Questions about "adding value"

[Matthew Lewis]

So I totally understand how to add value to a rundown property by doing the work myself -- it's good old-fashioned sweat equity (more properly termed "trading time for money.")

What I don't understand is how it works to add value (at least profitably) by hiring it out. I mean, every realtor I've ever discussed home improvements with has basically the same list of improvements, and all of them claim a negative ROI. For instance, spend $10k on a kitchen remodel, increase your value by $8.5k (or whatever, but it's always less than the expense).

I figure I must be missing something, because BiggerPockets is full of investors talking about their contractors, etc. I just don't understand how to hire out the improvements and still make a profit on them.

Could someone explain how this works?