Maximizing Home Value Through Strategic Renovations
One of the best aspects of owning a home is the freedom to make it uniquely yours. Want to ditch the carpet? Go for it. Dislike the tan walls? Paint them any color you prefer. That wall between the living room and kitchen? Tear it down—just ensure it’s not load-bearing! Home remodeling and renovations are a growing trend in today’s real estate market, with more homeowners opting to enhance their current space rather than buying new homes. While some renovations stem from pure desire, it’s more strategic to focus on home improvements with the best return on investment (ROI) before you begin.
Important Questions to Ask
Customizing your space through renovations is fantastic, but it's essential to remember that these "improvements" can impact your home's value, either positively or negatively. Not everyone will appreciate, for instance, a sunroom that reduces backyard space or a bathroom with no separation between the toilet and shower (yes, we’ve seen it!).
To maximize your ROI, consider focusing on renovations known to produce higher returns. Before you start any home improvement project, think about how long you plan to keep your home. If you expect to stay for one to three years, ask yourself:
Will these home improvements appeal to potential buyers?
Will these updates increase the equity in my home?
What will my return on investment (ROI) be?
If you plan to stay in your home longer, consider:
What do I wish my home had?
What do I value most in my home?
What makes me feel relaxed in my home?
Would these home renovations meet my personal needs?
Calculating ROI
While home renovations can be a good investment, you can’t precisely calculate their return on investment (ROI) until you sell your house. The value of the project will help determine the home’s resale price and your net profit at that time.
To calculate ROI, take the final assessed value of the home renovation and subtract it from the initial value of that space. This number is the ROI net. Divide the ROI net by the cost of the renovation, including labor, materials, and other associated expenses. This number expressed as a percentage, will tell you how much money you can recoup from your initial investment.
Remodeling Projects with High ROI
According to Remodeling.com’s cost vs. value report, here are some home improvement projects that offer the highest ROI:
1. Manufactured Stone Veneer
Project cost: $11,287
Resale value: $17,291
ROI: 153.2% Manufactured stone veneer emulates natural stone but is easier and more cost-effective to install. Adding it to your home’s exterior can significantly enhance its appearance and value.
2. Garage Door Replacement
Project cost: $4,513
Resale value: $8,751
ROI: 193.9% A new garage door improves curb appeal, enhances security, and increases energy efficiency. Choose a design that complements your home’s style for the best effect.
3. Minor Kitchen Remodel
Project cost: $27,492
Resale value: $26,406
ROI: 96.1% Small changes like replacing cabinet fronts, upgrading appliances, and installing new countertops can dramatically improve your kitchen’s look and functionality without the high costs of a major remodel.
4. Siding Replacement
Fiber-Cement Siding
Project cost: $20,619
Resale value: $18,230
ROI: 88.4%
Vinyl Siding
Project cost: $17,410
Resale value: $13,957
ROI: 80.2% New siding enhances your home’s exterior appearance and provides better insulation, which can lead to energy savings.
5. Bathroom Remodel
Project cost: $25,251
Resale value: $18,613
ROI: 73.7% Upgrades like a new vanity, sink, and fixtures, along with improved lighting and flooring, can make a significant difference in your bathroom’s appeal and value.
6. Deck Addition
Project cost: $17,615
Resale value: $14,596
ROI: 82.9% A wood deck adds outdoor living space and versatility to your home, making it more attractive to potential buyers.
High-Impact, Low-Cost Improvements
Paint: A fresh coat of paint, particularly in neutral colors, can dramatically improve your home’s look both inside and out, making it a cost-effective way to boost value.
Flooring: Hardwood floors, luxury vinyl tile, and wood-look tile are durable and appealing options that can enhance your home’s comfort and resale value.
Entry Door Replacement: A new front door can make a great first impression and significantly improve your home’s curb appeal.
Making Your Home Stand Out
In a changing market, a home full of thoughtful upgrades can really stand out. You can also use your home’s equity to finance these renovations. At Texas Lending Partners, we’re here to help you leverage your equity for smart investments. Contact us today to learn more about financing your home improvement projects.
