Smart Investments: Maximizing Your Home Renovations' ROI

Selling Your Home by Natasha Lingle

In the world of home renovation television shows and lucrative flipping businesses, homeowners are constantly asking themselves the question, “what home renovations are really worth it?”

It’s scary to think about dropping large chunk of your hard-earned cash into remodeling efforts when there’s a big question mark over how much money you’ll even recoup at the time of sale.

Luckily, the National Association of REALTORS®, National Association of the Remodeling Industry, or NARI, and Remodeling Magazine have conducted studies and created reports around some of the most common home renovations and the likelihood of losing, gaining or breaking even on your investment.

A New Roof

One of the big questions that comes up when we’re showing homes to potential buyers is, “how old is the roof?”

Putting on a brand-new roof might seem like a huge hassle for an insignificant aesthetic return, unlike a bathroom remodel, but potential buyers see it as a huge make-or-break condition. A whopping forty-five percent of REALTORS® have suggested sellers add a new roof before attempting to sell their home, and the typical value recovered from such a project is 109%. Yes, that means you’d be making money off this investment. Doesn’t seem so bad now, does it?

• Median Job Cost: $7,500

• Cost Recouped: $8,150 or 109%

A Kitchen Overhaul

When selling a home your kitchen can either be your greatest selling point, or your worst nightmare. Because this is such a prominent and frequently used part of your home that so easily shows its age, kitchens are always a big part of the house hunting discussion.

Kitchen remodels are a huge expense and you may be at risk of not recouping your entire investment, with a 62% return being the average. But if you’re looking to make a big impact with just one room renovation to stand apart from the competition in the area – this is the way to do it.

Keep in mind that if you are remodeling with the intent to sell, even in the distant future, try to stick to a neutral palette that will appeal to a wide range of buyer tastes and preferences. A kitchen remodel will backfire if all your potential buyers are adding up the cost of removing those bright red cabinets or gold-toned countertops you fell in love with.

• Median Job Cost: $65,000

• Cost Recouped: $40,000 or 62%

New Vinyl Windows

You may not immediately think to replace windows as part of a smart remodel investment strategy, but this project offers a number of benefits for a new homeowner. Windows can provide added safety, more enjoyable sunlight, or energy efficiency, and twenty-one percent of REALTORS® have suggested sellers add them before attempting to sell their home.

It’s very possible to just break even or lose a small amount on this investment, but it’s much lower in overall cost than a huge kitchen remodel and still offers a huge selling point.

• Median Job Cost: $18,975

• Cost Recouped: $15,000 or 79%

A Bathroom Update

Because bathrooms are typically amongst the smallest spaces in your home, they need to pack a big punch when it comes to efficiency. Outdated bathrooms often suffer from poor layout or lack functional elements such as storage, a tub for the kids, or removable shower heads.

When it comes to the shower versus tub debate it’s best to let both win. While large walk-in showers are often seen as a luxury add-in, if you must choose between that and a tub you’re better off sticking with the more versatile tub. If you have more than one bathroom to work with, go ahead and put that nice large shower in the master and leave the tub for the second bathroom. After all, a tub is often needed in a spare bathroom for growing families and bath time for the kids.

Bathroom updates that focus on increasing the functionality and livability of this small space have fared the best when it comes to home renovation returns on investment. It’s likely you’d recover at least half the investment but you would surely succeed in making a space more livable for a potential new owner.

• Median Job Cost: $30,000

• Cost Recouped: $15,000 or 50%

New Hard Wood Flooring

You can’t go wrong with wood flooring — it’s one of the few materials that just refuse to go out of style. It has warmth, blends with any décor, and makes you feel like Lord (or Lady) Grantham just looking at it. Put it where everyone can appreciate it — living room, great room, and your kitchen.

• Median Job Cost: $5,500

• Cost Recouped: $5,000 or 91%

A New Garage Door

This one might surprise you. After all, how many listings have you seen boasting a brand-new garage door? This is one of those smaller home remodel investments that see a high return from potential home buyers.

The reasons for updating this less-than-glamourous amenity typically relates to worn-out surfaces, finishes and materials. If you’re likely to see a high return on your renovation budget for this project – why not add it in?

• Median Job Cost: $2,300

• Cost Recouped: $2,000 or 87%

An Upgraded Landscape

Many homeowners might ignore the state of their lawn when listing their home for sale because they assume the new owners will want to make their own outdoor space changes based on their personal preferences. On the contrary, your lawn can be one area of your home offering the highest return on investment for improvements.

The simple act of seeding or sodding your lawn will typically more than pay for the project. The percent value on adding sod to a lawn brings in an average 143 percent the cost of the renovation, and seeding pushes that to a shocking 417 percent.

Even if your lawn is already looking its best, performing a standard lawn care program can be a real selling point for buyers – who knew? A standard lawn care program typically involves six applications of fertilizer and weed control, and returns an impressive 303 percent on your investment. This sounds like a weekend warrior project that pays.

Other outdoor projects will, on average, allow you to recoup your investment and maybe make a little more on projects such as a new wood deck, patio, or the addition of some new shrubbery.

It’s often hard to know exactly what will make a potential home buyer fall in love with your home or renovation project, so it’s important to stick to the areas with the greatest need and likely largest return. And the more TLC you put into your renovation project the more obvious it will be to your home’s potential new owners that this house has truly been loved and well cared for.

• Sod Lawn Median Job Cost: $700

• Cost Recouped: $1,000 or 143%

• Seed Lawn Median Job Cost: $120

• Cost Recouped: $500 or 417%!

Sources: NARI & National Association of REALTORS® 2022 Remodeling Impact Report. Remodeling 2017 Cost vs. Value Report for Washington DC Metro Area ( © 2017 Hanley Wood, LLC. Complete data from the Remodeling 2017 Cost vs. Value Report can be downloaded free at www.costvsvalue.com).

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