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What Raises Property Value The Most? Top Home Improvements To Boost Your Investment
November 8, 2024
If you’re a homeowner, you’ve likely thought about ways to increase your property’s value. The good news? Some home improvements don’t just make your home more comfortable or stylish—they can also provide a solid return on investment (ROI) when it’s time to sell. Let’s dive into the top improvements that add the most value to your property.
1. Kitchen Remodels – The Heart of the Home
The kitchen is the most important room when it comes to boosting your home’s value. A kitchen remodel—whether a minor facelift or a full renovation—can offer a high ROI. Upgrades like new cabinets, modern countertops, energy-efficient appliances, and fresh lighting can transform the space, making it more appealing to potential buyers.
But a kitchen remodel can be a large investment. Sometimes, the best way to go is with small upgrades that increase your home’s value without breaking the bank. So, a few upgrades to consider include replacing the faucet, updating the hardware, and adding a new backsplash.
Average Improvement ROI:
- Minor Kitchen Remodel: 7% ROI
- Major Kitchen Remodel:8% ROI
2. Bathroom Upgrades – Style and Function
Bathrooms are another high-impact area. An outdated bathroom can turn buyers away, but a well-designed and updated one can increase the property’s value significantly. This doesn’t mean you need to rebuild it from scratch.
Since the ROI for bathroom remodels falls into the 55% range, it’s better to spend your dollars making simple improvements like updating the plumbing, repainting, adding new fixtures, or replacing moldy-looking tile grout. If you have the budget, consider adding a second bathroom or a half-bath in homes with only one—this can be a game-changer for buyers.
Average Improvement ROI:
- Midrange Bath Remodel: 7% ROI
- Upscale Bath Remodel: 1% ROI
3. Exterior Upgrades – Boosting Curb Appeal
First impressions count, and exterior upgrades can make a big impact on your home’s value. A fresh coat of paint alone can make your home look well-cared-for and attractive to buyers. These improvements are often highly cost-effective and provide a solid ROI:
- Garage Door Replacement: A new garage door not only improves the look of your home but also enhances security and energy efficiency.
- Average Improvement ROI: 103%
- Front Door Replacement: Swapping out your front door for a stylish, energy-efficient model can add significant value and improve curb appeal.
- Average Improvement ROI: 101%
- Siding Replacement: Fresh siding can make a home look newer, reduce maintenance, and even improve insulation.
- Average Improvement ROI: Vinyl Siding (94.7% ROI), Fiber-Cement Siding (88.5%), House Siding with Stone Veneer Replacement (102.3%)
4. Adding or Improving Outdoor Spaces
Today, outdoor spaces are high on homebuyers’ wish lists. Adding a deck, patio, or even a cozy outdoor fire pit area can create extra living space and boost appeal. Landscaping updates like adding trees, flowering shrubs, and a well-manicured lawn can also make a powerful first impression. Just don’t go overboard with expensive landscaping and water features as sometimes buyers can see that as a hassle.
Average Improvement ROI:
- Backyard Wooden Deck:9% ROI
- Backyard Composite Deck:2% ROI
5. Energy Efficiency Upgrades
Modern buyers are increasingly eco-conscious, and energy efficiency can be a strong selling point. Consider investing in energy-efficient windows (especially if you have an older home), insulation, or a smart thermostat. These upgrades don’t just save future buyers money—they can also qualify for tax credits, making them a win-win.
Average Improvement ROI:
- HVAC Conversion: 103% ROI
- Window Replacement:
- Vinyl: 1%
- Wood:9%
6. Basement and Attic Conversions
If your home has an unfinished basement or attic, converting these spaces can add valuable square footage, increasing your home’s appeal. A finished basement can become anything from a guest suite to a home office or entertainment area, while an attic could be a cozy extra bedroom. Square footage is often a deciding factor for buyers, and additional useable space can make your home stand out.
Average Improvement ROI:
- Finished Basement: 70% ROI
Calculating Your Return on Investment (ROI)
When deciding on home improvement projects, it’s useful to calculate the ROI to understand how much value the project could add compared to its cost. Here’s a simple formula to calculate ROI:
ROI (%) = (Net Gain from Home Improvement / Cost of Home Improvement) x 100
For example, if you spend $10,000 on a bathroom remodel and it increases your home’s value by $15,000, the calculation will look like this:
ROI = (15,000 / 10,000) x 100 = 50%
This means your bathroom remodel would provide a 50% return on investment.
Factors That Impact ROI:
- Location: Certain improvements may offer a higher ROI depending on your local market. For example, outdoor spaces may add more value in areas with warmer climates where they’re used year-round.
- Project Quality: High-quality materials and professional workmanship generally lead to higher ROI because buyers perceive the improvement as more valuable.
- Timing: Market conditions, like housing demand, can affect the ROI of home improvements. A hot market might increase the return on your investment.
- Type of Project: Not all projects offer the same ROI; kitchens, bathrooms, and curb appeal improvements tend to yield higher returns than niche upgrades.
How to Pay for Home Improvements
There are several ways you can pay for home renovations, including paying out of your savings or by using a credit card. Since many home improvements require a substantial investment upfront, sometimes financing it is the best way.
- Home Equity Line of Credit (HELOC): You can obtain a HELOC which lets you borrow against the equity you’ve built in your home, giving you access to funds for projects that will ultimately increase its value. With a flexible line of credit, you can tackle projects over time or invest in one big upgrade—all while potentially boosting your property’s worth.
- Home Equity Loan: A home equity loan, also known as a second mortgage, is similar to the HELOC, but it has a fixed rate and is paid out in a lump sum and repaid over a predetermined period.
- Cash-Out Refinance: With a cash-out refinance, you can refinance your mortgage for an amount greater than what you currently owe and receive the difference in cash. This can be a smart option if you want to finance home improvements while possibly securing a lower interest rate on your mortgage. PSB can help you explore whether a cash-out refinance is right for your situation.
Ready to take your home to the next level? Contact Peoples Savings Bank today to explore our HELOC options and start adding value to your home. With careful planning and the right improvements, you can increase your property’s worth and enjoy the rewards when it’s time to sell.
Sources:
https://www.forbes.com/home-improvement/home-improvement/home-improvement-projects-for-roi/
https://www.renofi.com/home-renovations/renovation-best-return-on-investment/
https://www.zillow.com/learn/best-home-improvements-to-increase-value/