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Whenever you sink money into improving a home, there's an opportunity cost. Spend $20,000 on a bathroom remodel, and that's $20,000 you won't have available for another project. As such, it's important that you understand which home renovations offer the best return on investment. This holds true whether you're flipping houses for a living or are trying to improve the property you live in to sell eventually. With that in mind, here's a list of the home improvements with the best return on investment per Remodeling Magazine's 2020 Cost vs. Value report.
1. Manufactured stone veneer
When it comes to attracting buyers, curb appeal is huge. And the right exterior could really make a difference in sale price, too. Manufactured stone veneer is a great choice in that regard. If you're not familiar with it, it's fake stone that's designed to look like natural stone, which can be prohibitively expensive. In fact, the average cost to put up manufactured stone veneer is $9,357, $8,943 iof which you can expect to get back in resale value. That means you stand to recoup 95.6% of your outlay.
2. Garage door replacement
New garage doors can add to your home's aesthetic appeal and functionality. After all, no buyer wants to struggle with outdated garage doors whose mechanism fails every third try. The average cost to replace a set of garage doors is $3,695, $3,491 of which you should recoup at resale. That's a cost recovery of 94.5%
3. Minor mid-range kitchen remodel
If there's one room in the typical home that tends to see a lot of usage, it's the kitchen. But believe it or not, you don't have to go all out on a kitchen remodel to make a big difference when it comes to resale value. A minor, mid-range kitchen remodel will cost you $23,452 on average, $18,206 of which you can expect to get back in resale value. That means you'll recoup 77.6% of your investment. What does a minor kitchen remodel entail? Generally, it means refacing or replacing cabinets, swapping out countertops, and putting in new fixtures, like your sink faucet. At a price point of $23,452, you may or may not have the budget to replace some or all of your appliances, too.
4. Fiber cement siding
We talked earlier about curb appeal, and fresh, clean-looking siding can make a difference in that regard. Fiber cement siding is siding that's designed to look like wood, only it's not -- which means it's not apt to warp and rot the same way authentic wood generally will over time. Fiber cement siding also has a more natural look than vinyl, making it a popular choice among homeowners and buyers. The average cost to install fiber cement siding is $17,008, $13,195of which you'll add on average in resale value. All told, that means getting 77.6% of your investment back.
5. Vinyl siding
If your siding has seen better days, replacing it could improve your home's value substantially. And in that regard, vinyl siding is an easy, cost-effective choice. Vinyl siding is low maintenance and comes in a variety of colors. The average cost to install it is $14,359, $10,731 of which you can expect to add in resale value. That means you'll recoup 74.7% of your cost.
6. Vinyl window replacement
New windows can do a number of things for a home. Not only can they add aesthetic value, but they can also help improve a home's energy efficiency, thereby lowering heating and cooling costs. The average cost to replace a home's vinyl windows is $17,641, and the average cost recouped is $12,761. That means you're looking at getting 72.3% of your investment back at resale.
7. Wooden deck addition
Decks are a great thing because they make it possible to maximize outdoor space. In fact, you'll notice that when you install a deck, it'll generally add to a property's assessed value and property tax basis because it's considered "new living space." The average cost to install a wooden deck is $14,360, and that will generally add $10,355 of resale value to a home. That means your cost recovery is 72.1%
8. Wooden window replacement
Wooden windows cost a lot more money than vinyl, but some homeowners (and buyers) prefer the more natural look of wood. The average cost for this project is $21,495, and from there, you can expect to add $14,804 in resale value. That means you're looking at recouping 68.9% of your cost.
9. Steel door replacement
A steel door is a great security feature for a home to have. Steel also does a good job of blocking out the elements, thereby helping a home retain cold air in the summer and warm air in the winter. The average cost to install or replace a steel door is $1,881, $1,294 of which you can expect to get back in resale value. That's a cost recovery of 68.8%
10. Composite deck addition
Like a wooden deck, a composite deck can help homeowners maximize outdoor space. The main difference between composite and wood, however, is initial cost and ongoing maintenance. Composite decking (which is meant to look like wood but isn't actual wood) costs a lot more, with the average price tag coming in at $19,856. But composite decking is virtually maintenance-free, whereas wood decking is not, so it may hold more buyer appeal. From a resale value perspective, however, you'll get a little less back with composite decking. The typical job will add $13,257 in resale value to a home, which represents a cost recovery of 66.8%.
Put your money to work
Understanding which home renovations offer the best return on investment can help you maximize the funds available to you. At the same time, it's also important to know which projects to potentially steer clear of.
An upscale master suite addition, for example, will cost you an average of $282,062, and you'll only get 51.6% of your investment back, on average. Similarly, a major upscale kitchen remodel will cost an average of $135,547, with an expected cost recovery of 53.9%.
Unless you're selling a home in a higher-end market, you're generally better off spending money on mid-range renovations that appeal to a wide range of buyers. And while you don't want to skimp on the quality of the materials you use, you also don't have to go to the opposite extreme -- for example, buying the most high-end stone you can find for a new set of kitchen countertops.
Either way, always do your research when contemplating home renovations, and also, shop around for quotes if you're not doing the work yourself. Hiring the right people for the job could result in serious savings, thereby letting you score an even more impressive return on investment.
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