ROI of 9 Popular Home Renovations
Written by:
Frank Luisi
Frank is a VP at Own Up where he is responsible for business development and launching new products. He is a licensed property/casualty and title insurance producer.
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The longer you stay in your house, the more likely you are to look around and find things you’d like to remodel. Maybe you had a child or two, so the bathroom now seems cramped. Or after 10 years bending your back to reach into key kitchen cabinets, you want a more functional design. What about the backyard without a deck and thus no place to put a grill? It’s time to remodel.
If this is you, you have a lot of company. Home remodeling spending reached $172 billion nationally in 2018. And the National Association of Home Builders expects remodeling to increase in both 2019 and 2020. Many homeowners will recoup some or all of their costs when they eventually sell their homes. But how will you know if you fall into this category?
Below is a list of nine common home renovations and their return on investment at the time of sale. The National Association of REALTORS has a report on renovation costs and returns. On average, home remodeling improvements pay back 56 percent of their value. And some pay much more. For indoor jobs, data from both sources are listed.
Garage Door Replacement
If your garage door works and is not hideous looking, it’s likely you haven’t considered replacing it. But if you are thinking about selling your house and your neighbors have been making improvements, think again before passing on this job. Wouldn’t a steel or wood composite door matched with the existing motorized parts look nicer? Buyers think so!
Cost: $2,300
ROI: 87%
New Vinyl Windows
Many homeowners replace their windows because they are inefficient and lead to heat loss. An added benefit is that this job also mostly pays for itself at the time of sale.
Cost: $19,000
ROI: 79%
New Front Door
Your front door is literally the entrance to your house and the first thing prospective buyers see. Does it make the right impression? If not, you might want to upgrade. The payback is worth it. Fiberglass doors are the top choices of homeowners for their beauty and endurance, though the payback is slightly less than steel which is more commonly used in commercial properties. Neither of these doors shrink, crack or warp like wood can.
Cost: $2,000 (steel)-$2,700 (fiberglass).
ROI: 67% (fiberglass)- 75% (Steel)
Kitchen Remodel
People spend a lot of time in their kitchen, so it should come as no surprise that kitchen remodels are very popular. They can also be very costly. Remodeling your kitchen is about function and look, but don’t forget the paybacks.
Cost: $35,000 (upgrade)- $65,000 (replacement)
ROI: 57% (upgrade)- 62% (replacement)
Hardwood Floor Replacement or Refinishing
Hardwood floors are fashionable, but not so much when they are scratched up from years of use. Refinishing hardwood floors or replacing carpet with hardwood will attract buyers. They are also a no-brainer when you look at the return on investment.
Cost: $3,000 (refinish)- $5,500 (new)
ROI: 91% (new)- 100% (refinish)
Bathroom Upgrades
If your house has small and cramped or outdated bathrooms, upgrading them could make everyone a little happier. If your house has three bedrooms and only one bathroom, you might want to consider adding another. One thing that deters buyers is too few bathrooms. Consider doing a cheaper upgrade or addition to save, as these projects are costly. A midrange bathroom remodel costs about $20,000 and has a 70.1% return on investment.
Cost for an addition: $59,000
ROI: 50%
Pool Installation
A home with a pool is a dream come true for people who imagine warm days by the pool with a drink in their hand while the kids swim. Others see a smaller yard and a lot more maintenance, and would rather not purchase a house with a pool. If you live in a warmer climate, like Florida or Southern California, pools are more popular, while Northeast summers can be fickle and short when it comes to extended periods of warm weather.
Cost: The average pool costs $30,000. But that does not include a patio, fencing, maintenance, filling it with water and regular chemical treatment.
ROI: An increase in home value averaging about 7%, depending on the climate. A tropical climate like Florida where everyone has a pool might be higher while in a more moderate climate a pool might decrease the value of your house because it turns off buyers.
Finish Your Basement
If you have a smaller house or kids you have probably thought about finishing your basement give them a private place to play and give you some peace and quiet. You can also make a lot of your money back.
Cost: $6,500-$18,500
ROI: Up to 69%
Deck Addition
If your house didn’t come with a deck or patio, it’s likely you want to add one. Doesn’t everyone need a place for their grill and a place to sit and have a few drinks or a family dinner? It turns out it is a good investment. Wood is cheaper and has a higher payback, but it requires a lot more upkeep. Composite costs more but is almost maintenance free.
Cost: $11,000 (wood) and $18,000 (composite)
ROI: 82.8% (wood) and 63.6% (composite)
