Home values today are skyrocketing and rather unlikely to decrease anytime soon. As a result, many are selling their homes, relocating, and downsizing for a quick profit. Of course, while many people may be going this route, others are continuing the trend of investing in home projects to turn their space into their dream home. With current prices, plenty of projects can be undertaken with a breakeven return on investment when selling the property, or in some cases, even result in a profit.
Whether you’re looking to finally turn your residence into your dream home, or looking to renovate a new home after relocating, we’ll go over some of the top projects that offer the best return on your initial investment.
If your home has a garage, updating the garage door can be a great return, with an average recoup of 94.5% in 2020. This would include not only the replacement of the door itself, but also all the hardware that goes along with it if it’s not perfectly functioning. It’s a good idea to replace the track for the door whenever you replace the door itself, as well as the garage door opener since they typically have a lifespan of about 10 years, or longer if you’re lucky.
Americans have such an attachment to their cars, that most prefer to keep their cars protected in a garage when not in use, so having a quality garage is something that’ll increase the value of your home. Upgrading the interior doesn’t have to be an expensive or a major undertaking either; something as simple as giving the floor an epoxy coating, rather than leaving it as bare concrete which can stain and crack, can add value. An epoxy coating enables easier cleanup when the inevitable road gunk gets tracked in or when your car springs an unfortunate leak.
The bathroom is another great room to renovate for a decent ROI. While the return for a bathroom renovation isn’t as high as the return for a garage renovation, it still works out to an average of 64%, which is nothing to scoff at. Part of the reason that this return isn’t as high is due to the increased need for specialist labor like plumbers and electricians, as well as the fact that there’s a high degree of customizability available in a bathroom remodel. The more customized a remodel is, the less likely you are to get a larger return on investment since the next homeowners are unlikely to have the same taste as you.
Similar to the decrease in ROI for bathroom remodeling as you add more customization, the same goes for a kitchen remodel. A major kitchen remodel has an estimated return of about 54%, so about $54,000 from a $100,000 remodel. However, a smaller kitchen remodel has an average recoup of 77% or $15,400 back after a $20,000 remodel. So, the best ROI can be achieved by updating your appliances and a straightforward resurfacing.
Kitchens are one of the most used rooms in a home, and as such are simultaneously one of the most likely rooms for accidents to occur. If you’re not intending to move anytime soon after you finish remodeling your kitchen, it might be worth your while to consider signing up for a home warranty plan to help protect your investment until you’re ready to sell the house. A home warranty will help cover things that wouldn’t normally be protected under a manufacturer’s warranty. For instance, if the pipes under your sink burst and the resulting water short-circuited your brand-new refrigerator, a manufacturer’s warranty wouldn’t be able to help but a good home warranty will.
Replacing your home’s roof is a great project that’s likely to improve your chances of selling the home and provide a ROI of up to 68%. A new roof is a prominent selling point because most home buyers don’t want to worry about replacing the roof anytime soon after purchasing the home. Additionally, with improvements in energy efficiency, a new roof is likely to save money on heating and cooling during its lifetime since an estimated 25% of a home’s heat is lost through the roof and attic.
Lastly, replacing your roof before it needs to be restored is just a great way to keep peace of mind, because by the time you notice that your roof needs to be replaced, it might be too late to prevent collateral damage to other parts of your home’s structure.
Paint and Siding
Of course, one of the first things that probably come to mind when thinking about an exterior renovation of your home is paint. But in reality, it’s very likely to be a better investment to opt for siding instead of paint. Siding comes in a large variety of colors while lending benefits such as improved energy efficiency, and improved durability, especially in homes with a lot of direct sunlight, as well as easier maintenance and replacement. All these benefits contribute to the reason that replacing your home’s exterior paint with siding can grant returns as high as 89%, and that’s just on the direct capital and doesn’t include the savings from the improved energy efficiency.
If your home doesn’t have a deck, then adding one can be a great project that can recoup an average of 70% of its cost. Not to mention that a deck will add a whole new territory for you to enjoy while you reside there, and you can’t accurately value the emotional return on your investment. Of course, the type of material that you use will affect your end ROI, with quality wood offering the greatest returns but a more lofty upfront cost, and composite materials offering a more affordable upfront cost but a smaller return. Adjacent to a deck, a patio is a viable alternative, but they don’t usually offer as large of a return unless it’s paired with luxury amenities such as an outdoor kitchen or a pool.
Undertaking any home renovation is going to be a big project, and it’ll likely cost you a good couple of thousand dollars, so it’s important to budget your money beforehand so that you have the funds to afford your project without a loan. While there’s nothing wrong with taking out a loan, it’s always a good idea to try to avoid taking one out whenever possible. You shouldn’t expect to get a full return on any home improvement project, as a portion of the return comes in the form of an emotional return by enabling you to find greater enjoyment in your home.
Always keep in mind that the more customized your project, the greater the emotional return, but the lower the financial return.
Jeff is a fan of all things finance. When he’s not out there changing the world with his blog, you can find him on a run, a Mets game, playing video games, or just playing around with his kids.