Like most HGTV addicts, I caught the home renovation bug early on. It's difficult to avoid when designers are throwing around phrases like "clean and open" and "repurposed and refreshed." And yet, there's another phrase that isn't said nearly enough: return on investment (ROI).
Curb appeal, durability, and ample living space are important to prospective buyers, as evidenced by the upgrades listed in Remodeling Magazine's 2017 cost vs. value national report. If selling your home is on the horizon, keep these 10 renovations and their ROIs in mind to help you secure a greater profit.
1. Entry door (90.7%): Form and function meet when you replace your entry door with a reinforced steel door. The appeal of safety coupled with an updated look will allow you to recoup nearly all of your investment.
2. Manufactured stone veneer (89.4%): Vinyl siding won't earn you as much when it's time to sell, but replacing it with a stone façade will increase your home's value by about $7,000.
3. Garage door (76.9%): A steel-tracked model with built-in insulation will cost you about $1,750, but this upgrade will appeal to buyers who value car safety and a warm commute during the winter months.
4. Vinyl window replacement (73.9%): Old homes have a certain charm, but not if they're drafty. This update is an expensive one at $15,282, but you can tout a commitment to energy efficiency on the MLS listing once it's complete. You'll also qualify for a tax credit if your windows are certified by Energy Star (more on that here.)
5. Siding replacement (76.4%): Siding protects your home and brightens up an outdated property. Buying and installing 1,250 square feet of vinyl siding will cost just over $14,500, but the low-maintenance material will last decades longer than other siding options..
6. Minor kitchen remodel (80.2%): The kitchen is the heart of the home, and it's no surprise that buyers are interested in aesthetic appeal. A $21,000 budget will allow you to reap a decent return, but keep in mind that this number can decline quickly if you make too many costly changes.
7. Two-story addition (71.1%): Adding a second floor to your home may seem over the top, but it's worth it when the housing market is booming. For instance, while Remodeling Magazine's national report estimates a 71.1% return, their regional report for Seattle projects a 90.6% return due to a competitive market. Take a closer look at the earning potential in your neighborhood to learn if adding an addition is a lucrative option.
8. Basement remodel (70%): Basements are usually reserved for the ever-popular man cave or children's playroom. Cash in on nostalgia by updating the sub-level floor of your home. Renovations that include weatherproofing could also lower your home and flood insurance premiums.
9. Grand entrance (70.1%): A fancy entrance gives your home that "wow" factor buyers are looking for, and adding a simple fiberglass gable above your front door's exterior can make your property more inviting.
10. Family room addition (69.3%): Open floor-plans are all the rage in today's market, and adding 400 square feet of living space can set you apart in an older neighborhood. This renovation doesn't come cheap at an average cost of $89,500, but the rewards could be greater depending on your location.
Footing the bill
These upgrades sound great, but earning a profit means closing the gap between your initial investment and the estimated payout. While your ROI potential depends largely on your local real estate market, save as much renovation money as possible with these options:
- A home equity loan: Borrowing against your home's equity will help you avoid dipping into liquid funds during the renovation process. To avoid a strain on your monthly budget, consider using this option only if you plan to list your home right away.
- Do-it-yourself (DIY): There's a reason Pinterest has 150 million users. The internet is full of DIYers who share their tips for renovating on a budget. Speaking from experience, I slashed a $50,000 kitchen renovation by 80% using nothing but online tutorials and product discounts.
- Discounted materials: There are plenty of ways to renovate for less without sacrificing quality. For example, Habitat for Humanity ReStores stock new and used inventory for deep discounts, and the proceeds go back into the non-profit organization.
- Sell in trade: Skilled labor is invaluable during a remodel, and you may have your own professional talents to offer in return. Consider trading a portion of the costs for your own time. If you're a marketing professional, for instance, offer to create an ad campaign for your contractor in exchange for a few hours of labor. Small savings can add up quickly.
- Advertise: Don't let your renovation efforts go unnoticed at listing time. Attach a sheet of renovation details to your MLS flyer that details the changes you've made, prices included. This strategy may help you avoid low-ball offers.
It's still a buyer's market in most U.S. neighborhoods, but it's possible to secure a seller's profit with a little creativity. Take advantage of your local market research and look for ways to make your home the best on the block.
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