Everyone wants to upgrade their home, but some of these renovations won’t pay off long term. If you plan on selling your home within the next 3-5 years and care about getting a high return on your investment, follow these guidelines when choosing what to improve.
General Tips: Spend your money on what you will use the most. Don’t renovate your kitchen if you hate cooking – instead add a patio if you love the outdoors. Pay attention to the other houses in your neighborhood, and don’t upgrade too far past their homes. You don’t want to wind up with the most expensive home in the neighborhood, as ultimately you will lose value at resale.
Add Some Space: Increasing square footage generally always pays off. Pick what rooms you expand or add wisely – a sunroom, which only returns about 50% of what you spend on it, but adding another bedroom can open your home up to an entire new set of buyers. A deck can return up to 90% of the money you spend on it when selling. You don’t even need to add a room to create a sense of more space – knock down a few walls to create an open floor plan. Don’t price your home out of your neighboor, however.
Kitchens & Bathrooms: You can always tell if money has been well spent or not in these projects. A minor kitchen remodel costs around $20k and you will get back about 83% of the money you spend on it. Even paiting the cabinets and replacing appliances goes a long way. If you can afford it, add in granite or stone countertops. Don’t install too many high-end customizations, however, as these generally don’t add much value.
In the bathroom, forgo a tub for a walk-in shower if you don’t have room for both. A bathroom remodel only nets about 66% of the money you spend back, but even adding new fixtures, regrouting the shower, and repainting can completely change the look and feel of your bathroom. However, don’t spend money renovating your bathroom if you only have one. Instead, add another bathroom. Reducing the bedroom to bathroom ratio adds a lot more value than upgrading an existing bathroom.
Curb Appeal: We’ve got a great post on how to DIY some curb appeal quickly here, but some bigger investments are worth it when it comes to resale. Consider adding a front porch to break up a flat house. Lanscaping also pays off – just don’t go overboard. Replacing your front door and the garage door will return about 91% of the money you spent, and drastically boost your home’s exterior.
Attic Insulation: While this is the least glamorous of all renovations, it is the one that nets you the highest return on investment at 117% of the cost. Insulating your roof will not only improve the comfort of your home, but it will drastically decrease energy costs. You also get a tax credit of 10% of the cost, at up to $500 of the price of materials. While these tax credits don’t apply to installation costs, you can also get a credit for other air sealing products such as weather stripping, caulking and spray foam designed to air seal, and house wrap.
Finishing Touches: Some luxury items, like home theaters, built in cabinets, and wired in speakers can add value, but some aren’t desireable. Some green options – like installing Solar panels – are attractive in some markets, but a built-in compost bins might not be. Pay attention to the other homes in your neighborhood and follow suit.
What renovations have you completed on your home? Does anything not pay off in your area? Let us know!