10 Upgrades That Increase Home Value
Upgrades that increase home value are doubly rewarding.
There’s something satisfying about a makeover, especially when it involves a home renovation. The massive influx of “fix and flip” shows on TV is just one example of how much we love a good transformation story. Turning an outdated property into a modern, fashionable place is also an excellent way for investors to maximize its value.
The highest profits happen when you focus on renovation projects that promise a high return on investment (ROI). It also helps to cut costs on labor and materials by looking for deals or doing some easy jobs yourself. So, what upgrades increase home values, and what projects should you approach with caution? Here are this year’s best upgrades from Marketplace Homes. Let’s break it down.
Before You Start: Know Your Market
The property’s value highly depends on its comparable properties (comps). If you plan to renovate to boost values and profit in the future, you should always check out your property’s competition. For every property, there is an ideal combination of renovations that offer the most value. Since no two homes are the same, it’s best to look before you leap.
If there are no improved homes in the neighborhood, then it’s strategic to stick to low-cost but high-impact renovations like fresh paint and new flooring. These make a home look substantially better and improve its marketability. Doing some jobs as a DIY and using wholesale building materials can also minimize the upfront cost while providing visible improvements that appeal to buyers. The key is to give your property an edge without going underwater with contractor bills.
Keep up with the Joneses.
For example, if you invest in a 1,000-square foot rambler and no other home in the neighborhood has a garage, spare yourself the high cost of a garage addition. This upgrade won’t add value to its market price. Instead, give the home the necessary, basic upgrades to get it to sell, such as new carpets and fresh coat of paint. You may not even need to install new lighting or appliances if they are in good condition.
Most starter home seekers want something clean, functional, reliable, and safe. They are less likely to spend another 20k on a luxurious garage when they just need a roof over their head. In fact, they might pass on your home for the more affordable one across the street. Curb appeal is a plus, but it’s not a deal breaker if the exterior is basic.
On the other hand, if you acquire a property in a move-up home neighborhood, you can expect choosier renters and buyers. They have had the starter home and college apartment experience and want more luxury in their life. These buyers would prefer a home with a bathroom remodel and natural stone countertops. Updated light fixtures, faucets, new windows, smart thermostats, a finished basement, and energy-efficient appliances can greatly add to a move-up home’s marketability.
Use Market Data to Help.
Take a look at the local competition and see what other active or recently closed listings offer. Then, focus on those must-haves to get the best return on your investment. Knowing what upgrades increase home value makes all the difference in your success. Stick to projects that promise higher ROIs so that your home appraises well.
And finally, be wary of luxurious upgrades like heated swimming pools, fancy landscaping, and niche high-end automation like voice-controlled shades. Unless you’re in a top-tier market, these won’t be expected and can even become an unwanted expense to the market you’re in.
Pay attention to your comps to ensure that your upgrades give you a slight edge. There’s no need to blow them out of the water. Most of the time, simply having a neat, functional, well-maintained home will be enough to impress buyers and appraisers.
- Tip: It helps when the buyer can see themselves in the home. Neutral colors and home upgrades that embrace timeless styles help homebuyers start from a blank slate.
High ROI Home Improvements that increase value
As the cost of building materials and labor fluctuates, it’s crucial to stay on top of current ROI trends. Here are the home improvements that give you the most significant ROI based on the 2022 Cost vs. Value Report from Remodeling Magazine and the 2022 Remodeling Impact Report from the National Association of Realtors.
#1: Refinishing Hardwood Floors
Among all home improvement projects, refinishing hardwood floors takes the prize for the best value-boosting renovation with an ROI of 147%. That means that not only does the entire renovation cost get added to your home’s value, but you gain another 47% on top of that figure. Why? It costs less to refinish existing hardwoods instead of replacing them, yet the shiny beautiful look of a refinished wood floor is just as valuable to buyers.
#2: New Wood Flooring
When you need a low-risk project, this is it. At an outstanding 118% ROI, new wood flooring makes your home grow in value. This refresh brings luster back to your home while being a timelessly appealing upgrade to buyers and appraisers. For the most impact, install this flooring in highly visible areas like the living room. It’s also a boon for your home equity!
#3: New Interior Paint
According to painting pros, the national average ROI for new interior paint is 107%. Both interior and exterior painting are projects with a significant return on investment (ROI). However, exterior paint doesn’t fare as well at 55%. To keep your investment marketable, choose paint colors that are neutral like white, beige, or light grey in common areas.
#4: Insulation Upgrade
Replacing insulation with something energy-efficient like spray foam yields a 100% return. On top of that, new insulation saves you money on bills, reducing the wear and tear on furnaces and air conditioning units, making it just as eco-friendly as a new home construction. It’s an overall excellent money saver!
#5: New Roof
Having a good roof is more important than ever. You need one under 20 years old to confidently sell on the open market and qualify for the most homeowner’s insurance plans. According to the NAR, a new roof gives you a 100% ROI and adds to the sale price to your home– regardless of the material. So go ahead, choose asphalt.
#6: Garage Door Replacement
A secure, modern garage door is an attractive feature for homeowners and buyers. It improves the functionality of a home and brings peace of mind. The typical upfront cost of this replacement in 2022 is $4,041, from which $3,769 is retained, giving this project an impressive 93.3% ROI. According to the NAR, this figure is even higher, at 100%.
#7: Manufactured Stone Veneer Siding
Your home’s curb appeal is a big deal, especially in neighborhoods with HOAs. After all, the first impression matters. The average cost of manufactured Stone Veneer siding is $11,066, and this project retains $10,109 of its value, resulting in an incredible 91.4% ROI. This pertains to a 300 continuous square foot addition.
#8: Finishing a Basement
Growing families, the need for more living space, or simply wanting more options for entertainment make a basement conversion a profitable project. This project yields an impressive 86% ROI. Who would have thought a new gaming den would be good for your wallet?
#9: Fiber Cement Siding Replacement
Getting a sturdy fiber cement siding upgrade can get you an ROI up to 86%. Other figures estimate that the upfront cost of $22,093 retains around $15,090 of its value, which yields a competitive 68.3% ROI. Check with your builder and shop around for different options to get the best returns.
#10: Closet Renovations
Appraisers are always looking for practical conveniences that improve a home’s value. Improving storage, organization, and livability makes a home more desirable. A closet renovation is one of the surprisingly profitable upgrades, keeping steady at an excellent 83% ROI. Prospective buyers always want more storage space too, so this upgrade is a win-win.
Other Notable Improvements to Improve Home Value
For most home renovations, recouping between 80-100% of your initial investment is incredible. But even if you land between 60-80% ROI, you can still seal in extra value to your home. Here are some other notable home improvements that increase value.
#1: Vinyl Siding Replacement
Vinyl siding offers up to an excellent 82% return on your investment, but other figures suggest 67.2% because your return depends on the quality of material and labor costs. But overall, it is an affordable material that offers plenty of bang for your buck.
#2: Total kitchen Renovation or Bathroom Renovation
The adage that the kitchen, bathroom, and floors sell a home still rings true. Head-to-toe kitchen and bathroom renos have an outstanding 75% ROI. This means you don’t have to be afraid to transform these essential spaces because these improvements will positively affect your home’s value during appraisal time.
#3: Mid-Range Kitchen Remodel
The cost of a mid-range kitchen remodel averages $28,279 and keeps about $20,125 of its value, offering a sizable 71.2% ROI. Mid-range remodels often involve rearranging the kitchen layout, installing better materials, new appliances, and even some new cabinetry.
#4: Vinyl Window Replacement
Vinyl is one of the most affordable replacement window materials. It’s also sturdy and a reliable choice. Installing a typical set of them costs $20,482, while the project retains $13,822 of that figure. This yields a good 67.5% ROI rate. This project also appeals to homeowners and buyers because of the long-term benefits of energy efficiency and lower energy costs.
#5: Steel Entry Door Replacement
This project is low-cost compared to the other upgrades on this list, but it offers much value. Steel replacement entry doors are more secure than other materials and only cost $2,206 on average. They keep $1,409 of this figure, yielding a decent 63.8% ROI.
Best Home Improvements to Increase Value
Knowing what upgrades increase home value nationally empowers homeowners and investors to make the best financial decisions regarding renovations. It is up to you to decide what projects are worth the investment and when it is time to release properties.
However, you don’t have to make these important decisions alone. If you need assistance releasing a property that costs too much to renovate or want expert real estate advice on making your portfolio more marketable, contact Marketplace Homes today. One of our real estate agents will get in touch with you as soon as possible to discuss your needs.