Driven in part by the coronavirus pandemic, home renovation activity is on the rise with nationwide spending over $400 Billion a year. Many homeowners who would rather not brave a real estate world with rock-bottom inventory are choosing instead to reconfigure their current residences. But how effective is this at creating wealth? According to Remodeling Magazine, the average return on the 22 most popular renovation projects was 66.5%. This is up significantly from the 56% return homeowners received in 2018. So which projects are the best to invest in if you are looking to get your money back in the near future?
Below are the top ten home renovation/remodeling projects that offer the best bang for the buck. Notice that they are mostly small to mid-size projects. Most big investments like new rooms, bathroom remodeling and kitchen remodeling have return rates in the 50%’s. Projects like this are for those looking to stay in their home for a period of time, not those looking to sell in the near future.
When looking at the cost of projects from the National Association of Remodeling Industry and the estimated return value offered by the National Association of Realtors, the following are the top ten projects that offer the best ROI:
1. New Roofing
Thirty-nine percent of realtors suggested homeowners put on new roofs before putting a house on the market, and a third said that the new roof helped close the sale. Buyers want houses that are structurally sound and durable. A new roof on average cost $7,500 and saw a return of 107%.
2. New Wood Floors
New wood floors impact all rooms in the house and can give the overall house a new, up-to-date feel. On average, quality hardwood flooring ranges from $3-$8 per square foot. For a 200 square foot area, expect to spend about $1,200 if you install it yourself. Tack on another $3 per square foot if you have it professionally installed. 16% or realtors suggest homeowners do these before putting a house on the market and 5% said the project helped close the sale. The average cost for new wood floors is $4,700 and the return is 106%
3. Hard Wood Flooring Refinishing
A 2019 survey by the National Association of Home Builders ranked wood flooring as one of the top ten features homebuyers are looking for. Thus it comes as no surprise that two of the top three projects with a high ROI are wood floor-related. Sanding hardwoods is physically demanding. Make a mistake and you ruin the floor. Hire a pro to sand and then do your own staining and sealing to save money. Cost is $1 to $1.50 a foot. Fill carpet tack holes with Color Putty®. Refinishing hard wood floors typically costs around $2600 for a contractor to do it and the return is 100%.
4. New Steel Front Door
The first thing many people see when they look at your home is your front door. You want it to not only look good but be secure and durable. This is a relatively low cost improvement that should break even and help sell your house. The cost is $2,000 and the return is 100%.
5. New Garage Door
Like the front door mentioned above, the garage door plays on aesthetics. Like they say, you can never create a second first impression and a new garage door helps ensure that first impression is a good one. The cost for a new garage door is $2,100 and the return is 95%.
6. HVAC Replacement
Driving number six and seven is the move to “healthy home remodeling”. Results from a Joint Center for Housing Studies at Harvard University household surveys indicate that consumer appetite for healthier housing environments, broadly speaking, is substantial and growing. In 2018, fully 30 percent of U.S. households expressed specific concerns over some aspect of their “current home negatively affecting” a household member’s or other occupant’s health, up from 27 percent in 2014. These concerns included mold/moisture, indoor air quality and ventilation, water quality, chemicals in the home, noise insulation problems, and light pollution. To remedy the health concerns homeowners have put in water and air filtration systems, removed mold, used low/no VOC paint, installed ventilating systems or devices, included smart home devices, removed lead paint and asbestos and added insulation to reduce noise. An HVAC replacement costs $8200 and should recoup about 85% upon sale.
7. Insulation Upgrade
This can not only reduce noise but can lower your utility bills as well. Make sure the foil vapor barrier is installed down toward the ceiling to prevent moisture from seeping up. Check the US Department of Energy website to see the right level of insulation for your area. Insulation usually costs about $2,400 and can recoup 83%.
8. New Fiber-Cement Siding
It’s the only type of siding that combines the performance of masonry—minimal upkeep; rot-, fire-, and termite-proof; unaffected by wind or cold—with the look of painted wood clapboards, shingles, even stone or brick. Yet fiber cement goes for just a fraction of the cost of these other materials. No wonder nearly 15 percent of new homes are clad with the stuff. The average cost is $19,700 and the resale value is 76% of the cost.
9. New Fiberglass Front Door
Strong, durable and attractive, and ready to be painted any color, easily. Choose between dozens of styles with decorative glass panels or solid panels. Cost is $2700 with a 74% return
10. New Vinyl Windows
Big city window replacements pay off. The average homeowner recoups more than she spends on replacement windows in San Francisco, Seattle, Orlando, Miami, Chicago, NYC and Boston. For hot climates, there’s low-e glass that reflects heat. And for maximum efficiency, add argon gas inside the pane to prevent heat and cold transference within the window. Replacing windows doesn’t pay in all hot climates. You’ll recoup only 62 percent of your cost in the Las Vegas desert. On average vinyl windows cost $22,500 and recoup 71%.
After number four the improvements drop below 100% ROI. That doesn’t mean you shouldn’t do them. It just means that you aren’t likely to get back your full investment in this project. Projects like these, and others, can help you sell your house faster or might be better suited for those looking to stay in their house for a longer time.
So you like the idea of renovating, but you don’t have the money? Renovations like these can often be financed using the existing equity in your home. In a sense, you are using your home equity to create more home equity. To find out about a home equity loan or a cash out refinance that can give you money for repairs, contact EMM Loans.
