What Is ROI? Return On Investment – many financial organizations and businesses use ROI statistics as an important concept decision making on any financial or investment situation. When it comes to home remodeling, ROI is what you will get back when you sell your home. To calculate the ROI of a project, take the increased resale value after the completion of the project, and divide by the cost of the project itself.
When tackling any home remodeling project, think about if it is something you want as an ROI project or if it is simply lifestyle improvements. If your project is important to you and your family, but not particularly to anyone else (especially a potential buyer), it is most likely a lifestyle improvement.
Interior Visualization is important when selecting your home improvement project. You want the buyer to mentally move into your home and see if they can visualize living in the space with their own belongings with all the basic elements in place.
What are your plans for your home? If you plan on selling your home within the next 1-2 years, these home renovation projects may not be best for you. However, if you are planning on living there for several years, then larger home improvement projects become more valuable because you and your family will have had time to enjoy and appreciate it more, adding value to it. You also want to keep in mind the neighborhood in which you live. When working on a project, you don’t want to overbuild in comparison of your neighborhood because the smaller houses will lower the value of your home regardless of how nice it is.
Best ROI Home Improvement Projects
- Installing or updating a fireplace – The National Association of Realtors 2013 Survey of homebuyer preferences listed fireplaces as one of their most preferred home features. Nearly 40% of those said that they would pay extra for a home with a least one fireplace. According to Marshall & Swift’s Appraiser Handbook, about 91% of the cost of a remodel can be recovered when reselling your home. Contact us for more information.
- Kitchen Remodel – The kitchen can make or break a sale for a buyer. Surveys have found that projects that were budgeted at 6-10% of the value of the home see the best ROI.
- Entry Door Replacement – This increases the curb appeal of your home, especially if it matches the style of the rest of the house. Most homeowners see a 68-102% ROI depending on the door type.
Worst ROI home improvement Projects
- Master Suite Addition – Since this is typically a large and expensive project, it is often one with a low return during resale.
- Sunroom Addition – Considering all the different parts that are needed in the construction of a sunroom, this can also become quite a costly project. Especially with the cost of installing windows.
- Home Office Addition – May seem like a good idea at first, but can often become unused space. Many people prefer the freedom of working anywhere they like.