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Home improvements that can increase value — and those that don’t

July 29, 2020
6 min read

What we'll cover

Do's and don'ts for each room
How to increase curb appeal effectively
Resources to calculate your return on investment

After spending a significant amount of time at home, you’ve been itching for an upgrade. New paint, flooring, or maybe even a whole house remodel, perhaps? Regardless of the project size, you’re now ready to tackle the home renovation project you’ve put off in the past to make your space as comfortable and enjoyable as possible.

When you put thousands of dollars into a home improvement project, you hope to see that investment pay off down the line, especially if you take out a loan to cover renovation costs. But when it comes to renovations, not all are considered equal — and you don’t want the project that turns a house into your dream home to be the reason potential buyers walk away in the future. (Like if a remodel blows the price of your house far beyond the neighborhood average or an addition results in significantly higher property taxes or extra maintenance.)

Before you jump into your renovation and knock down the kitchen wall or install a whirlpool bath, it’s important to consider whether the renovation costs are going to boost your home’s resale value or make it a tough sell later on.

Dos and don’ts: Kitchen

In general, a kitchen remodel can be a great way to boost the value of your home. Even a minor renovation — like painting the walls and kitchen cabinets, updating countertops, and/or replacing the flooring — can net you nearly 80% return on investment (ROI). Basically, you’re giving the space a facelift with these fixes, not necessarily changing the foundation.

GIF depicting kitchen updates that could net a 80% ROI

More extensive kitchen renovations may not yield as high of a ROI. According to Remodeling’s 2020 Cost vs. Value Report, an upscale major kitchen remodel only leads to about 54% of recouped costs. So, prior to investing in luxury appliances, hardwood floors, and granite countertops (plus an interior designer to help it all come together), make sure to get a feel for what other comparable homes nearby offer. And don’t forget to think about how your kitchen will fit into the rest of your home — an old house with a modern, sleek kitchen may not feel cohesive and could be a turn off to others when you sell.

If you do need to replace your appliances like the fridge or dishwasher, consider energy efficient ones. Not only will Energy Star products save you money month-to-month on electricity costs, you’ll do better for the planet, and possibly attract buyers with these eco-friendly upgrades.

Even a minor renovation — like painting the walls and kitchen cabinets, updating countertops, and/or replacing the flooring — can net you nearly 80% return on investment.

Dos and don’ts: Bathroom

Bathroom remodels are the most popular interior renovation project for homeowners. Surprising, right?

When it comes to bathrooms, both remodeling and adding a new one can boost your home’s value — but the amount depends. For a one-bathroom house, you can likely recoup between 80% and 130% of the amount it takes to add a second bathroom. And the ROI for a bathroom renovation ranges as well, depending on your market — though the 2020 Cost vs. Value Report estimates you’ll recoup between 56% and 64% of costs.

GIF depicting bathroom updates that could net a 56–64% ROI

Similar to a kitchen, going all out on a bathroom remodel project isn’t likely the move to make if your goal is to increase your home’s value. While adding heated floors or a whirlpool tub (basically turning your master bath into the equivalent of a Palm Springs spa) might seem like the lap of luxury, it can actually result in high maintenance costs, increased electric bills, and even the need for a new hot water tank.

Dos and don’ts: New rooms

Adding an entirely new space to your home can be an expensive project. Even with the new square footage, you’re less likely to recoup the costs than if you renovate an existing space.

If possible, you might consider finishing your attic or basement. And the more versatile you can make the space, the more people will be attracted to it. An area that can act as a playroom, office, guestroom, or even an in-law suite ? Score.

Along those lines, remodeling a room for a specific purpose may not be your best bet to increase resale value. For example, a formal dining room with built in china cabinets or a home office decked out with shelves and a permanent desk might be too limiting for buyers who don’t have use for those extras.

If you aren’t in the market for new appliances but still want to give your home a green boost (earth-wise and money-wise), you might consider upgrading your windows and doors. By adding energy-efficient windows and doors, you’ll better insulate your home and save on electricity bills — Energy-Star windows can save you up to $500 a year! Not only can you potentially boost your home’s value, you’ll save on A/C and heating until you’re ready to sell.

GIF depicting a window update that could save $500 per year

Dos and don’ts: Outdoor

Ahh, the great outdoors. If you want to elevate your home’s value, adding some outside square footage might be the way to go. That means skipping the sunroom and going for a deck instead. The 2020 Cost vs. Value Report estimates you can recoup about 72% of the costs associated with building a wood deck — though the ROI is less for composite decking.

While a new deck or patio can make your home a more attractive real estate option to potential buyers, a swimming pool can do the opposite. In-ground pools cost tens of thousands of dollars to install, and it’s unlikely that you’ll recoup the costs. That’s because pools can make homes much harder to sell due to their expensive maintenance and electricity costs. Plus, families with young children may view them as dangerous.

Of course, where you live matters when it comes to swimming pools. Homes with them may be far easier to sell in hot climates like Florida or Arizona than other regions — and if pools are the norm in your neighborhood, it may be a worthwhile endeavor. Still, it’s unlikely the addition of a swimming pool will increase the resale value of your home enough to make up for the installation and its ongoing maintenance costs (which can be thousands of dollars a year).

Finally, when you’re deciding where to focus your home renovation budget, don’t discount the added value of top-notch curb appeal. If you’re hoping to attract future buyers with an HGTV-approved exterior, a little work can go a long way. Small updates like replacing your front or garage door can make a big difference, and you’ll likely make back around 70% on what you spend.

GIF of updated front door that could net a 70% ROI

And if you’re hoping to boost the “wow” factor through landscaping, remember less is more. A well-kept lawn with tidy shrubbery will generally be more enticing to buyers than extensive landscaping or an over the top garden, as more landscaping requires more work (and money) to maintain.

No matter what kind of project you do, if you’re taking out a renovation loan or tapping into your home equity for a remodeling or home improvement project, it makes sense to consider how this investment will pay off in the future. To make the most of every dollar you spend, be sure to vet the contractors you work with and receive estimates from at least three, so you can compare costs before getting started.

Keep in mind, your wants and your quality of life matter, not just the monetary value of your home. If a pool will bring your family joy and entertainment for years to come or a professional-grade kitchen will help you foster your passion for cooking, then don’t knock these choices for fear of selling down the road. Because, as we all know, the comfort and happiness your home can provide plays a major factor in overall wellbeing.

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