NAHB Looks at Residential Remodelers’ Cost of Business

by Kacey Larsen

The recent National Association of Home Builders (NAHB) Remodelers’ Cost of Doing Business Study: 2017 Edition shows that a typical remodeler’s net profit margin increased to 5.3 percent in 2015, up from 3.0 percent in 2011. Remodelers reported an average $1.8 million in revenue for 2015 when combining all sources. From that $1.8 million, $1.3 million (71.1 percent) went toward the cost of sales items—like labor, materials and subcontractors—which leaves a gross profit of roughly half a million dollars or 28.9 percent of revenue.

After also spending an average of $420,000 in operating expenses—general and administrative expenses, marketing and finance expenses—remodelers ended the 2015 fiscal year with $95,000 in net profit (5.3 percent net profit margin). The gross and net margins from 2015 were higher than the last two times—2003 and 2011—similar surveys were conducted.

Residential remodelers reported total assets averaging $414,000 on their balance sheets in 2015—about $279,000 (67.5 percent) of that was backed up by liabilities with the remaining $135,000 (32.5 percent) held as owner’s equity. While history for this series is limited, the share of assets backed up by liabilities went from 62.5 percent in 2003 to 67.5 percent in 2015, and remodelers’ average assets were higher in 2015 than the numbers recorded for both 2003 and 2011.

Learn more from the NAHB’s look at how much residential remodelers earn in a year here.

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