Being quarantined at home during the coronavirus outbreak can mean having more time for DIY home improvement projects, and after receiving stimulus checks under the government’s CARES Act, some homeowners may have extra cash on hand to execute their ideas. But anyone planning to take on renovations should do so strategically. Whether or not selling your house is on the horizon, homeowners must consider how each project will affect their home’s value.
5 worthwhile home improvement projects
A homeowner’s needs should be the driving factor in prioritizing renovations, but the return on their investment is also essential. Some projects prove to have a higher ROI than others.
To accurately determine ROI, homeowners must account for how they’ll pay for the improvements. If they need to supplement their stimulus check with additional financing, they must consider the cost involved. For example, if a homeowner finances the projects with credit cards, they could pay as much as 25% in interest (or more in some cases). On the other hand, if they choose a personal loan, they could pay interest rates as low as 9.09%.
Kitchen renovation or upgrade
The kitchen is the heart of the home and typically sees a lot of activity. For this reason, many homeowners dream of a kitchen renovation. According to the National Association of Realtors (NAR), doing one will pay off in many ways. In its recent Remodeling Impact Report, a complete kitchen renovation is likely to increase a home’s value by more than any other project. Additionally, most homeowners feel happier in their homes after improving their kitchen.
If you don’t have the funds to do a complete kitchen renovation, consider doing minor kitchen upgrades. This can include replacing or refinishing surfaces, updating appliances and painting. According to Remodeling Magazine, a minor kitchen remodel can often recoup more of its cost than a major kitchen overhaul. It estimates as much as a 78% ROI for minor upgrades that cost $23,452 compared to a 59% ROI on a $68,490 renovation.
Bathroom upgrade or addition
After kitchens, homebuyers put a lot of emphasis on bathrooms when shopping, so focusing here is worthwhile. Bathroom renovations ranked fifth in NAR's report as a project most likely to add value and appeal to buyers.
Consider putting in an additional bathroom if you’re in an older home where the bathroom count is disproportionate to the number of bedrooms. According to Remodeling Magazine, a bathroom remodel costing about $21,377 can yield a 64% ROI, and a bathroom addition costing $49,598 returns 54%.
Upgrading the basics
Focusing on your home’s plumbing or putting in a new roof won’t elicit the "wow" that a new kitchen island will. But improving your home’s systems and other basics that require maintenance will benefit you when it’s time to sell. For example, an HVAC replacement ranked third in NAR’s report as one of the interior projects likely to add the highest value. Similarly, new roofing was the top exterior project.
In many cases, prospective buyers can overlook an outdated bathroom and kitchen. But systems that need to be updated shortly after the purchase could be a turnoff for cash-strapped buyers.
Refinishing or putting in new wood flooring is a project that homeowners can tackle at a relatively lower price point than other home improvements. And it's one that can return most of — or in some cases, more than — what you spend. NAR estimates a 100% ROI on a hardwood flooring refinish costing an estimated $2,600. And brand-new wood flooring costing an estimated $4,700 yields a 106% return.
You can’t go wrong with adding liveable square footage. Putting in a master bedroom suite, adding a bathroom, as mentioned earlier, or converting a basement to a family room can all increase your home's value and appeal. Consider these projects, especially if they will bring your home up to par with other homes in the neighborhood. Adding a master suite and converting an attic or basement to a living area were on NAR’s report of projects likely to add the most value.
4 projects to skip
Over 53% of homeowners who take on renovations do so to increase their home’s value. With that in mind, make sure you avoid projects that may do damage to your home’s worth, especially if you expect to sell in the near future.
Think twice before you put in a pool, particularly if it’s not a going feature for homes in your area. You may see a pool and envision lazy summer days, while a prospective buyer may see it as a danger and high maintenance.
Your dream may be to have a workout room with a wall of mirrors, but that could be a turnoff to buyers when you sell in the future. An overly customized space can detract from your home’s value, especially if it decreases the bedroom count.
Before investing in an of-the-moment design trend or technology, think about its longevity. Consider whether the improvement will hold its attraction years down the road and appeal to a variety of tastes.
While solar panels are an environmentally friendly upgrade, don't expect to make back what you spend, according to some experts. Additionally, if you finance the panels and have to sell the home before you pay them off, it’s almost like having a lien on the property.