Whether you're flipping a house, prepping to rent one out, or just improving your own place, renovations can make a big difference -- both in the property's aesthetics and its value.
But make no mistake: Not all renovations are created equal, nor are their returns static across markets. In fact, according to a new study from home improvement platform HomeAdvisor, in one U.S. city, renovations equal a nearly 23% increase in value. But in another? That number is a mere 2%.
Want to make sure your renovations are worth it before you get started? Here are the five best (and worst) cities for home renovations returns.
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The best places for renovation ROI
1. Dallas-Fort Worth
The single-best spot to renovate your house is the sprawling Texas metro of Dallas-Fort Worth. There, renovated homes see a jaw-dropping 22.73% jump in value compared to nonrenovated ones. The typical renovated house clocks in at $249 per square foot and gains about $100,000 in value after renovations.
2. Miami
Miami's not too far behind DFW. In this hot housing market, renovated properties are nearly 21% more valuable than nonrenovated ones. The typical nonrenovated home sits at about $300 per square foot, while renovated properties are priced at about $362 per square foot.
3. Houston
Houston, the Lone Star State's largest city, claims an 18% increase for renovated homes versus nonrenovated ones (or $167 per square foot versus $141). The typical house sees around a $57,000 increase after renovations.
4. Tampa, Florida
Tampa comes in at No. 4 with an almost 15% increase in value for renovated properties. The typical renovated place increases in value by about $73,000, or about $32 per square foot.
5. Nashville, Tennessee
Nashville rounds out the list with a 14.5% value jump after renovations. It comes out to an extra $34 per square foot and around $77,000 in extra value per property.
The worst cities for renovation returns
Renovations don't deliver nearly the above returns in other cities. In Riverside, California, for example, renovated homes only see a 2.46% increase. In fellow California city San Diego, it's just over 3%.
Las Vegas, Phoenix, and Seattle also made the bottom five, according to HomeAdvisor.
Choose your renovations and market wisely
Clearly, as a real estate investor, choosing your market is key -- especially if you plan on renovating or flipping a home. You'll also want to be choosy about which projects you take on, as these can vary widely in ROI as well.
According to Remodeling magazine, the three most effective renovations are:
- Replacing your garage door (93.8% of your costs recouped; adds about $3,663 in resale value)
- Adding stone veneer siding (92.1% recouped; $9,571 in resale value)
- Minor kitchen remodel (72.2% recouped; $18,927 in resale value)
Adding fiber-cement or vinyl siding and replacing your windows are also top projects.
Not sure which projects to focus on in your home? Consider talking to a real estate agent in your area, who can walk you through the top buyer demands, as well as how various renovations impact local home values.
