Have you been thinking about renovating or remodeling your home? Are you thinking about selling your home? Do you know what the ROI (return on investment) the projects you have in mind can bring you? Let us walk you through what your options are and which renovations are best for you and your home.
Home improvements aren’t created equal. Some projects may actually decrease your home value. The ROI can vary between 20 to over 100 percent, depending on the type of project you take on. For the most part, the majority of renovations will not fully recoup their costs.
Market Value vs ROI
As mentioned above, not all home improvement will add value to your home. When looking to sell your home, you must take into consideration the average buyers taste. As most homeowners want to make their home unique, that may play a hand against them when it comes to selling.
Now looking at the projects that you may take on. There are two ways to see the projects return.
The first being Market Value. This is a way to see what your home is worth. This would be based on various factors such as location, if your home is in line with how your neighborhood looks. Standing out can impact your home’s value. For instance, if homes near you have in ground pools and you install an above ground pool, that may impact the value as your home stands out in a negative way.
The second is ROI (return on investment). This can be quantified by how much the value increases as a percentage of the cost of the project. In example if you replace the garage door for a cost of $4,000, this would add a $3,500 value to your home. The ROI would then be considered as 88%. So you would recoup a large portion of the project when the house sells.
Understanding which projects add the best value to the resale of your home and which are the best at recouping the investment you put in, helps you understand which projects are worth taking on.
Home Improvements that add Value to your Home
Now with that being said, here is a list of projects that will add value to your home and also have good ROI.
– Kitchen Renovations:
As kitchens are one of the rooms that are most in use in a home, buyers are typically looking for updated and modern kitchens. This project may increase the home’s appeal and value.
Now something to keep in mind is to not over do it. As more is not always best. Keeping the renovation simple may yield a higher ROI and value. As the more high end the kitchen project becomes the less the amount recouped will decrease dropping to about 31.7%.
– Bathroom Renovations:
Similar to kitchens, bathrooms are highly used and follow a similar pattern for ROI. Keeping the project clean, organized and appealing is better than a high end bathroom remodeling. The higher the project cost is the lower the recoup of the project decreasing down to 36.7%.
– Energy-efficient Renovations:
Energy-efficient enhancements for your home are a big draw for home buyers today as many of them are interested in green features and clean power sources. These projects helps lower utility bills and increase the overall sustainability of your home. An attractive feature that adds value for buyers.
One of the main projects would be a HVAC conversion, from a fossil fuel burning furnace to an electric heat pump. If you are in the Toronto area you may take advantage of the HER+ program for up to $10,000 in rebates which would help highly with the ROI and adding value to your home.
– Outdoor Enhancements:
– Basement Conversions:
Finishing or turning your basement into a habitable space is another project that can yield not only a great ROI but also an attractive addition for future income. It adds a precious living space as well as home value without adding to your home’s footprint.
Whether you turn it into a home office space as many people nowadays are working from home on a more regular basis, or Turning your Basement into an Income Suite to rent out. It is a great project to consider as it is one of the projects that helps with being an attractive addition to home buyers today.
What determines which renovations will add value?
As mentioned above, several things are taken into consideration when it comes to determining the value of your home.
Such as current real estate market trends, the location of your home and the neighborhood, the quality of work and materials used and of course the buyers preferences.
One of the best ways to get an idea of what the market looks like and what trends buyers are looking for is thee best resource you have available which is a real estate agent. They can provide guidance with what are the best projects that will add value to your home and get you into contact with the right professionals to get the work done right and ready to get the most value out of your home. (Contact us for a Free Market Value report)
What renovations decrease your home value?
As we had mentioned before there are projects that may actually impact your home value in a negative way. Making your home too uniue may be a turn-off for most home buyers as it may be something that they are not looking for. The more personally customized a home is, the less attractive it may be for home buyers. High-end and lavish upgrades may be a great personal touch but most home buyers would like to keep it simple and ad dtheir own personal touch once they buy the home.
Keeping your renovation projects simple and functional is what will increase the curb appeal for prospective buyers. Staying consistent with the rest of your home and neighborhood are a good rule of thumb. Modernizing and being trendy are two different things. Sticking to the basics is the best way to get the best value for your home.
In conclusion, when you are planning to sell your home, keeping in mind the best renovation and remodeling projects are those that will add value for your home and will allow you to recoup the most or majority of your investment. Keeping it simple and less customizable is what will attract potential buyers.
