Home Remodeling: What's the Best Return on Investment?
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Curb appeal is more important now than ever before.
The report states that outdoor upgrades recoup more money than interior renovations. If you only complete one renovation, make sure you replace your old front door with a steel entry door; this project on average recoups 102.2 percent of renovation costs. Garage doors also make the list of wise investments, recouping from 69.8 to 83.9 percent. Other money-smart renovations include siding replacement and wood window replacement, each recouping up to 80 percent and 72.4 percent, respectively.
Rather than add on, make use of wasted space.
Inside the home, it wasn't kitchen and bathroom renovations that brought in the money. Rather, the two projects that best retain their value for resale are attic renovations and basement remodels, recouping 72.2 percent and 70 percent, respectively. These two projects take advantage of a home's existing square footage, proving that it's more cost effective to work with the space you have, rather than add square footage with an extension.
Non-essential features have less resale value.
Three renovations retain significantly less value upon resale: sunroom additions, which recoup 48.6 percent of renovation costs; home office remodels, which recoup 45.8 percent; and backup power generators, which recoup 48.5 percent. Unlike front entry doors and windows, these renovations are not necessary; a house doesn't need a home office to still function as a house. Their value depends largely upon what a homebuyer wants and needs in a home. Some homebuyers don't want sunrooms, and most homebuyers in urban areas don't need backup generators. The less demand there is for a certain type of renovation, the less its resale value.
Spend less to earn more.
Another surprising finding of the report disproves the old adage, "You have to spend money to make money." When it comes to home renovations, you have to save money to make money. An affordable renovation usually recoups more of the initial investment than a costly one. The report found that a minor $20,000 kitchen upgrade recoups 72.8 percent of renovation costs, but a more expensive $58,000 kitchen remodel only retains 68.7 percent of its value on resale. A wood deck with a price tag of $10,000 will recoup 72.8 percent, but a composite deck that costs $5,000 more will only recoup 66.2 percent. A steel entry door will make you money, retaining 102.1 percent of its value, but a more expensive fiberglass door will only recoup 60 percent of your investment.
When you remodel a space, you are making an investment. And like any investment, you should do your research before you pull out your checkbook. Contact your local real estate agent to find out if a renovation you're considering will retain its value in your neighborhood.
To learn more, read the Remodeling Cost Vs. Value Report 2010-2011 online at www.remodeling.hw.net/2010/costvsvalue/national.aspx
