Who doesn’t want a master suite? An upscale bathroom, spacious room and a closet large enough to sleep in sure does sound luxurious. But are you adding that master suite simply for enjoyment or with the forethought you might sell one day? Before you call the contractors over, you should analyze the return on your investment for your Los Angeles home.

What does “Cost Versus Value” mean?

Cost versus value analyzes the total cost of the project – including supplies, labor, etc. – and compares it to the value you add to your home. Then from there you can calculate your return by dividing the current value versus the cost to see your ROI percentage. For example, if you spent $100,000 on a remodeling project, and it added $80,000 value to your home, you would have an 80 percent ROI on that money spent. Cost and value can be measured against national averages however it’s always a good idea to look closely at your region and city to be the most informed homeowner.

Analyzing the Return on Your Investment for a Master Suite

According to Remodeling Magazine, a 24-by-16-foot master suite in a Los Angeles home averaged $122,188 to build in 2014. The value that was added at time of sale was only $98,751, which equates to an 81 percent return. This return could be beneficial if you plan on staying in your home for a while. Because, square footage added to your home is square footage. But, if you plan on selling your home in the next few years, you will be taking a loss on the investment.

The Pacific Coast states have the highest average cost recouped on a master suite addition.

Comparing to Other Areas

Nationally, the same addition would cost a homeowner $103,844 in 2014 and receive a $70,121 value addition, or a 67.5 percent return, on the investment. That means Los Angeles actually has a higher return rate than the national average. The regions with the lowest ROI on a master bedroom remodel are Middle Atlantic and the West North Central states.

Comparing to Past Years

In 2013, the national average cost for a master suite addition was $101,873 with a $64,390 return (or a 63.2 percent return). For Los Angeles, the average cost was $119,724 and the return was $88,170 in value for a 73.6 percent return. So, 2014 obviously shows a substantial increase in not only the upfront cost, but the overall return.

Before You Remodel

Before you add on to your home or start a remodeling project, consider your motivation, costs (including permits), and professionals. Even an 80 percent return means a loss at first.

Thinking of starting a remodeling project? Read what you should know before hiring a remodeling contractor and tips for what projects to DIY versus hiring a professional.

Top image credit: De Meza + Architecture, Inc.