Home Improvements That Pay Off
As a homeowner, I'm often mulling over various improvement projects. A key consideration for many people who want to spruce up their homes, but think they may be moving in the foreseeable future, is what the payback is on particular upgrades. For instance, if there's something that's going to make your home look nicer and add back most of the value you put into the job, why not do it? Conversely, if there's very little residual value from your project, perhaps it should go lower on the list. (See also: Five Tips to Sell Any Home Fast)
To help sort out the various options (and perhaps give you some new ideas), the most comprehensive resource I've seen is the Remodeling Magazine Cost vs. Value Report. The report compares the average cost for 35 popular updates and then estimates how much of that upfront cost those projects retain at resale. While the methodology to arrive at these calculations may be tough to validate in today's volatile housing market, I believe the estimates to at least be directionally correct and helpful in sorting options.
The Best-ROI Home Improvement Projects
The study lists the following as among the best projects from a return-on-investment standpoint.
Steel Entry Door Replacement
The study reveals that you can actually have a positive ROI on this one, with 102% recouped on a $1,200 door. While it may not sound like the sexiest home improvement project, first impressions are lasting, right? The front door is the first thing people see upon entering your house, and most builder-grade doors aren't as nice as newer models you can upgrade to now.
With an average installation price of $11,000, the study estimates that at resale, you can achieve a 73% payback. Not too shabby considering you'll get a lot of use out of a deck anyway.
Minor Kitchen Remodel
This is the one I always hear about (from my wife!). We actually ended up upgrading our kitchen and beat the $22,000 price tag by installing our own cabinets. This is another project that ranks high on the list with a 73% recoup ratio.
Windows and Siding
Replacing the windows or siding yields returns over 70% as well.
Projects that didn't rank very high on the list and lost about half their value at resale included following additions and changes to the home:
- Garage addition
- Bathroom addition
- Sunroom addition
- Backup power generator
- Roofing replacement
Since we're staying in our home for the long-term, we don't rank the recoup value as high as some people might, but it's always in the back of my mind. After all, even if we don't plan on moving, maybe I can use this list to help talk my wife out of the next big project she has in mind!
What has your experience been with home improvement upgrades? Do you feel these recoup rates are accurate?
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