Many of the most exciting home improvements definitely increase our enjoyment of the home but don't add nearly as much to property value. If you're looking to break even on a project by spending a certain sum now and getting all of it back when you sell, you will want to focus on the projects with the best return on investment (ROI).
Projects with the best ROI are often not the sort of flashy upgrades we see on reality television. You know the scene: An excited homeowner steps through the door of her newly renovated home to see the finished work for the first time. "Oh my gosh!" she cries, cupping her mouth with her hands.Get Free Quotes
Transforming one's home and yard into more livable and enjoyable spaces is worth getting excited about, and it makes good TV, but strictly in terms of investment, the flashier upgrades can't compete with the ROI of more mundane improvements.
Take for example adding a swimming pool: a summertime dream, a kid's best exercise, the ideal centerpiece of backyard cookouts and birthday parties. The cost of installing an average-sized, 14x28-foot inground pool is about $50,000 and will raise home value by 5% to 8%, according to real estate experts via HGTV. So if your home was worth $350,000 before the pool, it could be worth $28,000 more (8%) after. That's just over half the cost of adding the pool, not even close to breaking even. The ROI for a $350,000 home is 56%, to be exact.
The pool example shows that if you really want an upgrade or addition to your home and you can swing it financially, make yourself happy first and consider any bump in property value later. You would install a pool for the value it brings to your family's life, not necessarily the home. Pools make for long-lasting memories and great photos. You can't put a price on home pride and togetherness.
Home Improvement: The Unglamorous Truth
The unglamorous truth about home improvement projects is that one of the best returns on investment comes from . . . attic insulation. You won't see that in the big reveal scene at the end of a home improvement show ("Oh my gosh! The insulation is amazing!").
Despite a swell return on investment, attic insulation is too mundane, too humdrum and real, for reality TV. According to a survey by Remodeling magazine, for every $100 spent on attic insulation, you can expect to recoup $116.90 when you sell the home. That's an ROI of almost 117%.
If you really want an upgrade or addition to your home and you can swing it financially, make yourself happy first and consider any bump in property value later.
Around the country, home prices have been rising independently of home improvements. Homeowners who sell are getting higher prices than they ever expected simply due to timing, without lifting a finger. At some point the market will readjust, so let's look at some relatively simple projects that increase your home's value.
Improve curb appeal.
An investment in fresh paint, fixing broken roof tiles, landscaping, and upgrading other features of your home's exterior typically brings a 100% return.
"By itself, having good curb appeal won’t sell your home," says real estate advisor Fritz Alders. "But it will get prospective buyers out of their cars and into your home."
Minor bathroom upgrade.
Little improvements in the john can raise home value a lot. Recaulk and glaze the bathtub, replace the toilet, repaint the walls, or swap out carpet for hard flooring.
If you're ready to take on a bigger upgrade, consider dual sinks, because "a dual sink in a home with a single bathroom can be a buyer's dream," says Realty Times. "Updated appliances are also very attractive to buyers, even if you only change the faucet and the showerhead."
Stick to minor upgrades like refaced cabinets and new appliances to see the biggest ROI. The sledgehammer renovations that make for such good TV are quite expensive and an ordeal for homeowners.
Add outdoor living space.
Tricking out a patio with a firepit and more seating is a cost-effective means of adding living space. Same with building a wooden deck. It is estimated that you can expect a 75% return on investment when you build a deck.
Don't expect a wow factor from the home improvement project with the best return on investment, attic insulation. What this upgrade lacks in excitement it makes up for in energy efficiency, lower power bills, and a 117% ROI when you choose to sell.
When considering your next home improvement project, take ROI into account, but also think of intangibles like fun and togetherness. An upgrade you and your family can enjoy all the time is worth every penny.Get Free Quotes