Which Home Renovations are Your Best Investments?
If your refrigerator and stove are still a matching shade
of avocado green, or you are forced to share a bathroom with
your three teenage daughters, it may be time to look into
a home renovation.
Remodeling your kitchen or bathroom are the best investments
you can make, with returns of over 100 percent.
Though remodeling can cost a pretty penny, it can provide
significant returns when it comes time to sell your home --
if you do it right.
Certain home renovations are a win-win situation, providing
enjoyment to you, the homeowner, and then making your home
more marketable, and worth more, in the future. Other renovations,
however, can set you back thousands with no guarantee of future
Smart Home Renovations
Kitchens have replaced living rooms and family rooms as the
new "heart of the home." Whether entertaining or
spending time with the family, the kitchen is likely "the
place to be."
Kitchen remodeling can range from installing granite countertops
or tile floors to adding built-in appliances, an island or
Says Mary Johnson, residential specialist with Premier Properties
in Naples, Florida, "The younger buyers, especially the
baby boomers, want a modern kitchen with the cooktop stove
and nice cabinets, not to mention wine coolers and subzero
refrigerators. I think it does make a difference. Even if
it's just a cooktop stove, they walk in and say, 'Oh, it's
a remodeled kitchen!'"
Estimated Return on Investment (ROI) at Resale: 92.9
percent, according to a 2004 survey by Remodeling magazine.
The Four WORST Renovations
In terms of return on your investment, the following
home improvement projects make up the bottom of the
- Adding a pool (ROI: 5-15%)
- Finishing your basement (ROI: 15-25%)
- Remodeling your home office
- Adding a gazebo
2. Bathroom (Remodeling)
How does a couples' walk-in shower, new skylights, Jacuzzi
tub or vaulted ceilings sound, for starters? According to
Harvard's Joint Center for Housing Studies, a mid-range bath
remodeling (which costs an average of $10,499), will add $10,727
to your home's value. The ROI based on these numbers? 102.2
" ... If money's tight, just replacing the water
fixtures helps," says Johnson.
ROI: 90.1 percent for a mid-range remodel, according
to the Remodeling magazine survey.
3. Adding a Bathroom
An extra bathroom will always add extra appeal to buyers
with families. If you're not sure you have the space, consult
with a contractor.
"You can't lose by adding a bath," Johnson says.
ROI: 86.4 percent for a midrange addition (approximately
$20,000). 80.1 percent for an upscale addition ($40,000 or
4. New Siding
New siding can give a major facelift to your home, and the
return you'll receive is one of the highest out there.
ROI: 92.8 percent.
5. Add a Room
At the top of the list are family rooms and bedrooms. Doing
so can be expensive, as it often involves extending walls,
rearranging rooms or adding box-bay windows, but the investment
will likely pay off in the future.
ROI: 80.6 percent for a family room ($50,000 or more investment).
82.7 percent for a bedroom (costs about $35,000).
More Renovations Not Necessarily Better
Before you begin any major projects, it's important to assess
your home's value and the neighborhood it's in. It is possible,
through a lot of renovations and money, to boost your home
up so high that you're no longer in the market.
"Are you going to do work that makes your house worth
$300,000 when it's sitting in a $100,000 neighborhood?"
asks Israel Ramos, a real estate agent in Phoenix, Arizona.
Be sure that your home renovations will add to the value
of your home, but be aware that getting too extravagant may
not bring the return you're expecting.
"Don't exceed the ceiling for the neighborhood, or you
won't get your money back," Ramos says.
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Old House: Renovations That Give You a Return on Your Investment
Remodeling: Pick Renovations That Pay Off