Increasing home equity through renovation is always a good idea, but some ventures have a better return than others and experts advise focusing on those before seeking out pet projects. Remodeling magazine recently released a report that outlines the best renovations jobs based on investment and return and came up with some very specific suggestions. Top among them include putting in a steel front door, adding a wooden deck, replacing the garage door and investing in a minor (defined by Remodeling as about $18,000) kitchen remodel. For more on this continue reading the following article from TheStreet.
Spring is a popular time for home-renovation projects, but a recent study by Remodeling magazine and the National Association of Realtors found that not all upgrades are created equal when it comes to reselling your place.
"I always recommend making very wise use of your remodeling dollars to get a good return on investment," says Judy Moore, a suburban Boston real estate agent and a National Association of Realtors board member.
Remodeling recently estimated costs of 35 popular home-renovation projects in 81 major cities, then polled some 3,900 Realtors to calculate how much each upgrade would add to a property’s value.
That allowed the magazine to create the Remodeling 2012-13 Cost vs. Value Report — national and local rankings of which projects offer the best and worst ROI when homeowners later sell their properties.
For example, the study found that you’ll recoup 102.9% of the $3,014 that adding upscale garage doors costs in Los Angeles — but only 32.9% of the $29,370 you’ll pay for a home-office remodeling in Detroit.
"You don’t want to put something in that a buyer isn’t going to want to pay extra for," Moore says.
None of the projects studied offer a 100% or better return on their average nationwide price, meaning most U.S. homeowners will theoretically lose money on any job.
But some projects do provide at least a 100% ROI in certain cities, while Moore adds that you "have to look at the total package" when calculating an upgrade’s overall value.
"If I walk into a house that has and old kitchen or an old bathroom that needs a ton of work, that might be a problem to sell ‘as-is,’" she says.
Here’s a look at the five best projects Remodeling found offer the best nationwide average returns on investment. (The Remodeling 2012-13 Cost vs. Value Report is copyrighted by magazine publisher Hanley Wood, but data from the study can be downloaded for free at www.costvsvalue.com.)
Putting in a steel front door
Projected return on investment: 85.6%
Moore says this inexpensive fix (estimated cost: $1,137) can improve your home’s energy efficiency while making a good first impression on house hunters.
"The doorway is very important because it’s the first thing buyers go through to enter the home," she says. "If your home’s front door is in bad shape and paint won’t fix it, it makes sense to install a new one."
Installing fiber-cement siding
Projected return on investment: 79.3%
"Fiber-cement siding is a very popular product on new-construction homes because it’s very low maintenance, it doesn’t need painting for quite some time and it insulates a home well," Moore says.
And while Remodeling predicts you’ll spend $13,083 installing 1,250 square feet of prepainted fiber-cement siding and trim, Moore says the job will add to your home’s curb appeal — especially if you live in a cold-weather locale.
"Siding is one of the first things to go in [cold climates] because of the weather," she says.
Adding a wooden deck
Projected return on investment: 77.3%
Moore says she’s noticed house hunters favoring decks ever since the Sept. 11, 2001, terrorist attacks increased many Americans’ interest in entertaining at home.
"Decks are just a great way to enjoy your home," she says.
Remodeling calculates that installing a 16-by-20-foot wooden deck with posts, railings and a built-in bench and planter will set you back $9,327.
Projected return on investment: 75.7%
Moore says this upgrade can really boost curb appeal — again, particularly in cold climates — even though Remodeling estimates the job costs only $1,496.
"Water and snow and things bouncing up from the driveway can easily rot garage doors," she says.
Minor kitchen remodel
Projected return on investment: 75.4%
Study authors defined this job as repainting trim and replacing the kitchen stove, oven, wallpaper, flooring and cabinet/drawer doors and handles (but not the cabinet/drawer interiors).
Remodeling estimates all of that costs $18,527, but Moore says the price is worth it if your kitchen needs work.
"If the rest of the house is really nice but the kitchen is a disaster, you’re going to get much less for house than you deserve," she says.
This article was republished with permission from TheStreet.