When it comes to home improvement projects, one of the key considerations is the return on investment (ROI). The ROI measures the financial return or profitability that can be gained from a particular project. It essentially evaluates the value or gain generated from the investment made in improving or renovating a property.

Garage additions and renovations have historically shown positive ROI in many regions. The actual ROI can vary depending on factors such as location, the size and quality of the garage, and local real estate market conditions. Because of these factors, it’s important to note that there truly is no tried-and-true mathematical formula that precisely calculates ROI for home improvements – there will always be a variance.

To calculate the return on investment (ROI) for a garage project, you’ll need to consider the cost of the project and the expected increase in your property’s value as a result of adding the garage. Here’s a simplified formula:

ROI = (Net Gain / Cost of Project) x 100%

Cost of Project: This is the total cost of building the garage. Make sure to include all expenses such as materials, labor, permits, and any additional costs related to the project. Let’s assume the cost of your 22 x 23 garage project is $30,000.

Net Gain: To calculate the net gain, you’ll need to estimate how much the addition of the garage will increase the value of your property. Let’s assume the garage adds $40,000 to the value of your home.

ROI = ($40,000 – $30,000) / $30,000 x 100% ROI = ($10,000 / $30,000) x 100% ROI = 33.33%

In this simplified calculation, your estimated ROI for the two car’ garage project is 33.33%. This means that for every dollar you invested in building the garage, you can expect to gain an additional 33.33 cents in home value.

Keep in mind that real estate markets can be complex, and the actual ROI can vary greatly based on many factors including local market conditions and the specific features such as the size and the quality of construction.

Expert Tip: The only official way to calculate the net gain of the improvement is to determine the home’s value after the improvement is made. There is a unique type of appraisal called an “as-completed appraisal” where an appraiser will look at your renovation plans and your current home value and determine how much value the improvement will add to the property value upon completion. 

This type of appraisal is  normally completed if the home owner is  applying for a “renovation loan” and is based on the equity of the home , however this type of appraisal  can also be used by the home owner to see exactly how much value you are getting from your new improvement.

Remember, every home improvement project is unique and has its own set of variables. Your garage serves as more than just a place to park your car; it can be a valuable asset that adds both functionality and appeal to your property. Whether you’re looking to sell or simply want to understand the worth of this space, evaluating the value of adding a garage is an important step in maximizing your home’s overall value.