Return On Investment for Home Improvement Projects

Many people undertake home renovations on older homes to update them; some are looking for upgrades to boost appeal for selling their homes. Home improvements don’t typically earn back the money put into them, so make sure they are improvements that increase your enjoyment of the property.

Mini-projects like adding decorative tile to a kitchen backsplash or to a bathroom, refinishing the doors on kitchen cabinets, adding new hardware to cabinet doors, replacing bathroom fixtures, replacing old light fixtures and painting are relatively inexpensive but can make an immediate visual impact.

Replacing carpeting, flooring and window coverings are a little more expensive but can also make a huge difference in first impressions. Finishing a garage with drywall and paint, adding lighting, even epoxy-coating the floor can add to the value of the home.

If selling the home is the goal, first consider making all needed upgrades or repairs to the major indoor systems (wiring, plumbing, heating and air conditioning). Buyers want this assurance and inspectors will be looking at these. Then consider functional aesthetics and outdoor curb appeal.

Replacement projects actually add more value than remodeling projects. Replacing the front door, garage door, siding and windows averages 72 percent return on investment (ROI), according to a National Association of Realtors report.

ROI increases when projects add more living space, or make the property more efficient or less costly to own or operate.

According to the 2010-11 Remodeling Magazine nationwide Cost vs Value report, these updates bring the best return based on their cost and the value they bring to the home.

• New front door: 102.1 percent

• New garage door: 83.9 percent

• Fiber-Cement Siding: 80 percent (vinyl siding returns 72.4 percent)

• Wood Deck: 72.8 percent

• Minor Kitchen Remodel: 72.8 percent

• Window Replacement: 67.5 (wood) to 72.6 (vinyl) percent

• Remodel for Extra Bedroom (unused space, e.g. attic): 72.2 percent

• Basement Remodel: 70 percent

• Major Kitchen Renovation: 59.7 (luxury upgrades) to 68.7 percent

• Two-story addition: 65 percent

This was a nationwide report and remodeling attics, basements and second-story additions are not typical for Southern California homes. Kitchens are typically the heart of a home and improvements there are add value.

The National Association of Home Builders did note that in 2011, the addition of a half-bath added 10.5 percent to a home’s value; a full bath, up to 20 percent.

A clean, well-maintained front yard with color, a strategically-located shade tree, and solar lights can add up to 10 percent.

Some improvements add to perceived value — alarm systems, water filtration systems, upgraded dishwashers, built-in wine refrigerators, spa tubs may peak the interest of luxury buyers.

The big caveat here is not to go overboard! The values of surrounding homes will play a part in determining the value of your home; you don’t want to make improvements that will price your home significantly higher than any thing else in the neighborhood and make it more difficult to sell.

You don’t want to put $100,000 of improvements into a $300,000 home that is in a $300,000 neighborhood. Unless you live in a neighborhood of custom or semi-custom homes, try to keep your upgrades within the values of the neighborhood.

Make improvements that you can enjoy. That value is priceless.

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