Homeowners take on home projects for a variety of reasons. In some cases, they want to make the property more attractive to buyers. In others, they’re focused on their comfort. However, in either case, considering the return on investment (ROI) of your home projects is essential. That way, you can ensure that the upgrades are a smart use of your money.
Ultimately, some projects typically come with a stronger ROI than others. If you’re wondering which home projects give you the best ROI, here’s what you need to know.
Determining the ROI for Home Improvement Projects
Every home project has a different potential ROI. For example, the return on investment for a kitchen remodel is different from garage renovations. As a result, you can’t expect the same value increase for every project you might undertake.
Luckily, determining ROI is fairly simple. All you have to do is compare the project cost to the value increase you capture when it’s done. For example, if a project costs $1,000 and increases your home value by $900, the ROI is 90 percent.
It’s important to note that projects that typically qualify as one of the highest ROI home improvements aren’t guaranteed to provide exceptional value inherently. Instead, what you can get out of the update depends on the quality of the work, selected finishes, and other factors, as well as the nature of the project.
For example, a kitchen remodel return on investment can perform well or poorly, depending on your exact choices. Generally, if you over improve for a neighborhood, choose unconventional materials, select highly polarizing colors, or make similar divisive choices, you may not get the same return as someone who focuses on appealing to buyers.
8 Home Projects That Give You the Best ROI
1. Bathroom Remodel
Bathroom remodels usually perform quite well when it comes to the absolute best return on investment home improvements (based on average ROIs). It isn’t uncommon for buyers to focus heavily on the bathrooms – particularly the master bath – when deciding whether they like a home.
If you update yours to feature on-trend tile, replace worn-out fixtures, and give it a fresh look, getting your investment back is possible. Just make sure you don’t go overboard. For example, if the neighborhood doesn’t support luxury materials or fixtures, you may want to skip them if ROI is your main concern. Instead, look at what’s widely available in your area and elevate the bathroom just slightly above the competition.
2. Kitchen Remodel
Another one of the best ROI home improvements is kitchens. Like bathrooms, buyers seek out nice kitchens when looking for homes. Both minor and major updates have significant ROIs, often letting you recoup most – if not all – of what you’ve spent.
As with bathrooms, you need to make sure you don’t over improve for the neighborhood. Additionally, make sure to factor in practicality. For example, while marble is undoubtedly luxurious, it isn’t the easiest to maintain, so it may not have the best ROI for family homes where durability and cleaning ease may be priorities. Instead, you may want to choose an alternative, like quartz, to combine form and function.
3. Manufactured Stone Veneer
Installing manufactured stone veneer on your home can have a surprisingly high ROI. By adding some faux stone to the exterior, it can help your house stand out from others while boosting curb appeal. Plus, you’re giving the home a luxurious touch buyers won’t see on many other properties.
4. Front Door Replacement
If you’re looking for cheap renovations to increase home value, replacing your front door might be your perfect project. You can choose a door that stands out, ensuring it blends with the style of your home. Plus, it’ll be free of dents or dings, and you can paint the fresh surface in an eye-catching color, boosting your curb appeal.
5. Attic Conversion
For homes with sizeable attics, converting the space into a bedroom can have a solid ROI. This is particularly true if your house has fewer bedrooms or less livable square footage than is commonly found in your neighborhood.
Do be aware that this kind of project is a significant undertaking. You’ll need to make sure that you can add a staircase up to the space and that there’s enough headroom for the attic to qualify as a bedroom per local building codes. However, if you can make that happen, it’s worth considering.
6. Garage Door Replacement
If you want the best return on renovations and also want to keep the project simple, replacing a garage door is surprisingly effective. It can boost your curb appeal dramatically, ensuring the house makes a great impression. Plus, it’ll allow you to make sure it operates seamlessly, which is also critical if buyers may open it.
7. Finishing Your Basement
Another project that adds square footage and gives you the ability to add living space, bedrooms, and more is finishing your basement. Again, this is a major project, particularly if you need to add electrical, install plumbing, or put in egress windows.
However, if your house is on the smaller side for your area, it’s a way to increase the square footage without an addition. Just make sure to read local codes before you begin to ensure the end result qualifies as livable space.
8. Siding Replacement
If the outside of your home has seen better days, a siding replacement is one of the more popular renovations to sell a house. It gives the exterior a fresh, clean look. Plus, you can opt for low-maintenance, durable materials that buyers prefer, increasing interest on multiple levels.
3 Home Projects That Give You the Worst ROI
1. Swimming Pools
One of the worst ROI home improvements around is installing a swimming pool. They’re often costly to maintain and don’t appeal to all buyers. In some cases, they can even turn off buyers, particularly those who view them as expensive safety hazards or if the yard is small and the pool makes the rest of it hard to use.
Generally, if you’re planning to sell soon, you should only add a pool if it’s a standard in your neighborhood, you’re in a warmer climate, and there will still be a usable yard. Even then, the ROI isn’t always strong.
2. Wall-to-Wall Carpeting
Today, buyers don’t broadly prefer wall-to-wall carpet, even if it’s brand new. If you’re concerned about ROI, go with another flooring upgrade, like hardwood, laminate, vinyl, or tile. Just choose the option that makes sense for the neighborhood.
3. Removing Bedrooms
While converting a bedroom into a large ensuite for the master might seem like a smart move, it usually isn’t unless you have far more bedrooms than is common in your area. For example, turning a three-bedroom into a two-bedroom is almost never a wise decision, even if the resulting master bath is breathtaking.
Even sacrificing a fourth bedroom may be a poor decision, particularly with more people working from home who may want to use it as office space. If you have five bedrooms, that may be a different story. However, it’s best to review the potential change to your home value first to ensure it’s a wise choice.
Simple Cosmetic Updates for Home Sellers
If a major home renovation isn’t affordable, but you still want to make sure your home is sale-ready, some simple cosmetic updates could make a difference. A fresh coat of paint can often work wonders, ensuring the walls of your home look clean and the color is on-trend.
Updating the knobs on kitchen or bathroom cabinets is another solid option. The same goes for replacing the fixtures, especially if your current ones aren’t on-trend.
Finally, some simple curb appeal improvements can work wonders. Pressure washing your siding, adding some potted plants, and other easy projects can make your home feel more inviting, increasing interest and, potentially, leading to a higher offer.
