Call it renovation, remodeling or refurbishment. Whatever name you use, you may be thinking of making changes in a home you own or one you want to buy. While your vision may include the coolest spa bathroom or most professional of kitchens, before you start surfing the web for ideas or asking contractors for bids, consider your ROI: Return On Investment.
There are upgrades that will pay for themselves over time. There are also upgrades that will cost you plenty and never make up for the expense when it’s time to sell. Knowing which is which could help you decide between insulating the attic and adding a tiled steam bath. Of course, in some parts of the country, you could tile the attic and use it as a steam bath in the summer! (Note: This is NOT a real remodeling suggestion.)
As you consider your renovation, think about how long you intend to stay in your home. If you plan to stay longer than 5 years, ROI may not be as important. You’ll get years of enjoyment from your Graceland-inspired Jungle Room, and when it’s time to sell you can strip the green shag carpet from the walls and paint them beige. But if you don’t plan to stay in the home that long, or you’re not sure of your plans, a backyard patio might not be your best investment, as you’ll see below.
Remodeling magazine publishes an annual Cost vs Value report and the 2017 version reviews 29 home remodeling projects, both mid-range and upscale, comparing the average cost for each one with the value it retains at resale. The projects range from attic insulation (ROI of over 100%) to a bathroom addition (ROI of just under 54%, about the same as a back-up generator).
Here’s a rundown of the 5 projects they identified with the highest ROI:
Project Cost Recouped
Attic insulation (fiberglass) 107%
Entry Door Replacement (steel) 90.7%
Manufactured Stone Veneer 89.4%
Garage Door Replacement 85%
Minor Kitchen Remodel 80.2%
And here are the 5 lowest:
Project Cost Recouped
Bathroom Addition (mid-range) 53.9%
Back-Up Power Generator 54%
Backyard Patio 54.9%
Deck Addition (composite) 56.4%
Bathroom Addition (upscale) 57.1%
Remember that there may be regional variations in what’s hot and what’s not. Remodeling breaks out regional data so you can compare job cost, resale value and cost recouped in your area.
You may want to consider larger national trends as you look at renovating your property. Baby Boomers are entering (or in) their senior years, so universal design has become a popular focus. This concept has its roots in the disability rights movement and the Americans with Disabilities Act of 1992, but it has been embraced as a way for people to modify their homes so they can age in place. While you can’t turn your 2 story colonial into a single-level ranch, you can look at installing a curbless shower with a hand-held sprayer and grab bars when you remodel the bathroom, or incorporating multiple counter heights in your kitchen re-design. The Center for Universal Design at North Carolina State University offers some interesting resources, and an Internet search will yield more ideas.
One more trend to keep in mind: Energy efficiency. The fact that attic insulation is at the top of the 2017 chart for renovation ROI indicates that buyers value upgrades that will make their homes more comfortable and save them money. Projects to consider include energy-efficient windows, insulated doors, a programmable thermostat, high-efficiency water heater, and energy-efficient HVAC system. Don’t neglect the low-tech projects like sealing ductwork, windows, and doors.
Whether you’re renovating a home you’ve lived in for years, or have found a home you’d like to buy that needs some work, talk to First Choice Loan Services Inc. We have loan options that may help you keep the rain out with a new roof, or create a rain bath in your new shower.