From a strictly dollars and cents analysis, almost all (but not all) home improvements make no sense (DIY projects should be judged differently than home improvements done by professional contractors, since they will have an inherently higher ROI on dollars invested).
In most cases, you are not going to get the money back you put into them. But is a home improvement going to perk up the quality of your life, make you proud of your house, improve your lot with the neighbors, make your life more fun? You cannot put a price tag on those.
However, be aware that even that emotional boost aka “enjoyment factor” will not always make a home improvement worth it. Take a hard look at the real estate market in your neighborhood before plunging into a major home remodeling upgrade.
If all the houses in your area sell in the $150,000 range and you undergo a major makeover to increase the value of your home to $225,000, you may have priced yourself out of the resale market.
Also be careful of altering your living space if doing so violates the integrity of the house.
A bulky room expansion to a classic bungalow, for instance, will destroy its eye appeal to buyers in the market for period-appropriate houses.
On the other hand, time matters. If you are planning to stay in your home for a long time, the cost of some remodeling upgrades and renovations will start to look good, both in your pocketbook and your pride of ownership.
If you are looking to sell in the near-term it may be better to restrict your efforts to a freshening up, take a realistic price and let the next owner sink money into major improvements. Your best financial play may even be just offering a discount or credit for a major repair.
So knowing that you are likely never going to see the money you put into a home improvement going in, let’s look at what you can expect from some common home improvements…
1. Steel entry door. Ah, yes, the portal to your soul. An attractive entryway is never a bad thing. But to return the bang for your buck go with a modern insulated steel door. The energy savings and fresh look will return anywhere from 70% to 100% of its cost, depending on how grungy the front door looked at the beginning of the project.
2. Siding replacement. If your house’s skin is showing its age, new siding is a rational choice. It will bring back between 75% and 80% of its installation cost, more for fiber cement than vinyl among the mainstream siding options.
3. New roof. It does not matter what return this brings you. No one is going to buy a house with a leaky roof. The return a new roof brings you is the ability to sell your house and move.
4. Adding a Deck. A sharp looking new wooden deck can return about 80% of your investment, but this will depend on the region of the country you live in.
In the warmer climates of the South and Southwest where outdoor living is a way of life a deck will absolutely help at selling time. Plus, a deck is a great enhancer to your life while in the house as well.
5. Kitchen Remodel. The kitchen is the most popular target for upgrading – and also the biggest money pit. You may be lucky to get back 50 cents on the dollar if you go in for all the fancy bells and whistles for an extravagant kitchen and then have to sell your house in a bad market.
A better option is a partial makeover (think $20,000 range) that concentrates on improving the work flow in the kitchen space known as the “golden triangle” – the ideal positioning of the cooktop, refrigerator and sink.
Make your kitchen an efficient workspace marvel and you can see an 80% to 85% return on your buck. And make your own kitchen time that much more pleasant as well.
6. Bathroom Remodel. Everything said about a kitchen upgrade holds for the bathroom, the second most fussed over room in the house. Think mid-range and sensible improvements and you will get a bigger bang for that dollar.