After living in a home for some years, it’s natural to start looking around and wondering whether it’s time to upgrade a few things. My parents, who have been in their home for more than 20 years, recently remodeled their kitchen and their master bathroom.
It’s a good thing that they don’t want to sell the home anytime soon, though: the return on these projects, in terms of improved home value, isn’t likely to offset what they spent. In fact, according to the 2015 Cost vs Value report, the major kitchen remodel will only return 67.8 percent, while the bathroom remodel will return 70.0 percent.
Home Improvements with the Highest ROI
Every year, the publication Remodeling issues a report breaking down the home improvement projects that offer the best return for the money — at least when you plan to sell your home. If you are getting ready to sell your home, ditch the large-scale interior projects and instead focus on smaller projects that make a good impression. Here are the top home improvement projects in terms of ROI on resale value:
- Entry Door Replacement: If you replace your front door with an attractive steel version, you will recoup 101.8 percent of the cost, according to Remodeling. It’s a relatively inexpensive project, but it adds to the curb appeal of your home, and that first impression is important.
- Manufactured Stone Veneer: You can recoup 92.2 percent of the cost of this project. Once again, it adds to the curb appeal. However, it will likely cost you more than $7,000.
- Garage Door Replacement: Recoup 88.4 percent of your outlay when you replace your old garage door.
- Siding Replacement: Get new vinyl siding (to complement your manufactured stone veneer), and recoup 80.5 percent of the cost.
According to Remodeling, you are likely to spend close to $22,000 to complete those four projects. However, your home’s resale value will go up in a way that allows you to recoup a good percentage of your outlay. On top of that, it’s hard to put a price on the impression that curb appeal makes. Compare that outlay to spending more than $50,000 on a major kitchen remodel that will only allow you to recoup about 67.8 percent. A few cosmetic touches, or a minor kitchen upgrade that is much less expensive, makes more sense for the interior.
Considering the ROI on your home improvements is important because the cost is likely to be higher than the state cost. Most homeowners borrow against their home equity to make upgrades, and that means they have to worry about paying interest on loans and lines of credit. If you sell soon after completing your remodel, you probably won’t realize any gains at all.
Improvements for Your Own Comfort
In my parents’ case, they aren’t too fussed about the cost because they expect to live in their home for another 20 or 30 years. They’ve been slowly upgrading the home (new paint and carpet in addition to the heftier remodeling projects) over the last six or seven years. They have almost got the home to the point that it is exactly as they like it — and that allows them to live in comfort.
If you are more interested in remodeling the home so that it becomes more comfortable for you and your family, recouping the cost might not be as important. The longer you plan to stay in the home, and less interested you are in selling, the less it matters if you recoup your costs.
Another consideration is what you plan to use the space for. Adding an attic bedroom (recoup 77.2 percent) and another bathroom (recoup 57.8 percent) for more than $90,000 combined isn’t going to help you much when you decide to sell the home. However, if you plan to rent out the space, you might be able to recoup some of your outlay on top of the increase in home value.
In the end, it’s important to understand your goals when you improve your home. Decide the reasoning behind the remodel, and then focus on the projects that will best help you reach your goals.