Those who renovate their home seek not only more comfort in their everyday life, but also want to add value to their property. Sometimes the remodeling projects that add more comfort and match the home owner’s style don’t actually add value to the property. If you plan on selling your home within 5 years, it’s important to consider the return that can be obtained from the upgrades and if this return is greater than the investment made.
Home renovations are expensive! You want to ensure you are getting a return on your investment when embarking on a home reno project. If you want to invest more than you can hope to recover because you love your house and plan to live in it for a long while, that’s totally fine! But if ever you do sell your house, you might still find yourself wondering “how likely am I to make money off of my house?”
According to renofi.com, the average home improvement project gets you a 70% ROI. What’s not included in that estimate is the increase in quality of life while you live and enjoy the home renovation.
Let’s break down the report made by the National Association of Realtors and National Association of the Remodeling Industry to find out what type of home remodeling project can give you the best ROI.
Adding Square Footage
The best long term investment you can make to your home is creating more square feet. Creating an addition, finishing a basement or adding an additional bed/bath will definitely pay off in the long run.
Kitchen/Bathroom Remodel
Kitchens and bathrooms are typically one of the highest ROIs. They are the most essential and high functioning rooms in a home.
When choosing kitchen cabinets, countertops, and flooring, aim for classic or neutral colors and styles rather than the latest trend that might be out of style when you sell. It’s all about finding a balance between what you love and what the general public will love.
You can get a high ROI as long as you take a few careful considerations. If your renovation is purely aesthetic or far outside the norm of the neighborhood, you might not get a high ROI.
Updating appliances, functionality and ease of use will ensure a higher ROI and a more enjoyable living space in the meantime!
Context
It’s important to consider your neighborhood when making home improvements with a return of investment in mind. Let’s say you buy your house for $250k and put in another $50k of home improvements. If the houses in your neighborhood are worth $300k, then this is a good ROI. If you do work that makes your house worth $500k in a $250k neighborhood, you may have a hard time attracting the right kind of buyer.
The condition of the market will also affect your ROI. If you paid way over the asking price during a hot market and spent even more to remodel the home, you are less likely to get your money back when you sell in a cooler market.
Floors
The results found by the National Association of Realtors and the National Association of the Remodeling Industry is pretty interesting. This group discovered that the best ROI is in floor renovation.
According to this 2022 article from cnn,
“The report estimates the cost of refinishing floors at $3,400 with an estimated return on investment of $5,000, for a 147% recovery of costs. The estimated cost of installing hardwood floors is higher at $5,000, but with a $6,500 return on investment, 118% of the cost is recovered.
Refurbishing wood floors can get your 147% cost recovery, whereas new floors can get you a 118% return.”
If you have wood floors, this remodeling projects your best bet at getting a good return.
Quality Materials
One of the easiest ways to get a decent ROI is to use quality certified products that will last a long time with minimal maintenance.
When building or remodeling a house, it is important to verify the quality of the products you select.
For example, it is risky to buy an uncertified door. The biggest risk is the high probability of the door having defects in its finish. After just a short time of use, problems will manifest that will affect the lifespan, functionality and appearance of the door.
When you buy FSC products from EightDoors, you mitigate this risk. We exclusively use reforest wood from ethical plantations.
Did you know that all of our products are compatible with CARB II (California Air Resources Board) and do not emit compounds that can be toxic to people or the environment?
Learn more about how quality doors are made.
