Over the course of time, owning a home will often lead to different wants and needs for a house. Sometimes this leads to a move, and sometimes, renovations are a better alternative. While some renovations are driven by personal preference and style, it’s important to consider the return on investment (ROI) when planning major home renovations. Investing in the right areas can not only enhance your living space but also increase the resale value of your property. The following renovations are the ones various sources have cited as offering the biggest bang for your buck in terms of ROI.
- Kitchen Remodeling: The heart of any home, the kitchen, is often considered the most critical area to invest in for a high ROI. A well-designed and modern kitchen can significantly boost your home’s value. According to Remodeling Magazine, a minor kitchen remodel has an average ROI of 72.2%, while a major kitchen remodel has a respectable ROI of 54.9%. Upgrading countertops, cabinets, appliances, and fixtures can revitalize your kitchen and attract potential buyers.
- Bathroom Renovation: A well-appointed bathroom is another renovation that yields a high return on investment. Homebuyers are often attracted to updated bathrooms with modern fixtures and amenities. According to the same Remodeling Magazine report, a midrange bathroom remodel has an average ROI of 57.1%, while an upscale bathroom remodel has an ROI of 49%. Focusing on enhancements to functionality, aesthetics, and energy efficiency of your bathroom will maximize appeal.
- Outdoor Improvements: Curb appeal plays a crucial role in creating a favorable first impression for potential buyers. Investing in outdoor improvements can greatly enhance the value of your home. Upgrading your landscaping, adding a deck or patio, or installing outdoor lighting can make your property more appealing. The National Association of Realtors (NAR) states that a well-maintained landscape design can offer an ROI of 100% to 200%.
- Energy-Efficient Upgrades: In today’s environmentally conscious world, energy efficiency is highly sought after. Upgrading your home with energy-efficient features not only reduces utility bills but also increases its marketability. Installing energy-efficient windows, upgrading insulation, and investing in high-efficiency HVAC systems can yield substantial long-term savings. According to the U.S. Department of Energy, energy-efficient upgrades can save homeowners up to 30% on annual energy costs.
- Basement Renovation: Transforming an unfinished or underutilized basement into a functional living space can be a wise investment. Adding extra living space, such as a bedroom, home office, or entertainment area, expands the usable square footage of your home and increases its value. The ROI for a basement renovation can vary depending on the region and the extent of the project, but it generally offers a good return on investment. For those without a basement or in areas of the country where basements are uncommon, other space increases can offer a similar ROI. Think attic conversions, garage conversions, or even a room addition if your home has sufficient space.
When considering home renovations, it’s important to balance personal preferences with potential ROI. While over time styles and preferences will vary, kitchen remodeling, bathroom renovations, outdoor improvements, energy-efficient upgrades, and basement renovations have consistently shown a solid return on investment. Before undertaking any major renovation, it’s a good idea to consult with a real estate professional (we know some great ones!) to discuss how renovations could effect the marketability of your home. In addition, you’ll want to speak with a contractor to understand the project details and costs so you can decide on the best ways to invest in your home.
Did you know? MasonMac offers renovation financing through our Conventional renovation loan and the FHA 203k program. We also have HELOCs to access home equity to complete your home projects. Questions? You can ask an expert here!