Thinking about installing a new deck, replacing a front door, or even adding an entire master bedroom to your home to help increase its resale value? Considering that your home is one of the biggest investments you’re likely to ever make, it makes sense that you’d be interested in increasing its value through remodeling.
This is especially true if you have plans to eventually sell your home, whether immediately or further into the future. But as you probably guessed, not all remodeling projects are created equal when it comes to their anticipated return on investment (ROI).
There’s no perfect formula for increasing your home’s value through remodeling. However, you can make an effort to choose financially beneficial projects if your primary concern is getting the best return on your investment.
Using Remodeling Magazine’s Cost vs. Value 2020 report , which compares the average cost of 22 remodeling projects in 101 housing markets, we’ll cover some of the most popular home improvements, based on estimated ROI. And we’ll include a breakdown of the estimated time and costs involved in each project.
For additional information on remodeling project ROI, use this https://www.sofi.com/home-project-value-estimator/ to get an idea of what value each project could add to your home.
Things to Consider Before Starting a Home Improvement Project
Before diving in, it’s important to understand that the decision to remodel requires more consideration than relying on what national averages for remodeling ROI tell us. For one, both costs and preferences for amenities and styles vary by geographic location.
You might also want to consider hiring a general contractor, real estate agent, or an appraiser to come to your house and give an opinion on what remodels could provide the most value for your money spent.
But for most people just figuring out the average ROI isn’t the only consideration. Many folks remodel their homes because they want to upgrade or add a specific feature or amenity for their own immediate needs, with the hope that it will increase a home’s value in the long run.
If this is the case for you, you’ll want to consider the trade-off between what you want and need, how much you are willing to spend, and what the potential ROI could be.
For example, if you really need to add an additional bathroom, it could be worth the cost even though the Cost vs. Value report we’re using to estimate ROI for this article says that you’ll only recoup 54% of your expenses for your project.
Top Home Improvement Projects to Help Increase Your Home Value
Garage Door Replacement
Average Cost: $3,695
Costs Recouped: 94.5%
General Time Commitment: A few days
Removing an old garage door and replacing it with an attractive, sturdy new one could return nearly every dollar of your initial investment, according to the Cost vs. Value report. It’s an effective way to improve your home’s appearance from the outside while increasing your home’s functionality for years to come.
With an average cost of $3,695, which includes the door and the cost of labor, it’s also a relatively affordable renovation. While most folks would likely hire someone to help install the new garage door, it is something that you could potentially do on your own (with the help of a friend).
This would be a project you could do in a weekend. If you hire someone to install the door for you, they will likely come to your home twice: First, to take measurements and give you a quote, and then again to install the door.
Manufactured Stone Veneer
Average Cost: $9,357
Cost Recouped: 95.6%
General Time Commitment: One month
Removing the vinyl siding and adding a stone veneer to the bottom third of your home’s street-facing façade is an effective way to help increase the value of your home, returning 95.6% of the cost of renovation. First impressions matter when it comes to selling a home, and stone veneer is a popular look right now.
Whether you tackle this project yourself or hire a handyperson to help with the installation, this project will take several days to complete. If you hire someone, understand that the construction days might not be successive, so the exterior of your home could be under construction for several weeks to a month.
Minor Kitchen Remodel
Average Cost: $23,452
Cost Recouped: 77.6%
General Time Commitment: Four to eight months
Whereas the Cost vs. Value study reports that major kitchen remodels ($68,490-$135,547) recoup only 58.6%-53.9% of costs ($40,127-$72,993), a smaller remodel appears to do a better job at retaining the value of the dollars put into the project.
A minor remodel includes things like replacing cabinet fronts with new shaker-style wood panels and drawer fronts, replacing the cooktop, oven range, and refrigerator with new models, replacing the countertops and floors, and installing a new sink and faucet. To stay on budget, consider using mid-priced appliances.
It would be very difficult to make it through a kitchen remodel without the help of experts, such as electricians, plumbers, and contractors, so you may have to put some extra effort into coordinating. You’ll also want to be realistic about how long you can devote to the project — and be without a working kitchen. Expect several months at minimum for a kitchen remodel.
Wood Deck Addition
Average Cost: $14,360
Cost Recouped: 72.1%
General Time Commitment: Three to six months
Nothing beats enjoying family and friends on a deck in your backyard on a sunny day. Potential buyers are typically rightfully happy to pay extra for a deck, and a wooden deck installation could recoup 72.1% of what you spend.
Ideally, you’ll also get the chance to enjoy the deck before you sell your home.
Understandably, a deck installation is a pretty large project, by both dollar cost and the cost of effort. You’ll likely want to hire the help of a designer or architect to map out an initial plan, and a contractor to do the building work.
You can attempt to do the project yourself, but be certain that you know how to build a deck that will pass an inspection and adhere to your city’s building codes. In considering whether this is a good investment, remember that building a deck may increase your property taxes and home insurance.
Check out this Home Improvement Cost Calculator to find out an estimate on how much each renovation project could cost.
Entry Door Replacement (steel)
Average Cost: $1,881
Cost Recouped: 68.8%
General Time Commitment: One week
A new, safe front entry door is an attractive quality to prospective homebuyers. Replacing your entry door and jambs with a steel door, “including clear dual-pane half-glass panel, jambs, and aluminum threshold with composite stop,” should get you a good bang for your buck, according to the Cost vs. Value report.
Of all the projects covered by the Cost vs. Value report, this one should take the least amount of time and effort. You can do it yourself (preferably with an extra set of hands) or hire an installation expert. If you go this route, you can have them come to your home to do the initial measurements and return for the installation, or you can measure and order the door yourself, and just get help with installation.
Remodeling Projects With the Lowest Potential ROI
Master Bedroom or Bathroom Addition
Average Cost: $136,739 for midrange, $282,062 for upscale
Cost Recouped: 58.5% for midrange, and 51.6% for upscale
General Time Commitment: Four to eight months
The Cost vs. Value report considers master bathroom and bedroom additions in both midrange and upscale homes, and neither returns much more than half of the initial investment. While not a great return, a home addition project of this size does offer a larger overall change to the value of your home.
For example, a $300,000 home that adds a master suite for $136,739 could potentially return about $80,000 on the investment. A home that sells for $380,000 instead of $300,000 is a 26% increase in the home’s value. If you were to get enough use from the addition to justify the other cost you can’t recoup, it could still be a fine investment.
Again, these figures are purely hypothetical, and the value of expanding your home can depend on a multitude of factors.
Average Cost: $49,598 for midrange, $91,287 for upscale
Cost Recouped: 54% for midrange, 54.7% for upscale
General Time Commitment: Four to eight months
A regular bathroom remodel is not as costly as a master bathroom addition, and it boasts a slightly better potential ROI. Again, a bathroom addition or any large remodeling project should be considered in terms of both ROI and what you want to get out of your home while you are living in it.
And that’s a calculation that only you and your family can make — consider your potential usage and whether it makes the difference between staying and having to relocate to a larger home, which would also come with its own set of costs.
Making it Happen
As you can tell, determining the best home improvements for your personal situation usually requires more consideration than simply looking at current home remodeling ROI trends, though ROI numbers can definitely help inform your decision.
You also have to consider what you need and want out of your current home, and whether both the relative and absolute cost of taking on a big project is worth it.
Your time and personal efforts should be considered as well. In an ideal world, you’d settle on a project that will allow you to maximize the enjoyment you get out of your home while also adding ROI value.
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