Real estate is always an investment, whether it’s the initial purchase of a home or calculating how much and on what you will invest in improvements down the road. Investing is, for the most part, predicated on one thing: making money.
Every decision you make impacts your bottom line, so upgrading your property without considering the return on the money you are spending is not a wise path to follow. Even if you occupy the last home you will ever own and your mortgage is paid off, the possibility will always exist that you MAY have to sell someday. Life happens, and it is entirely possible to lose money by making the wrong upgrades and updates.
We won’t concentrate on projects that simply don’t warrant the initial cost because we might be here all day. So let’s looks at projects that separate themselves from the rest, either helping you break even or even providing a return on your investment (ROI) when it comes time to sell. Focus on projects that don’t experience highs and lows and you are headed in the right direction.
Your entryway is the first thing buyers see — similar to the elegant approach to a resort hotel portending the lobby will be fabulous as well. And nothing has proven to be a better return on investment in recent history than a front door replacement. Steel entry doors have been known to return approximately 101.8 percent of their initial investment upon resale, according to experts. In fact, curb appeal in general makes your home more attractive from a buyer’s perspective – an invaluable addition to any remodel.
While the average cost to install a wood deck is just over $10,000 — no walk in the park, price-wise — wooden decks (or wood-like products used to build them) have become synonymous with great returns on their investment. Some experts suggest that building a wooden deck can recoup as much as 80.5 percent of the initial cost upon selling the home and depending on where you live, the ROI could be even more impressive. Decks are a bit of a luxury, we’ll admit. But decks are coming back and are now considered a great investment.
How about all that wasted attic space? Attic conversions to bedrooms or more living space is one of the most cost-efficient ways to improve the value of a home. Not only does the home’s footprint remain unchanged, but also there is no need to add walls, flooring, or even a ceiling. On average, experts say converting an attic space into an additional bedroom can cost more than $50K, but that is considerably less than building a new room from scratch. And when it comes time to sell the house, owners can expect to recoup as much as 77.2 percent of the initial cost.
Replacing your garage door goes hand-in-hand with replacing your front door not only increasing the value of your home, but also increasing your home’s curb appeal exponentially. Costs can vary, with a mid-range prices at around $1600. Even if you choose to go fancy and add carriage doors made of real wood, however ROI hovers from 82.5 percent on a more modest investment to 88.2 percent on those fancy doors.
Siding, whether its vinyl or fiber-cement, can have huge impact on your home’s curb appeal, with benefits far beyond the cosmetic. Fiber-cement siding offers longevity even stucco or wood could never match and resists termites, moisture, rot and fire. Fiber-cement has one distinct advantage over its vinyl counterpart: perceived quality. Homeowners can expect to recoup approximately 84.3 percent of the initial cost of installing a fiber cement fascia to their home. Vinyl siding gets you up to an 81 percent return, offering a lightweight, low maintenance, low-cost alternative.
Window replacements have withstood the test of time, and still account for one of the highest ROIs on a remodel. It has been estimated that mid-range vinyl window replacements return as much as 77.5 percent of their initial cost at resale. Wooden window replacements (If you can afford them) may be the most efficient use of your rehabbing budget, however, increasing curb appeal, value and efficiency. The right windows can reduce a home’s carbon footprint for years to come, reducing both heating and cooling costs.
We can’t leave kitchen remodels out of this. It is, after all, the most important room in a home. Kitchen updates coincide with relatively high ROI rates, especially in older homes where kitchens were an afterthought. It is estimated that it costs around $20K to update a kitchen depending on where you live as well as how much gutting you want to do to your kitchen. The average return on investment, however, is 79.3 percent. The real benefit of a kitchen update, however, lies in its ability to attract potential buyers, since there is perhaps nothing else that can sell a home faster than its kitchen.
Source: Fortune Builders and TBWS