You may want to upgrade your home to make the space more livable for you and your family, but it doesn’t hurt to know whether you’ll be able to recoup the cost of the upgrade should you decide to sell your home. Of course, whether you will be able to depends on the upgrade itself.
Just ask residential real estate investor and creator of the real estate investment-focused site Investiture Mark Ferguson, whose friend recently confessed to shelling out $100,000 to renovate the kitchen in her $325,000 home. “There was no way she was going to get close to her investment back,” he explains, remorsefully.
That doesn’t mean you shouldn’t renovate your kitchen (It’s on our list below!), but it does mean you should carefully consider which upgrades to make and how much to spend. If you ever decide to sell, you may not recoup the entire cost of your project but, if chosen wisely, it may help your home sell faster—and for closer to your asking price.
Just be sure to do your research up front. Make sure that your prospective project is in line with what’s being done in your neighborhood. If it’s not, you run the risk that your home will sit on the market—which can be a huge drain on your finances.
To give you a sense of which home renovation upgrades are most likely to pay you back, we used Remodeling Magazine’s 2017 and 2018 Cost vs. Value report as a guide. Then, we spoke to the experts to get their take on each one. Here’s the rundown on which projects to tackle… and a few to avoid.
Install Insulation in the Attic
It’s not the sexiest home upgrade but adding a little energy efficiency to your home can pay off in spades. In fact, per Remodeling Magazine’s report, adding fiberglass insulation to your attic ranked first on the list of renovations that pay you back.
A professional can air-seal your space, then add loose fill fiberglass insulation on top of any existing insulation. This project gives you double bang for your buck. You’ll increase the value of your home and save an average of 11 percent on your annual home energy costs.
Average cost: $1,343
Added home resale value: $1,446
Cost recouped: 107.7%
Design with Manufactured Stone Veneer
When it comes to selling a home, curb appeal can make a big impact. For an upgraded look that’s cost effective, strip out vinyl siding from the bottom third of your house and replace it with manufactured stone veneer.
The exterior isn’t the only area of your home that can benefit from this type of upgrade. “I often use it to create a stone wall in the house or for fireplace mantles,” says Glenna Stone of Glenna Stone Interior Design. “It’s a nice way to create a certain look at a fairly reasonable price.”
Average cost: $8,221
Added home resale value: $7,986
Cost recouped: 97.1%
Put in a New Garage Door
A new garage door is an easy and inexpensive way to elevate the look of your home, especially if your current door is old, tired, and worn.
Modern garage doors come with a lot of options. “A lot of them look like wood but are made from [more durable] steel or metal,” explains Stone. “There are also hybrids on the market—where the outer is fiberglass and the inner is steel. That combination brings your cost way down.” Install your new door on galvanized steel tracks. Most come with a 10-year limited warranty.
Average cost: $3,470
Added home resale value: $3,411
Cost recouped: 98.3%
Replace the Front Door
Your home’s front door can make or break your home’s entryway. “When you’re selling your home, it’s one of the first things people see,” notes Stone. If you’re planning to replace your door, select something that matches the overall architecture of your home, she advises.
Not sure how to select a door with the greatest visual appeal? Stone recommends the DoorWays app by Therma-Tru Corp. “You can stand outside your home, use your phone’s camera, and drop doors into the photo of your house, so you can see what it would look like,” she says.
Once you have a general sense of what you want your new door to look like, opt for one made from fiberglass or steel. Compared to wood doors, they are more energy-efficient, are more secure, last longer, and require less maintenance.
Average cost: $1,471
Added home resale value: $1,344
Cost recouped: 91.3%
Upgrade the Kitchen’s Look
The kitchen is probably the most heavily used areas of the home, which is why, for many home buyers, an outdated kitchen could be a deal-breaker, says Larry Greene of Case Design/Remodeling. This is especially true “for older houses where kitchens are often small and closed in. Transitioning to a more open concept will give your entire living area an updated feel.”
You don’t need to gut the room and start from scratch to get the biggest bang for your buck. Unless you’re a serious foodie or professional chef who never plans to move, you probably don’t want to build a kitchen that’s worth tens of thousands of dollars more than anything else in your neighborhood.
Instead, focus on a minor remodel, which can include new countertops, cabinet fronts and hardware, and an upgraded, energy-efficient cooktop and wall oven. You can also throw out the kitchen sink—just replace it with a mid-price model and a new faucet. You’ll save on the substantial costs of a major overhaul, which has a much lower overall return.
Average cost: $21,198
Added home resale value: $17,193
Cost recouped: 81.1%
Add a Wooden Deck
Creating a new space outside the house can change the way you and your loved ones spend time together. Think backyard barbecues with friends, summertime birthday parties, and even a relaxed outdoor dinner with the kids.
When it comes time to sell, a new deck could make all the difference, especially if decks aren’t common in your area, explains Ferguson. But, there’s no need to go overboard. If you’re building an extremely intricate or ornate deck, it’s unlikely that you’ll get all your money back, unless you own a higher-end home. Simple, decent-sized decks will probably give you the best value for your money.
It’s also worth noting that decks made from composite materials are more expensive and tend to recoup less of a homeowner’s outlay.
Average cost: $10,950
Added home resale value: $9,065
Cost recouped: 82.8%
Replace the Roof
It goes without saying, but a leaky roof can lead to damage to the interior structure of your home and its belongings. Very few buyers are interested in a home with an old or damaged roof. At an average replacement cost of $20,000, who can blame them?
“When you have a bad roof, most buyers will not be able to get a loan on the home. It will look bad and it will decrease the price you can sell the home for,” says Ferguson. Most buyers expect the roof to be in good shape, he explains. If it’s not, the buyer may wonder what else could be wrong with the house. And no one wants to risk their hard-earned dollars on a money pit home.
Average cost: $20,939
Added home resale value: $14,320
Cost recouped: 68.4%
Remodel the Basement
“Finishing up a basement is a great way to instantly add square footage—and value—to your home,” explains Greene. “You can choose to keep things simple, or go all out to create an amazing new space where you can entertain guests.” “A basement remodel works best when it feels like a continuation of the rest of the home,” adds Stone.
The most compelling basement features include a good-sized area for entertaining, a wet bar with raised-panel oak cabinets and a refrigerator, and a half or full bathroom.
Average cost: $71,115
Added home resale value: $49,768
Cost recouped: $70.0%
Home Upgrades to Avoid
“Additions rarely pay off, unless you live in an area with an incredibly high dollar per square foot, like San Francisco,” says Ferguson. Renovation’s data backs up that claim. Most room additions—be it a bathroom, a family room, a master suite, or even a new second story—fall toward the bottom of the list.
Also, avoid renovations that are highly specialized to your tastes. Greene says this includes a pool, sunroom or home office. “Those renovations will often be seen [by buyers] as an additional maintenance hassle,” he warns.
Finally, don’t forget the nitty-gritty. Before starting any renovation project, give your homeowners insurance agent or carrier a quick call. If you’re adding value to your home, you may want to increase your coverage. If you’re hiring contractors or doing the work yourself, you’ll want to understand if and how the work may affect your existing coverage.
Alaina Tweddale
Comments
Post a Comment