Examining Potential Return on Investment for a Remodel
February 27, 2017 | nella
Whether you are considering the purchase of a new home or preparing to sell the home you currently own, putting some thought into potential home improvements in order to increase the value and overall appeal of the home is common and smart. Gathering all types of information, including how much the project could cost, how long it should take to complete, and calculating the possible return on investment and then evaluating whether taking the project on is worth it is a must.
Below is an evaluation of a few midlevel-remodeling projects, which typically offer the highest return on investment.
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 renovation projects are the same. “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, while these rooms can be the most costly to redo they are also more likely to pay for themselves and make you some money when you resell the property. Adding rooms, such as a family room or a new master suite, also tend to do very well for resale value, since larger homes translates into the ability to start with a higher asking price.
Other points to take into careful consideration:
- Swimming pool additions rarely return their cost, because buyers are typically not willing to spend the higher amount of money 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. Sprucing the home up improves the overall look and attractiveness of the property.
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. Remember that just because you may be drawn to certain features and colors, does not mean that everyone else will, so better to remain classic and neutral with colors and features.