Home Renovations: Where to Spend and Where to Save
Photo: © Elena Elisseeva - Dreamstime
Some home improvements are smart investments, and some will only cut into your profits when it comes time to sell your home. To help you distinguish the good renovations from the bad, The Remodeling Cost Vs. Value Report 2011-2012 ranked home improvement projects based on how much of the initial investment they recoup at resale. When it comes to renovations, it seems the bigger the budget, the smaller the payoff.
Not all materials are created equal.
High-end materials might look beautiful, but they don't always make financial sense. A steel door that costs around $1,200 will recoup 73 percent of its value on resale, but a fiberglass door that costs $2,300 more will only recoup 56.3 percent. A wood deck that costs $5,000 less than a comparable composite deck will recoup around 70.1 percent, 8 percent more than composite. Wood windows are a more expensive upgrade compared to vinyl, yet they both recoup roughly the same amount at resale—67.5 percent and 68 percent, respectively. Potential buyers seem to value the functionality of an upgrade more than high-end materials.
Be cost conscious.
You might want a grand kitchen or bathroom with top-of-the-line finishes, but future home buyers care more about that sale price than they do about the trendiest kitchen faucet. Large-scale remodels of kitchens and bathrooms recoup less of their cost than more affordable renovations. If you spend $110,938 on the kitchen of your dreams, you'll only recoup 57.4 percent. Cut that budget in half, and you could recoup 65.7 percent of your renovation costs. If you shop smart and spend around $20,000 on new cabinets and appliances, you'll see an impressive 72.1 percent of your initial costs returned to you at resale. A complete bathroom renovation that costs upwards of $52,000 recoups just over half of its initial cost, 55.5 percent. Yet a more cost-conscious $16,552 renovation still impresses potential buyers enough to bring back 62.2 percent of the initial cost.
Add space and curb appeal.
Making the most of your home's square footage is always a wise investment; adding an attic bedroom to your home's floor plan recoups 72.5 percent, while a basement remodel brings in 66.8 percent of its initial cost. Additions might be an expensive way to increase your home's total living space, but you can recover some of the initial cost. A family room addition recoups around 60 percent, while a two-story addition recoups 62.4 percent. Improving your home's curb appeal also increases your home's value. Replacing your garage door recovers 71.9 percent at resale, while replacing worn siding can recoup anywhere from 69.5 to 78 percent, with fiber-cement siding bringing in the biggest returns.
A home is an investment. To make the most of your investment, spend your renovation budget wisely. Fix what you can and only replace what is beyond repair. Keeping a tight rein on your spending will pay off at resale.
Read the Remodeling Cost Vs. Value Report 2011-2012 online at www.remodeling.hw.net/2011/costvsvalue/national.aspx.
