Home Renovation Ideas That Give A Good ROI. Property valuation is a complicated niche. As real estate professionals know, various factors affect the market price of homes, including timing, location, and specifics of the offer.
Homeowners can often influence these factors by understanding market trends and investing in remodeling projects.
For many Americans, the idea of remodeling their home is an investment that will pay off in the future. However, the reality is often far from what we see on TV. In a buyer’s market, investments can quickly become sunken costs, and you can lose money in plenty of ways.
Nevertheless, it is a rule of thumb that you can expect to see a 60-70% return on investment under normal market conditions. Some projects, however, are more productive than others. So, where should you look before allocating your budget?
There are a few key areas you should focus on if you want to get the most bang for your buck:
- The kitchen is always a good place to start, as it is one of the most used rooms in the house. Bathrooms are another popular choice, as they can also add value to your home.
- Other great options include finishing a basement or attic space, or adding an addition to your home.
The first mistake homeowners do
It’s often said that you can’t do much with a bad hand in poker. The same goes for homeowners who are looking to remodel their property to increase its value. While remodeling can certainly help raise a property’s value, the location will ultimately determine the upward limit.
Sadly, there’s no way around this predicament. You can spend a fortune on your home, but it doesn’t make sense to far surpass the neighborhood average.
Most home prices tend to reflect local market conditions, so it’s important to be mindful of how much buyers are willing to pay. Intuition can be unreliable, especially if you’re not following the market closely.
Where should you spend your money?
Families who are looking to relocate will usually appreciate the extra space – so the best ROI (return on investment) will come after adding square footage or opening the floor plan for more functional space.
However, be mindful of where this extra footage goes. Decks, for example, while popular among buyers, are not the best renovation project at this moment due to the rising costs of lumber.
You may struggle to get a decent return on your investment if you choose to add a deck at this time, so you may want to consider other options that will give you a better ROI.
Interior versus exterior
The COVID pandemic has had a significant impact on remodeling preferences, according to a recent CNBC article. With many people unwilling to let contractors into their homes, much of the focus in the past year has been on exterior renovations.
This is backed up by a report from Forbes, which states that most remodeling projects with a good return on investment are related to entrance and curb appeal. Of these, garage door replacements offer a 92% ROI, while manufactured stone veneer comes close at 92%. In contrast, significant interior projects such as kitchen remodeling only offer a 66% ROI.
So if you’re looking to add value to your home with a remodeling project, it’s worth considering making changes to the outside rather than the inside.