Which home remodel projects get the best return on investment? As a Realtor, it’s a question I get asked quite often. Kitchens and bathrooms steal the renovation spotlight, but are not necessarily the best return on investment when you sell your home.
The trade magazine for builders and contractors, “Remodeling” has been tracking the cost vs value added since 2002. The projects that consistently rank the highest have four common characteristics:
- Low maintenance
- Good quality – but not necessarily the highest
- Energy efficient
- Not too costly
The top 5 projects with the best return on investment.
What is the top return on your investment? Replacing your front door year in and year out, is the winner. This simple project has the best bang for the buck, a whopping 98% return on the investment. It is the lowest priced project on the list and carries the added benefit of increasing energy efficiency, which is always a plus.
Second behind replacing your front door, is replacing your siding. No other single project can impact the curb appeal as much as replacing the siding. It is estimated that worn siding can contribute to a loss of up to 10% of your homes value. By adding new, quality siding you can boost not only curb appeal but also the energy efficiency of your home. By combining a new housing wrap and quality siding, you can reduce your annual energy cost by 5%. The return on this type of upgrade comes in at 84%.
At 82% return on the investment, a minor kitchen remodel comes in at number 3 on our list. While kitchen remodels are always a good idea, the more modest remodels have a better return on investment than an all out high end remodel. “People are always willing to upgrade their kitchens,” says Dale Contant, secretary of the National Association of the Remodeling Industry. “It’s the hub of the home.” This is further underscored by stats from Harvard’s Joint Center for Housing Studies that showed over the last 10 years, homeowners have spent more money on kitchen remodels than any other home improvement category.
Although its recent return on investment has fallen off a little in recent years, deck additions are a strong number four. In recent years, during the down economy, decks were seen as a bit of a luxury. With the popularity of outdoor living, decks are making a strong comeback. It’s easy to see why people are turning to building outdoor living spaces, at a cost of $8 to $30 a square foot for outdoor spaces compared to $150-$300 per square foot for new home additions. A lower initial investment and a higher rate of return at 81% makes a new deck really attractive.
A new garage door comes in at number 5. An average garage door replacement costs around $1600, with a return of just under 81%. A new garage door can add a big boost to your homes curb appeal. Visually from the street, your garage door is the second most visible feature of your home, second to only siding.
A few projects that were close to the top 5 include: attic bedroom remodel (79%), window replacement (78%), and bathroom remodel (77%). Two projects on a steady decline include, home offices and sun rooms.
This list shows the importance of curb appeal, as 3 of the top returns on your investment fall into that category . Energy efficiency also is a factor taken into consideration more and more. Not only are energy efficient upgrades popular with buyers, but homeowners also get the added benefit of lower utility bills. At the end of the day, everyone likes saving money.
