What Are the Time Tested, High ROI Remodeling Projects?

Posted on Aug 27 2014 - 4:29am by Housecall


To remodel, or not to remodel? That is the question for many homeowners who are unsure whether they will remain in their home long-term. Since the average American moves every five years, it’s wise to consider the possibility that you will be putting your home on the market in the near future. In the meantime, however, it is your home and you deserve to enjoy it.

With that in mind, let’s take a look at some remodeling projects that will bring you a reasonable return on investment, as well as some to avoid.

One great place to start is by examining Remodeling Magazine’s 2014 Cost vs. Value Report. This study compares the average cost for more than 30 remodeling projects with the actual value recouped at time of home sale.

Is remodeling worth it?

First, the bad news: not one project consistently resulted in a positive ROI nationwide. So, unless you live in one of the hottest real estate markets in the country, don’t count on making a profit from your remodel.

Good news next: The cost vs. value ratio on remodeling is trending upward for the second year in a row after dipping to a low of 57.7 percent in 2011-12. Now at a much healthier 66.1 percent, it appears to be continuing its upward trajectory.

Remember, too: that number represents the value ratio of all remodeling projects combined. By carefully selecting high ROI remodel projects, you can come in significantly ahead of the average and recoup a reasonable percentage of your cost when you sell your home.

Also, the Cost vs. Value Report does not include time-on-market data. Home improvements that make your home more attractive can help your home sell significantly faster – relieving you of extra mortgage payments and utility bills. Finally, don’t discount the value of the increased comfort and pleasure a remodeling project can bring to you if you are planning to stay in your home for a while.

So, what are the best and worst remodeling projects in terms of ROI? 

First impressions rule

Some of the best remodeling projects to consider if you are concerned about recouping your costs are exterior upgrades. “That first impression sets the tone for the whole experience," says Sarasota Association of REALTORS® president Roger Piro — adding that a negative first impression can set buyers on the alert for additional problems with the home.

The first physical contact a buyer will have with your home is the front door, so it is not surprising that a front entry door replacement is one of the highest-ROI improvements you can make. Steel front door replacements topped the list at 96.6 percent return on investment — a better choice than fiberglass, with an average return of 70 percent. (Steel doors cost less than half to install, too.)

Other exterior projects to gain consistent high marks were garage door replacement (83.7 percent), adding a wood deck (87.4 percent) and vinyl siding replacement (78.2 percent).

Little upgrades have big impact

You may have noticed that many of the high-performing exterior upgrades mentioned above are relatively minor, low-cost remodeling projects. The same is true for your home’s interior.

While full bathroom and kitchen remodels can produce satisfying results, they rarely are worth the investment if your goal is to sell your home. A minor kitchen remodel, however, was one of the best-performing projects on the list. Simple changes like replacing the countertops, refinishing the cabinet doors, and upgrading the sink and light fixtures freshen and update a kitchen without turning it into a budget sink.

While not mentioned in the report, another time-tested interior upgrade that can instantly boost your home’s value is simply to add a fresh coat of paint. When painting to sell, most real estate experts suggest sticking to light, neutral colors, such as warm whites and tans.

One exception to the small-upgrades-are-savvy rule is adding an attic bedroom. This project adds useful space to your home without the cost of an addition, at an average return ratio of 84.3 percent.

Energy smart projects pay back

One last item of note: energy efficiency is becoming a hot selling point. Recent studies have shown that homes with green features command a premium on the market — so it’s no wonder that window replacement scored high on the Cost vs. Value list.

For pure energy efficiency payback, consider weatherizing and insulating your home. If you are planning to stay in your home for a while before selling, you will recoup part or all of your investment before you even list your home.

Projects to avoid

Wondering what not to do? The worst performing projects in the Remodeling Magazine study were the home office remodel and a sunroom addition. Most buyers don’t value these areas enough to justify the cost of installation.

Not every home needs a major remodel, but minor upgrades can make a world of difference in how a buyer perceives your home. If you choose your remodeling projects carefully, you can be reasonably sure of recouping a large part of your investment — and you’ll boost your enjoyment of your home while you’re still living there, too.

Lindsey Schroeder is the voice behind all social media accounts and blogs for Archway Construction, home renovators and remodelers that have served Metro-Chicago for over 27 years. She also loves working with homeowners, ensuring their remodeling projects are a great investment while changing the look and feel of their home.

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