A Deeper Look at Return on Investment Prior to Renovations

Whether you are considering the purchase of a new home or preparing to sell the home you currently own, putting some thought into home improvements in order to increase the value and appeal of the home is common and smart.  Gathering information including how much the project could cost, how long it should take to complete, and the possible return on investment and then evaluating whether taking the project on is worth it is a must.

See below for an evaluation of a few midrange remodeling jobs, which typically offer the highest return.

Remodeling Job                                 Estimated Cost          Return on Investment

Entry door replacement (steel)       $1,137                        85.6%

Deck addition (wood)                       $9,327                        77.3%

Garage door replacement                $1,497                        75.7%

Minor kitchen remodel                     $18,527                      75.4%

Window replacement (wood)          $10,708                      73.3%

Attic bedroom                                   $47,919                      72.9%

Sliding replacement (vinyl)              $11,192                      72.9%

Window replacement (vinyl)           $9,770                        71.2%

Basement remodel                            $61,303                      70.3%

Major kitchen remodel                     $53,931                      68.9%

Not all remodeling projects are created equal.  “People buying a house look first at kitchens and baths,” says Kermit Baker, Director of the remodeling futures program at the Joint Center for Housing Studies at Harvard University.  So, why these rooms can be the most costly to redo they are more likely to pay for themselves when you resell the property.  Adding rooms, such as a family room or a new master bedroom, also tend to do well for resale value, since larger homes equals higher asking price. 

Other points to take into consideration:

·         Swimming pool additions rarely return their cost, because buyers are typically not willing to spend the higher amount for a feature that will result in higher maintenance costs.

·         Higher cost for a renovation project does not necessarily equal a higher return on investment, as minor improvements (such as painting, refinishing surfaces, and upgrading appliances) can often yield major dividends.

The key to spending money and time on a renovation/upgrade project is to spend wisely, take great care in design and product selection, and consider styles that will stand the test of time.  Aim for classic or neutral colors and styles that will be more likely to attract a wider array of potential buyers.