Ask a number of seasoned home renovators about what they think is the best home improvement project for your money, and you’re likely to get three different answers. That’s because there is no perfect answer to this question. What you ultimately decide to do really does depend a great deal on your own individual uses and needs, the location of your property, and a potential buyers needs and desires (if you are thinking of selling).
Individual Needs and Desires
Some renovations will not provide a great payback in the marketplace, but are essential for your own personal comfort and proper use of the property. For example, you may want to add an extra bedroom in your house, but that may compromise the size of your existing bedrooms… this may serve your needs at the time, (perhaps you have a large family), but may not be what someone else would be willing to pay for when purchasing the house.
Location of Your Property Matters
Some upgrades simply do not make sense in the neighbourhood your are in, and can can actually decrease the value of your property. For example, If you build and extravagant front porch and entranceway in an otherwise middle-class, high conformity neighbourhood, you will have to wait around for a buyer that doesn’t mind “sticking out”. These changes will not appeal to many people looking for a house in that particular neighbourhood, even though it may appeal to someone looking for a place in a more expensive neighbourhood.
Are You Planning to Sell?
If you are thinking of selling your house, it is important to look at any upgrades from the perspective of the potential buyer as opposed to your own needs and desires. Ask yourself, if you were looking around for a house today, what would be most important to you? What is most important to the average home buyer in your neighbourhood? How can you make your house more like the ones that sell quickly and for top price?
Low End Repairs:
Lower-end projects tend to retain the highest percentage of their cost upon resale. This proves you don’t need an extensive budget to see excellent returns. These types of improvements most often involve curb appeal, or general exterior improvements. Two great upgrades that have a very high rate of return – recouping over 90% of their cost in the near term – are addition of a deck, and the replacement of a front door with a solid steel door. Some other repairs that also add appeal include siding replacement, vinyl window replacement, and grand entrance cutting and reframing. These are function-driven upgrades that also have a significant impact on how a home looks from the outside. The big thing about these lower-end upgrades is that they may not always recoup their total cost when selling the house, but they will increase the curb appeal and therefore will speed up the selling process. In some markets this may even determine whether your house gets sold at all. And, because they are lower cost repairs, they can be done in very little time and won’t take as much in terms of capital outlay.
Mid-Range Upgrades < $50,000
Midrange projects are a common choice for homeowners. Kitchens and baths are the most common upgrades in this category. These upgrades are more finish- and material-intensive (not to mention more time- and labor-intensive) than low-end projects, but they also contribute a lot toward home comfort, utility and value. It’s important that we emphasize the word “minor”. Improvements to high-profile rooms like kitchens pay off, but industry insiders have one crucial caveat: remodel for yourself rather than for potential buyers. We’re seeing a tough market for homebuyers coming into 2019, with more people choosing to remodel rather than put their home on the market. So if you’re updating your kitchen with an eye on ROI, you may want to avoid a complete overhaul. The same warning—to improve in moderation—holds true for bathrooms. Minor and midrange bathroom remodels tend to give bigger payoffs than full renovations. So why are these two still on the “popular” list? Simple: with more people opting to stay put, – plumbing and fixtures eventually need to be upgraded, and also more homes need to be adapted for occupants as they age if they are planning on staying put for a number of years. Roof replacement, wood window replacement and composite deck addition are also honorable mentions in the midrange category. You’d be hard-put to find a contractor who wouldn’t recommend a maintenance or add-on project at any price point. These are the types of upgrades that make sense to homeowners across the board, whether they’re looking to sell, buy or stay.
High-End Upgrades < $50,000
High-end projects depreciate the most upon resale. Their popularity is owed to more qualitative metrics, such as homeowner comfort and satisfaction. These upgrades prove that while cost is one of homeowners’ three basic considerations in remodeling, trends aren’t necessarily driven by ROI potential. Here’s the cold, hard truth about big-ticket projects like this: in most markets, a $45,000 bathroom isn’t going to add $45,000 to your home’s value. These aren’t the types of upgrades realtors will advise paying for if you’re looking to sell. Big if! If, however, you have money to spend and you know a new bathroom will improve your home’s livability, there’s no reason you shouldn’t give this project the thumbs up. Like bathroom additions, major kitchen remodels and master suite additions are upgrades best suited to homeowners who want their homes to fit their changing needs. These projects are, for the most part, long-term commitments. Our last category’s honourable mentions are also in the same vein: upscale bathroom and kitchen remodels, upscale bathroom and master suite additions, and midrange patio makeovers. What makes these improvements worth the money isn’t ROI; it’s quality of life.
Bottom Line
If you want maximum impact for minimum expense, work on your home’s curb appeal. It’s a win-win-win for you, for realtors and for future homebuyers. It’s not always about the payback! There will be projects where you’ll recover less than half your initial expense. That doesn’t mean they aren’t worth the money. If the upgrade improved your quality of life and overall satisfaction with your home, then it was money well spent. A limited budget is not a problem. You just need to establish your priorities and communicate them well with your design team. Budget limitations can even become an avenue for creativity.