Working to improve your current home is a constant battle between finding upgrades that you like and make you comfortable, versus integrating new styles and upgrades to your home that add value. While you currently reside in your home, you constantly want to be thinking about different upgrades that can bring additional value to your home when it comes time to sell. When weighting the pros and cons of various upgrades and home improvements, it is always important to find the right upgrades that will bring the biggest return on your investment. By honing in on lucrative upgrades and avoiding common pitfalls, it is possible to get the most return and value out of your current home.
Table of Contents
- What is ROI?
- The Best Home Improvements by ROI
- Home Improvements to Avoid
- How to Budget for Home Improvements
- Maximize Your ROI on Home Improvements
What is ROI?
ROI is an abbreviation that stands for Return On Investment. This is a common term that is used when analyzing the value or worth of a home improvement project. Although many home improvement projects take initial funding to start and complete the project, the ROI measures the amount of value your home gains at the completion of the project. For some projects, only a minimal financial investment is required to create a large growth in value. These projects have a high ROI and would be well worth your time and money. Projects that have a large initial financial commitment, with minimal value added to the home are said to have a low ROI, and should be avoided.
The Best Home Improvements by ROI
Finding home improvement projects with a high ROI are key to building value in your home for minimal up front costs. These projects can make a big impact on your home, increasing value and driving the market for potential new buyers. Of course, before diving into a home improvement project. Be sure to consider your own comfort and style before going after projects simply intended to raise the value of your home. While increased value is always welcomed, it should not come at the expense of your own comfort and taste.
New Front Door
The front door of the home is really an inviting entrance into your space’s interior. The front door can speak volumes for what lies just beyond the exterior of your house. Adding an interesting front door gives you a chance to showcase your house, and set your home apart from neighbors. When adding a front door, consider adding design elements like additional accent windows or dramatic new height. Although a high quality front door can be a bit more expensive, this is a perfect opportunity to build value in your home. If you can’t replace your door, replacing the doorknob can also be a good way to freshen up the look.
Minor Kitchen Remodel
In the kitchen, a minor DIY renovation might be just what you need to increase the value of your home and give your space a fresh and modern look. Sometimes simply adding upgraded countertops or a trendy backsplash can add enough modernization to your space to really increase a home’s value. It is important to not go overboard in the kitchen, as it can be easy to spend thousands of dollars on upgrades. While the latest appliances and modern cabinetry are beautiful to look at, they can also carry a hefty price tag. Consider updating your appliances as needed, or refinishing rather than replacing existing kitchen cabinets.
Minor Bathroom Remodel
Just like the kitchen, the bathroom has loads of potential to increase the value of your home. Keep bathroom remodels simple and small. Adding a new vanity or countertop can go a long way and not hurt your budget. A fresh coat of paint and some new lighting can really enhance a space. Of course, a complete bathroom renovation can completely transform a space, but will also cost a great deal of money that you may never get back out of the sale price of your home. Small DIY plumbing projects like replacing faucets can also be easy ways to add value back into your home with tool sets and kits you already have.
People want to enjoy a beautifully landscaped yard that involves minimal effort. Hiring a professional landscaper to help you design your yard can pay off big when it comes time to increase the value of your home. Simply adding some manicured beds, beautiful trees, and perennial flowers can boost the value of your home and highlight your yard. Perennials are a great value because the flowers return year after year, with minimal care and upkeep. Remember to keep landscaping efforts within reason though. Too much landscaping can distract from the yard and appear as a tremendous amount of work for potential new buyers.
Stone Veneer Accents
This rustic northwestern architecture style is really popular right now, which includes wood timbers and stone accents. Adding stone veneer accents to your house is surprisingly affordable and gives your home a timeless look. Stone veneer accents are the perfect way to highlight the unique architecture of your home, or can really help make a feature, like a bay window or chimney, stand out.
To spruce up the exterior of your home, new siding is a relatively inexpensive addition to any home. Not only will this give your house a finished and updated look, but it is a great way to enhance the value of your home. Plus, adding a high quality siding to your home, such as Hardie board, that has excellent performance ratings can really increase the overall efficiency, and value of your home.
Painting can be time consuming and potential buyers love to see that this needed project is already checked off the list. Luckily, pain has the ability to completely alter the look of your house. Dingy, dark, or dated colors can make rooms feel smaller and the house seem less desirable. A fresh coat of paint in neutral colors has the ability to completely transform a space. Fresh paint is also a great way to hide the spackle from filling holes in drywall. Consider painting beyond just the walls too. A fresh coat of paint on doors and baseboard can completely update and brighten any home’s interior. Painting is an easy project that can be completed by the home owner for minimal cost.
Although a relatively large project to add to our list, a finished basement can bring a large return on investment. Not only can a finished basement make the house appear to be complete, but it can give valuable square footage to the home. The basement can function as a game room, play room, or even additional bedroom that can make the value of your home skyrocket.
Deck Or Patio Addition
If you live in an area where you can take advantage of your outdoor space you can immediately increase the value of your home. For a minimal cost it is possible to add a patio or a back deck area. Not only is this a great way to highlight your fantastic backyard, but it increases the useable square footage of your house. Potential buyers will see that there is an outdoor area that is perfect for hosting parties, entertaining family, or allows a place for children to play. Depending on the size and complexity of your deck or patio addition, many can be added for minimal costs.
Home Improvements to Avoid
As tempting as it may be to take on any and all home improvement projects to increase the value of your home, there are a few projects that home owners should avoid. Not only are these home improvement projects costly, but they see minimal return on investment. Despite adding appeal to the home, the trade off between the cost and resale value just isn’t enough to warrant the time and effort required.
At first appearance this home improvement seems to makes sense. A new sunroom will add square footage to your home and provide an enticing new space for your family to spread out. It is like adding a deck, but one that can be used all year long. Unfortunately, adding a sunroom is a tremendous project.
To do so properly, you need a proper foundation, exterior siding, and internal insulation and temperature control to make the room comfortable. Not only does this mean that you are taking on a hefty project, but you are adding a significant amount to the overall cost of the project. If done incorrectly, you will be stuck with an unstable room that is too hot in the summer and too cold in the winter, which can ultimately become a burden for potential new buyers.
Metal Roof Replacement
The appeal seems to be present up front with a long-lasting and durable metal roof. Unfortunately, when comparing the price difference between a metal roof and a traditional shingle roof, the pay off just doesn’t exist. Modern shingle roofs can easily be added to any home and many can last for 50 years or longer. Plus, traditional shingle roofs can be installed for a fraction of the cost compared to a metal roof replacement. If you’re considering a metal roof because your current roof is leaking, it’s much more effective to simply fix the leaky roof.
Master Bedroom Addition
Having a private sanctuary to escape to at the end of the day seems like it would fetch a high sales price for the resale value of your home, but again you must consider the cost. If adding a complete addition to the home there are many costs to consider including additional foundation, exterior components, wiring, heating, and cooling. If you are taking unused space from your current home layout, you really are not increasing the square footage of your home, but really just pulling away from an otherwise potential space in your house.
Upscale Professional Landscaping
While some professional landscaping help can boost the overall value of your home, adding too much can be a detriment. Upscale professional landscaping is beautiful, but ultimately can show diminishing returns. Upscale and exotic plants and shrubs may have a high price, but really look no different to traditional plants to the untrained eye. For this reason, avoid costly upscale landscaping and stick with the tried and true basics that people know and love. Instead of upscale landscaping, spend some of that money on fixing cracks in your sidewalk or driveway or install new gutters on your roof.
How to Budget for Home Improvements
There is no way around it, home improvements are expensive. When it comes time to start a home improvement project, make sure you fully research what you want done. This way, you have a plan in place and limit the surprise expenses. Depending on the size and scope of the project, it may be necessary to budget appropriately for the home improvement project. Be sure to talk with your contractor about the scope of the project before you start. A good contractor should be able to give a cost estimate and price breakdown of everything he or she is doing for the home renovation project. Not only will this help you see where your funds are going, but it can help you make cuts to the project if necessary.
Keeping a separate savings account, or limiting frivolous expenses can help free up money to fund the project. Further, many contractor companies will work with you to set up convenient and easy financing options. This way you are still able to get the home improvement project you have dreamed of, without having to spend a great deal of money up front. Financing options are sometimes available at little to no interest and can allow you to tackle a larger project than you thought, because the expense is spread out over months.
Maximize Your ROI on Home Improvements
Not only does a new home renovation project help to make your current home more comfortable and livable, it can also help to increase the value of your home. An increased value can not only be beneficial when it comes time to sell your home, but it can help you grow your equity and use your home’s value for future projects and home equity loans.
The important factor to remember before starting a home improvement project is to consider the return on investment. There are several feasible projects that cost a minimal amount of money, such as minor remodels, exterior upgrades, and interior upgrades, that can have a big impact on the overall value of your home. Consider these minimal changes to your home and avoid the common pitfalls to maximize the returned value on your home.