Home improvement projects can breathe new life into a home and make it stand out. Understanding which renovations will have the greatest return on investment (ROI) is beneficial whether you’re living in your dream home or planning to sell.
Ultimately, numerous factors influence property value increases, so you may see even higher returns if your area’s housing demand increases. As you evaluate the benefits of each renovation, keep in mind that expensive projects do not always offer significant returns.
Keep reading to discover the estimated ROI for six popular home improvement projects.
1. Kitchen Remodel
As the heart of the home, kitchen remodeling is usually at the forefront of every homeowner’s priorities. Understanding its impact on your home value greatly depends on the size of the undertaking.
Minor Renovation
Minor renovations typically cost $23,452 and have a resale value of $18,206, which means a 77.6% ROI on average.
In some parts of the United States, this number will be much higher. Likewise, if you intend to live in your home for several years, you have the potential to recoup your investment by over 100%, as property values tend to increase with time. However, like all things, these periods of growth are subject to change.
Minor kitchen remodeling includes replacing outdated appliances, changing out hardware and light fixtures, and refacing cabinets. In comparison, a major kitchen renovation is much more extensive and may involve changing the layout.
Major Renovation
Major kitchen renovations are a prime example of how overall cost does not indicate return value. These will cost $68,490 on average but only return $40,127, for a 58.6% ROI.
Like minor renovations, these repairs could bring a larger return if the area is in high demand, but homeowners should be careful not to over-invest. If a house is only worth $150,000 and you install a $100,000 kitchen, it’s doubtful you’ll be able to get that money back out.
Keep in mind that extensive customizations and fancy designer finishes are unlikely to wow potential buyers enough for them to pay a significant price increase. Similarly, unusual designs and eccentric colors are unlikely to appeal to a broad market.
Therefore, you should only make these investments if you’re planning to live in the house indefinitely or aren’t overly concerned about making your money back.
2. Garage Door Replacement
People often overlook their garage doors because their main focus is on updating their interiors. However, garage door replacement has the second-highest ROI when compared to any other home improvement project. The national average is a 94.5% return, which means homeowners can enjoy the replacement themselves and then make back most of their money when it’s time to sell.
Costs vary based on the material type and customization level, but most people will pay around $3,695. Updated garage doors can drastically improve a property’s curb appeal and help to create a cohesive design. Like all home improvement projects, buyers should look for timeless styles that match their house’s aesthetic to appeal to a greater number of people.
3. Basement Renovation
Basements hold so much potential. If you remodel the space, you have a blank canvas for designing. It could become a master addition, a guest suite, or a game room with a bath addition. Each upgrade has a different return on investment, which means that, if done well, your reimagined basement could substantially increase your property’s value.
In 2017, a general basement remodel had a 70% ROI. But this number could increase significantly when you consider the possibilities. One way to ensure your basement improvement project offers the greatest return is by transforming it into a walkout basement. Walkout basements include a door accessing the outside and are common in houses built on a slope. They offer natural light and provide an additional entrance to the property.
This would make renting out the basement much easier and provide homeowners with an additional income source.
4. Bathroom Update
Like a kitchen remodel, people can choose to undertake minor or major bathroom renovations. To determine which is more suitable for the space, property owners should evaluate the existing bathroom’s condition and age. An outdated, dirty, and rundown bathroom will likely require an extensive remodel, while a lackluster bathroom may only need a refresh.
Midrange Renovation
A midrange renovation will likely include new paint, lighting, and hardware. Homeowners may also choose to refinish the tub or replace the tile and upgrade the toilet or vanity. On average, these repairs cost $21,377 and offer a 64% ROI.
While not as high as other home improvement project returns, realtors often express how bathrooms sell houses. If your bathroom is an eyesore, it could cause your home to stay on the market much longer than if it were renovated.
Universal or Upscale Renovation
When you think of a universal or upscale renovation, it’s best to think of a complete overhaul where the existing bathroom is removed and replaced with brand-new items. The difference between these two renovation types is the price tag and subsequent return on investment.
The universal design will cost owners $34,643 and offer a 62% ROI, while the upscale will cost $67,106 with only a 56.5% ROI.
If you’re wondering why the ROIs vary substantially, the answer is simple — people are only willing to pay so much extra for a well-designed bathroom. When you go beyond functionality and basic style, the design choices get more nuanced, and not every buyer will place the same dollar value on a jetted tub and marble floors.
5. Deck Addition
Decks make it easy to enjoy the outdoors. Many homeowners appreciate the opportunity to entertain and relax — regardless of the design aesthetics. However, the material you choose plays a role in the overall costs and aesthetics.
Wood deck additions are less expensive and offer a higher ROI than the composite alternatives. Yet, the material you choose isn’t the only factor in the overall value. So is your location.
While a wood deck addition offers an average ROI of 72.1% nationally, the value skyrockets to 77% in the South Atlantic. This is because local factors influence demand, meaning buyers are willing to pay more for the same product or feature. Simply put, people will be able to get more use out of a deck in the south than they would in the north.
6. Manufactured Stone Veneer Installation
Installing manufactured stone veneer (MSV) offers you a more significant return on investment than any other home improvement project. On average, it costs $9,357 to complete, but the return is 95.6%, meaning you recoup almost all of your money when you sell the property.
This exterior upgrade can give your house the look and feel of real stone while remaining highly customizable and affordable. While most commonly used outdoors, some people also use MSV inside as accent walls or backsplashes.
Unfortunately, it can have adverse side effects if installed improperly, so homeowners should plan to hire a professional if they’re interested in this exterior upgrade.
Plan for Hidden Expenses
Listed above are six of the most popular home improvement updates and their associated ROIs based on the United States’ national averages. While some percentages are incredibly high, homeowners should always plan for hidden expenses. When you begin opening up walls or building additions, unexpected costs can pile up and decrease your return margins.
Always do your research in advance and choose home renovations that will offer you the greatest value.
