There are generally two purposes of home renovation: if it’s a house you currently live in, then it’s about convenience and aesthetics, where you want something fresh for the house. If the house is an investment, however, more often the remodeling efforts are done to improve your house’s value.
Yet, even if the reason for remodeling is cosmetic or functional for your own use, it’s always better to consider how it will affect the house’s price.
It’s important to consider, however, that many home remodeling projects won’t add value to your house price. In fact, some can be counterproductive and decrease the value.
However, some home renovation projects can significantly improve your house’s value. So, when it’s time to sell, you can recoup the renovation costs and probably make profit.
Since home renovations can be (very) costly, it is wise to think ahead and consider whether the remodel will be a good long-term investment. Here, we will discuss some of the best home renovations that can increase your house value.
The kitchen is often associated as the identity of the house itself, and a kitchen renovation can really add value to the house. In good cases however, you can make 20-30% profit from what you’ve spent for the kitchen.
We should, however, be a little careful about kitchen remodeling. A general rule of thumb is that your kitchen shouldn’t overreach the overall look of the house and the neighborhood.
According to Dave Ramsay, the national (U.S.) average ROI for kitchen remodeling is 54%. Meaning, you can recoup roughly $54,000 if you spent $100,000. For minor renovation, however, this number can increase to 81%.
So, in general, maintain the original kitchen layout. There are three key areas where you can get the most value of your money: paint, cabinets, and appliances/lighting.
Simply repainting your kitchen with fresh, modern choice of colors can be a significant improvement, and it’s generally very affordable. Fixing and repainting old cabinets can also go a long way.
Invest on smart appliances and smart lighting. Not only they can improve the aesthetic and functional aspects of the kitchen, they can help save on your electricity bills—indirectly improve the ROI.
2. Reinvent Unused Space
More spaces in the house and preferably more natural light can significantly help the appeal of the property. However, building a brand new room can be a very expensive project, and there are often hidden costs that can cause it to be even more expensive.
Instead, convert any existing space in the house into a usable space. You can, for example, convert an attic into a bedroom or turn your garage into a usable room (in some cases, you can also build a room over the garage). The basement is a particularly interesting space to remodel. You can turn it into a man’s cave, a second living room, or even a usable apartment. The average ROI of basement remodelling is as high as 70%. So, although the average cost is relatively high at $65,000, it is worth considering.
3. Energy-Efficient Improvements
More and more people are getting more conscious about the environment and the expensive utility costs. So, an energy-efficient house will appeal to more buyers and will improve its value.
There are several remodeling projects you can implement with energy-efficiency in mind:
- Invest on smart home appliances and smart lighting. Appliances like smart thermostat can significantly cut down utility costs. In general, having an integrated smart home system will improve the house’s value.
- Even if you don’t want to invest in smart lighting, replacing your old bulbs with LEDs is a relatively affordable, yet significant investment.
- Invest on energy-star rated windows. The ROI for this is relatively high at 70%-90% (and remember you’ll also get 10%green energy tax credit in the U.S.). Energy-efficient windows can save over $500 in HVAC costs.
- Proper insulation can save a lot of money in energy, and will also be an added value for homebuyers
4. Landscape Improvements
The outdoor appeal of your house is very important when it comes to attracting buyers. Remember that first impression does matter, and how your house looks from the outside can add 5 to 10 percent of its current value.
There are several things you can do to improve your curb appeal:
- Repaint your exteriors and improve necessary details. These are quite affordable with high possible ROI.
- Roof remodelling has a relatively high average ROI of almost 70%, and can significantly improve your curb appeal.
- If you have any driveways, make sure it’s paved properly and consider renovations when necessary.
- Add a deck or patio to your front lawn. In general, a deck will provide a better ROI of more than 75%. A well-made deck or patio can improve your front yard both in aesthetics and functionality (in the form of usable space).
- Setting up a colorful garden might be an expensive investment, both in initial costs and maintenance. However, it can significantly improve your house’s value. This is a great option especially if you already have a gardening hobby.
Keep in mind, however, not to get overboard especially in your landscaping renovations, as the costs can quickly spiral out of control.
5. Home Office
With the blooming gig economy, the in-demand home office a significantly add some value to your house.Convert an unused room into a home office. In general, you wouldn’t need to make too many changes on the room’s layout, but you’ll need to invest on things like:
- Wall outlets that are convenient to reach for computers, printers, and other devices. You might also want extra wiring here and there.
- Internet and phone cables, besides the Wi-Fi. Some office appliances will require wired connection.
- Office furniture, from desks to office chairs to coffee tables.
Probably your biggest investment here will go to furnishings, which when well-maintained, will have good resale value.
Not all home remodeling projects are equal in value, and it’s also worth considering that costly home renovations don’t always equal good ROI and resale value. The 5 projects we have shared above are certainly among the best in terms of ROI, and are worth considering for your next home remodeling plan.