resale value: $103,333. 79 percent.

• Basement remodeling. Average cost: $42,147. Resale value: $30,450 Cost recovered: 72 percent

• Bathroom addition (midrange). Average cost: $14,584. Resale value: $10,250. Cost recovered: 70 percent.

Cory's report focuses on return a homeowner can expect if selling the property a year after the remodeling is completed.

He said many variables can influence the return a remodeling job might bring, including overall value of the home and the rate at which homes in the surrounding neighborhood are appreciating in value.

And in areas where property values are flat or declining, major money spent on remodeling probably won't harvest a good return, he said. In contrast, in neighborhoods where home values are rising fast, the return could be higher than average.

Longer horizon

Realtors and executives of some large remodeling companies in the Tristate contend the horizon for measuring the impact of a major remodeling should be longer in term.

The better measurement of return is possibly a longer period such as 5 years, said Neal Hendy, president of Neal's Remodeling in Dent.

"If you're making that big of an investment, you'll get a higher return over that period and possibly benefit even more if your neighbors also are doing some remodeling during that time."

Steve Zimmer, president of Steve Zimmer Remodeling in Blue Ash, said most of his clients have remodeling done for the long haul and not as short-term investments. He also said most of his clients are more concerned about how much a remodeling project will cost rather than the return on investment, though many ask about that as well.

"The biggest concern seems to be what value will they get for their dollar," Zimmer said. "They want to know if I spend $50,000 on a kitchen remodel, will it be worth the money and if they will be happy with the work that's been done."

Sandra Butler, vice president and sales manager at Sibcy Cline Realtors in Springdale, said a home with an updated kitchen and bathroom typically is more saleable than a home in well-worn condition.

Butler said that's particularly true when comparing homes in the same neighborhood and in similar price ranges.

"Most buyers want homes that are pretty much in move-in condition and don't want the hassle or expense of upgrading the home," she said.

She also said consumers should be cautious about over-improving homes. For example, if the home is in an area where the average value is $125,000 and a consumer does a $30,000 upgrade, it's unlikely the home can be sold for $155,000.

"It's not likely a person would recover the full $30,000 because they've outpriced the market with that improvement," Butler said.

E-mail jmckinney@enquirer.com