The following is a guest post.
Although most home remodeling projects wouldn’t be categorized as “splurges,” many are based less on necessity and more on funds available and the possibility of a good return on investment (ROI). But how do you know which home remodeling renovations are worth shelling out the cash for or are better for using home equity, and which ones you should skip? Read on to find out just how good a return some of the most popular home projects offer.
Depending on where you live in the country, most home remodeling projects don’t offer the dollar-for-dollar return of the past. According to First Realty, you should always be sure to keep your home’s property value within 15 to 20 percent of your neighbor’s. With that in mind, consider these ROI guidelines when deciding which home projects to start:
80-100 percent ROI:
- Energy-efficient fireplace – The addition of a vent-free gas fireplace will likely have the highest return on investment of any upgrade you can make. And until you sell, it’s a great way to help heat your home in the colder months.
- Kitchen remodels – A kitchen remodel is often one of the best investments you can make to your home. Whether putting in all new appliances or installing new cabinets, counters and floors, close to all of the cost will probably be recouped when you sell.
- New bathroom or renovations – Adding an additional bathroom or upgrading the ones you have can have a very high return. Whether it’s a new vanity, tub or even new fixtures, the money you put into your bathroom will typically have a high ROI.
- New room addition – If you’re thinking about adding a family room or an extra bedroom onto your house, consider the high ROI you can expect in return.
- Master suite remodel – This often-simple upgrade can really pay off in the long run and sellers often recover most of the cost. Think about closet organization, new floor covering or even a fresh coat of paint – most master suite costs will probably be recouped.
- New windows/doors – Not only do these upgrades help with energy-efficiency, they can give a facelift to the look of your home.
60-70 percent ROI:
- Deck – Most buyers like the look of outside living space, but until you’re ready to sell, you’ll enjoy the time spent on your new deck long after it’s paid for.
- Finished basement – Finishing your basement not only adds to the square footage of your living space, but it typically offers a good return.
- Remodeled garage – While a garage renovation may only pay off a little over half at point of sale, a clean, dry garage is always a good selling point.
- Landscaping – A great way to enhance your curb appeal yourself, landscaping can be an inexpensive way to update the look of your home and attract potential buyers. However, keep it simple. What catches the eye of some may be off-putting to others. At the very least, keep the lawns well-groomed and make sure weeds are at a minimum. Add one pop of color, whether it be a hanging flower basket in the summer or a bright pot of mums at the front door in the autumn. You want landscaping to add to the look of the home, not detract from it.
50 percent ROI and under:
- New heating system – Save money on energy costs and recoup almost half of spend with this upgrade.
- Exterior painting – While painting the outside of your house is time-consuming, doing it yourself can be an inexpensive project that could really pay off.
- Siding – While new siding may only reach 35 percent ROI, if you’re not interested in maintaining your home’s paint job every few years, this may be a great alternative.
- New roof – Re-roofing may not earn much back, but it may help your home sell for what it’s really worth, and that may be just as important.
- Skylight – While a skylight may be a great way to add natural light to a space, the addition of a skylight does little to raise a home’s value, making it one of the least beneficial investments you can make.
Whether you intend to invest in your home for your own use or to increase its resale value in the future, these guidelines will help you make wise money decisions for your family. And if you’re looking to make any of these home remodeling upgrades in the near future, consider using your home’s equity to finance your next project. Flexible home improvement financing is available and could be a great way to utilize the valuable equity you’ve built in your home.