The money you spend on one home improvement project is money you won't have available for another. And assuming you don't have unlimited funds, you'll really need to be mindful of which renovations and updates are most likely to add value to a home. This applies whether you're making renovations to a home you live in with the hope of recouping your investment down the line or flipping a house and want to make the most of your renovation dollars.
So what adds value to a home? Remodeling Magazine's 2020 Cost vs. Value Report highlights some of the best renovations that improve home values and also discusses those that don't add as much value. Based on that, here are a few projects it pays to pursue -- or not.
Renovations that increase home value
Not every home improvement project you pursue will add to your home's value, but these updates might.
A minor kitchen remodel
Updated kitchens are a big selling point, but the last thing you want to do is go overboard on your kitchen remodel. A minor, midrange kitchen remodel costs an average of $23,452 but adds $18,206 of resale value to a home. That means you stand to recoup 77.6% of your investment.
There are a number of things you can do to give your kitchen a makeover on that sort of budget. First, you can look at refacing your cabinets if they're looking worn, as that will be much less expensive than ripping your current ones out and putting in new ones. You can also update your cabinetry hardware, put in a new backsplash, install lighting fixtures, and paint your kitchen walls. All of these things will add aesthetic appeal to your kitchen, and they're not that expensive.
You might also get away with replacing a few kitchen appliances on a budget of $23,452. For example, you might get an updated fridge with more storage space or add a dishwasher if you don't have one already. It may also be possible for you to replace your countertops in that price range, but that will largely depend on the material you choose and the amount of countertop space you have.
New siding can lend to your home's curb appeal, provide insulation, and make your home more energy efficient. You have a few cost-effective options for replacing your home's siding, or adding new siding to begin with.
Fiber-cement siding costs $17,008, on average, and it adds $13,195 of resale value to a home, representing a 77.6% recovery. Meanwhile, vinyl siding costs $14,359, on average and adds $10,731 of resale value. That's a 74.7% cost recovery.
Both siding options are fairly easy to maintain, but fiber-cement siding is a bit trickier to install -- hence its higher cost. Fiber-cement siding also may need to be painted every few years because it has a tendency to fade. That's less likely, though still possible, with vinyl.
New windows can do more than just enhance your home's aesthetic appeal; they can also help with insulation. Updated windows can help retain cool air during the summer and avoid letting cold air in during the winter, making your home more comfortable.
Vinyl windows are an affordable option to consider, costing $17,641, on average, for the typical home. Going that route will add $12,761 of resale value to your home, letting you recoup 72.3% of your investment.
Wood windows are an option as well, though they're more expensive, averaging $21,495. If you choose wood windows for your home, you'll add $14,804 of resale value and recoup 68.9% of your cost.
A new deck
Putting a deck on your property will make your outdoor space more accessible. A wooden deck will cost $14,360 on average, but that should add $10,355 of resale value to your home, thereby allowing you to recoup 72.1% of your cost. On the other hand, composite decking costs $19,856 on average, which should add $13,257 of resale value. Your cost recovery in that case will be 66.8% -- not quite as high as what you'll get back if you opt for wood.
One thing you should know, however, is that wooden decks cost more to maintain over time than composite, and they're also more difficult to maintain (where composite is basically maintenance-free). If you're not planning to stay in your home for that long before selling or are flipping a home, then a wooden deck is a better investment. Otherwise, you might consider composite, even if it means getting less of your money back when you go to sell.
New garage doors
Curb appeal is important for resale value. Now when we think about curb appeal, we tend to think about landscaping, but actually, your garage is one of the first things a buyer will see, and so a new door will add value to your home in a very meaningful way. The average cost to replace a garage door is $3,695, of which you'll get back $3,491 in resale value. That means you'll recover 94.5% of your outlay.
Renovations that may not increase home value
When it comes to home improvements that increase your home's value, bigger isn't always better. In fact, these renovations may not add value the way you'd expect them to.
An upscale master suite addition
Not every home comes equipped with a master suite to begin with. If yours doesn't have one, you may be craving that personal oasis. But it will come at a cost. To put in a master suite complete with a bedroom, bathroom, and closet, you'll spend $282,062 on average. Of that, you'll add value to your home in the amount of $145,486, which means you'll get back just 51.6% of what you put in. In fact, if you're itching for more private space, it could pay to move to a new home that already has a master suite rather than sink that much money into adding one onto your existing home.
A major upscale kitchen remodel
It's true that an updated kitchen could entice any potential buyer who comes to see your home. But a major kitchen remodel may not add as much value as you think. If you really go all out with your kitchen -- meaning you replace your countertops, appliances, cabinetry, and flooring, plus add high-end cosmetic touches -- you'll spend an average of $135,547. Of that, you can generally expect to add $72,993 worth of resale value, which means your cost recovery will be just 53.9%.
A midrange to upscale bathroom addition
A lower-cost bathroom remodel might score you a decent return on investment. But it doesn't pay to go over the top by putting in a high-end bathroom. An upscale bathroom will cost you $91,287 on average to add on, but of that, you'll only increase your home's resale value by $49,961. That means you'll only recoup 54.7% of what you spend.
Even a midrange bathroom addition doesn't offer such great resale value. You can expect to spend $49,598 on that project, of which you'll generally add $26,807 of value. That's a cost recovery of 54%.
Renovations that increase home value
|Renovations That Increase Value||Renovations That May Not Increase Value|
|A minor kitchen remodel.||An upscale master suite addition.|
|New siding.||A major upscale kitchen remodel.|
|New windows.||A midrange to upscale bathroom addition.|
|A new deck.|
|New garage doors.|
Put your renovation dollars to work
If you're going to pay for renovations, it pays to do some research to see how they might impact your property value. Of course, sometimes, renovations need to be done out of necessity. If you need a new roof, it makes more sense to put one on than to install a deck, even if the latter technically adds more value to your home. Similarly, a basement remodel may not give you the best return on investment, but if it provides the added square footage you need to live comfortably, then it may be worth doing.
However, if you're updating your home just to sell it or are flipping a house, then be sure to pay attention to the cost of your renovations versus the value they're likely to add.
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