How Well Does Remodeling Your Home Pay You Back?
When planning a home remodeling project, it is important to consider which projects will create added value to your home should you decide to sell it. All remodeling projects have an immediate price tag. Some home improvements will increase the value of the home enough to fully recover their cost at resale, while others will only recover part or none of the cost. On average, home remodels pay back 56 percent of their cost at resale. This is an important consideration if the remodeling projects are for the purpose of increasing the value of the home for resale.
What to Know When Remodeling
There are some general rules to follow when remodeling. Exterior improvements currently seem to create higher payback values than interior improvements. This is because curb appeal is very important in real estate, and outdoor living spaces are popular. Small projects better recover their costs than large home projects. Along this same line, projects that involve replacement are better than full scale remodels.
There are several exterior home improvements which currently have the highest increases in payback value. Installing a new four-panel garage door is one of the best investments in terms of value. Consider replacing vinyl siding with a more visually appealing option such as stone veneer, even replacing old siding with new siding can add value. Replacing the entryway door with a new steel door, as well as adding energy efficient windows may be strong options. The addition of a pressure treated wooden deck also has one of the higher payback values.
Its What’s on The Inside That Counts
When it comes to interior remodeling projects, less seems to also be more. On popular home improvement shows, full-scale bathroom and kitchen renovations are very popular. In real life, full bathroom and kitchen remodels are unlikely to pay back their full cost. Smaller scale updates in a classic style in these areas will yield better results. New appliances and fixtures are desirable in resale values, but trendy or eccentric designs should be avoided at all costs. Simple replacement projects like replacing old laminate with new laminate may be smarter than a costly upgrade such as a granite counter top.
Location, Location, Location
Location matters when it comes to the value of remodeling. There are some rare parts of the country like San Francisco, where almost any home improvement project will have a high return rate on investment. In general, the highest returns on remodeling projects are seen on the West Coast, whereas the mid-Atlantic region may see around 10 percent less on returns. Completing renovation projects during slow times for contractors may be a way to decrease upfront costs and increase payback value down the road. Although location matters, some trendy items may not be smart as an investment update. Despite the usefulness of generators in hurricane-prone areas, they do not create payback value in resale.
It’s important to research what types of home improvement projects will pay back their cost if you intend to sell your home. Exterior projects to increase the curb appeal of the home often have the highest returns and may be the best area to focus on. Strategic and small-scale projects may create the most value.