Whether you’re buying a home, living in your current home, or have an investment property, most likely there are areas of the home you want to update or, depending on the condition of the home when it was purchased, areas that need to be updated. Unless you have an unlimited supply of money, it will be important to ensure that you’ll get the best return on your renovation investment by choosing the which ones to complete wisely.
The top two spaces that homeowners naturally want to update first are the kitchen and the bathroom. Bathroom and kitchen remodels average about $20,000 to $90,000 out of pocket cost, but on average have a return on investment (ROI) of about 60-80%. Overall, that ROI percentage seems pretty good, but there are other less costly renovations that will bring back more bang for your buck.
According to Remodeling, the majority of the top 10 renovation projects in 2019 with the highest ROI involved the exterior of the home. A garage door replacement brings back 97.5% ROI while a deck addition, siding replacement, and a steel entry door replacement will bring back 75%.
Curb appeal is what will get buyers attention before they’ll be interested to see what’s on the inside and while potential buyers care about the exterior of their homes being updated and aesthetically pleasing, they would rather someone else foot the bill. Updating the exterior as a seller will also allow buyers to feel more comfortable since they’ll have the option to use their money to update the kitchen and bathroom to their own taste and needs.
Doing updates are great, but it’s important to know what’s expected in your area. Head over to Homes.com to check out homes currently on the market and see what features and finishes are on trend, you can also check the value of your home as it is right now with their Home Values tool. Doing the bare minimum or going overboard on finishes could ultimately put your home at a disadvantage in an already competitive market according to Investopedia. Something else to consider is to do the renovations that make the most sense. Carpets that are heavily soiled, walls that need to be patched and painted all take precedence over adding a pool. If the home has any structural issues or leaks, spend money to solve those problems as opposed to updating the kitchen cabinets. Knowing that the roof is newer or the HVAC has a lot of life left, brings buyers peace of mind. Buyers want to know that they made a sound investment purchasing the home in the first place.
If you’re not planning on selling your home, it’s okay to update based on your own current wants and needs. For example, we recently updated our bathroom by removing the whirlpool tub and in its place, created a water closet for the toilet. It could potentially be a risky move down the road since it was the only tub in the home, but no one in our family takes baths. Removing the tub and moving the toilet actually opened up more space for storage, which will better serve our family. There’s nothing wrong with updating your home with the expectation that you’re going to get your money’s worth of enjoyment, there’s just no guarantee that the next person down the road is going to be as excited.
Investment properties for rentals add an extra point of interest when talking about renovations. Keeping the property updated, while knowing there may be more frequent repairs, and keeping rental fees competitive, will all play a major part in deciding which renovations take priority.
The key, is to do your homework before you sign your first renovation contract or spend that first dime on any home renovations. Think about your overall goals for your home, what you hope to achieve, and understand your area and the current market to see where your home stacks up against the competition.