Home renovations can be an exciting part of homeownership – and in many cases, they can be a good investment. Making strategic home improvement decisions can help increase your home’s resale value, save you money on heating and cooling, and improve your quality of life.
That being said, there are some projects that can end up being colossal money pits, and might even make it harder to sell your home.
Here are some of the best (and worst) upgrades you can make to your home:
Best Home Renovations for the Value: Structural Upgrades
Before you install those gorgeous new countertops, make sure the structure of your home doesn’t need tending to, first.
That would include:
- Replacing your roof
- Fixing any drainage issues in your yard that could impact your home
- Fixing your foundation if you find cracks in your walls
- Plumbing or electrical upgrades
- Improving insulation
These aren’t the most fun areas to invest in, but they keep your house as safe to live in as possible, and that’s the most important job you have to do as a homeowner. Fixing these things also signals to potential buyers that you have taken good care of your home.
Energy and Heating Improvements
It costs thousands of dollars to heat or cool the average home all year. Investing in new windows, air conditioning or a heating system might be a significant cost upfront, but that money is often recouped quickly in energy savings.
The same goes for major home appliances like dishwashers, washing machines and dryers and refrigerators. Many new appliances are designed to save water or run on less energy, which saves you money in the long run.
Kitchen and Bathroom Renovations
When it comes to the aesthetics and functionality inside your home, kitchens and bathrooms tend to have the most payoff. Minor kitchen remodels have an ROI of about 72%, and bathroom remodels have an ROI of about 60%. These are rooms that get the most use in your home, so it’s typically worth the investment to make sure they are functioning properly. If you plan to sell, these are the rooms that often help sell a home. Why? Because kitchens and bathrooms are typically the most expensive and time consuming to renovate, so if they’re in great condition, potential buyers are more likely to spend more (and buy faster.)
The caveat here is that these are expensive rooms to renovate, so you need to determine if you can actually afford that expense. Plus, these renovations can incur other expenses. For example, if you’re renovating your kitchen, you should factor in the cost of having to eat out a lot more.
If your kitchen is totally run down and might hinder your home sale, it could be worth the investment. But if you’re just tired of the look of your kitchen, you should look carefully at your budget and savings to make sure you can afford that renovation.
Outside the home, the goal is to make your yard safe and usable. One of the best projects for your ROI is adding or updating a deck. (Just keep in mind that there are maintenance costs that come along with staining and repairing a deck.) But other potentially pricey projects – like redoing your driveway, purchasing a new garage door or cutting down dead trees – are also typically worth the cost.
Curb appeal is a key factor if you’re planning to sell, and this is where cheap upgrades can make a huge difference. According to Zillow, just painting your front door a darker color could net you up to an additional $6,000 in your home sale.
Additionally, improving your outdoor lighting, cutting back overgrown bushes and adding flowers are all simple extras that can make a big difference in curb appeal.
Potential home improvement money pits
In terms of adding to your home, the absolute worst bang for your buck is installing a swimming pool. Not only do pools deter potential buyers, but they can also cost thousands of dollars to maintain every year. That doesn’t mean you shouldn’t install a pool, necessarily. It just means you should think very carefully about why you want one, and if you can afford the installation and upkeep.
Overall, the worst home renovations are the ones that are impulsive or blow the budget. For example, if you need to renovate your bathroom, a simple upgrade will net you the best ROI. If you go way over the top with custom tiling and marble, your ROI will likely be lower.
That doesn’t mean you can’t go over the top in your home; it just means you should think carefully and run the numbers beforehand. Weigh your wants and needs, consider if you will be selling your home anytime soon, get a budget together, and then peruse Pinterest for ideas.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.
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