7 Home Improvements with the Best ROI
7 Home Improvements with the Best ROI
When it comes to home renovations, everyone wants to talk about return on investment (ROI). How much will a kitchen remodel increase your home’s value? What if you create an open floor plan? But the first thing you should know about home renovations is that most won’t turn a profit.
You read that right: You will lose money on most home renovations you do.
Now, that doesn’t mean you shouldn’t do them. One of the best parts of owning your home is being able to make the space yours. But this knowledge should shape the way you think about home renovations.
They should primarily be about what will bring you the most enjoyment during your time in the house. And when you consider ROI, you should generally be thinking about how much cost you’ll recoup, not turning a profit.
(Note: ROI is a measure of profitability. Many home improvement articles that talk about ROI are actually talking about costs recovered. For example, they say a project offers 91% ROI, but they really mean you’ll recoup 91% of the costs. Before you invest, make sure you do the math yourself.)
Knowing the ROI of a project can help you understand its actual long-term cost. It may be more affordable than you realized — and, in some rare cases, it may pay for itself. Let’s take a look at some of the home renovations with the best ROI.
1. Basic Yard Care and Landscaping
According to a 2022 survey of real estate agents, basic yard care and mulch can give you a massive ROI. Yard care reaps a 539% ROI, and three cubic yards of mulch can give you 536%. Combined, they can add nearly $4,500 to your resale price. More complex landscaping tends to cost more but can yield a 21% ROI. That means you’ll earn back 100% of what you spent, plus an extra 21%.
Generally, the key to getting a good ROI on your landscaping is that it should be easy to maintain. A big flower garden may be wonderful to behold, but it can also intimidate anyone who doesn’t have a green thumb. Invest in detailed landscaping if you want it. Otherwise, tidying up your yard will give you the biggest bang for your buck.
2. Fresh Exterior Paint
You’ve probably heard that freshly-painted interior walls are important to resale value. But painting the outside of your house offers significant ROI as well — up to 51%! So, for example, you may spend $2,803 on painting the house but increase your home’s value by $4,228.
This makes sense because the first part of your house people see — even online — is the outside. The more people you get to take a look inside, the more likely you are to have multiple people bidding on your house. Just make sure to choose a paint color other people will like, too. You want to stand out, while also fitting the personality of your neighborhood.
3. New Wood Floors
Replacing or refinishing your flooring can be a great investment. That’s because, frankly, updating your flooring is an intense process. You have to move all your furniture, and it can take days to finish.
That said, new flooring can be transformational for your house. And because no one else wants to do it, buyers will pay more for a house that already has nice floors. According to HomeLight’s 2019 survey of real estate agents, new wood floors can give you a 51% ROI.
4. Minor Kitchen Remodel
At this point, we’re getting into projects that won’t turn a profit but may recover most of their costs at resale. It’s no secret that homebuyers love to see a remodeled kitchen. But according to Remodeling Magazine, you’ll likely recoup only 53.9% of your costs on a major, upscale kitchen remodel. Instead, opt for a minor kitchen remodel. Remodeling says this recovers 72.2% of costs, and Fortune Builders says it could recover up to 98.5%.
A minor remodel includes things like a fresh coat of paint, replacing appliances, replacing cabinet hardware, and updating the flooring. You’re not changing the layout of the kitchen or adding fancy gadgetry. These are low-cost projects that you can cover as you have the budget, but they make a big impact.
5. Garage Door
Experts agree that a new garage door is a solid investment, likely to recover most of your investment costs if not turn a profit. Remodeling Magazine estimates homeowners will recover 93.8% of their costs, while HomeLight estimates an ROI of 133%. While there is a large gap between those numbers, both paint a positive picture for this investment.
You may note that this is yet another renovation happening on the outside of your house. But it makes sense when you consider the importance of first impressions. If potential buyers pull into your driveway, that door will be the very first thing they focus on. It helps set the tone for the rest of the viewing.
6. Manufactured Stone Veneer
Much like that fresh coat of paint, a stone veneer can make your house stand out as one of the prettiest houses on the block. To do this, you remove a continuous band of vinyl siding and replace it with the veneer. Remodeling Magazine estimates that you can recover 92.1% of the cost for this improvement, and they have a detailed how-to guide to get you started.
We'll note that while you should recover most of your expenses, installing manufactured stone veneer is not a cheap project. Remodeling says the average cost is around $10,000. So, if you truly love stone veneer, you can move forward knowing you'll likely recover most of your costs. If, however, you simply want your house to look more dignified, you might return to our point on landscaping or consider replacing your garage door.
7. Minor Renovations
By this point, we hope you’re noticing a theme. Increasing your home’s value is not about having the fanciest house on the block with the biggest renovations. It’s about having a house that people can see themselves living in comfortably. And much of that comes down to simple things like painted walls, tidy yards, and pretty light fixtures or drawer pulls.
These are projects that don’t demand the help of a professional. You probably know how to do many of them, and if you don’t, there are a wealth of how-to videos from experts who do. Look around your house and think about the low-budget DIY projects you could get done in a weekend. Make a list of the things that would make you more comfortable in your home. Tackle the projects that will make you feel good about your house, and don’t sweat the rest.
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