Maximize Your ROI with These Home Renovations
To many homeowners, reinvesting money on fixing up their house presents a slippery slope. On one hand, there’s virtually no renovation that will offer a 100% return on the investment, whether $5,000 or $50,000 is budgeted.
Then again, home improvements increase the overall value of the property while also making the house more enjoyable to live in. Most experts agree that if the money is available, building equity in your home is one of the smartest investments a person can make and there are various ways these projects can pay you back.
Please note: the following figures are taken from the 2014 Cost vs Value Report.
Improve Energy Efficiency
Upgrades that help a home become more energy efficient potentially offer a three pronged ROI – they increase property value, lower utility bills, and are eligible for government tax breaks. In addition, the house will have purer air quality and will be more comfortable without drafts or warm air leaking out. Some of the best projects for improving efficiency include:
• Window and Door Replacement / Restoration – While window replacement is typically listed as a project with a great ROI, that’s really only true for homes built after World War II. Replacing windows in older homes actually decreases their value but in newer dwellings can save up to $400 annually. Installing a new steel entry door remains the top renovation project for 2014, offering a 96.6% return.
• Energy Star Appliance Upgrade – The effectiveness of replacing household appliances depends on the age of the old equipment. For instance, a new refrigerator will use about half as much energy as one that’s 10 years old, while a washing machine upgrade can save about $100 per year. This might not seem like a lot but if the annual cost deductions are measured over 10-15 years the savings can be quite significant. Plus, tax credits of about 10% of the total cost can be acquired after purchase.
Other energy efficient upgrades include adding insulation to a basement or attic and installing programmable thermostats.
Curb Appeal Renovations
Improving the look of your home is also a big selling point and the following investments for prettying up the property make your home more attractive – to both you and a potential buyer.
• Garage Door Replacement – Replacing an old, damaged, or bland garage door consistently offers one of the best ROI, around 85% on a $1,500 project.
• Siding and Shutters – New vinyl siding will give your house a fresh new look and will recoup almost 80% of your investment. Shutters add detail and can be salvaged or reclaimed for maximum return.
• Aluminum Fence – A classy looking aluminum fence will improve the curb appeal of the home while also offering a return of investment around 65%. The fence also adds security and aluminum is maintenance free compared to wood or wrought iron.
Other types of landscaping will get you around 50 – 75% but should be limited to usable space such as a backyard barbecue or pergola. Shrubs, mulch, and trees add value but also require upkeep.
Quality of Living Remodeling
The benefits of quality of living upgrades are hard to measure in only dollars and cents. Enjoying your whole home could be considered priceless but these projects are a good place to start:
• Attic Bedroom – Adding functionality to ‘dead’ space greatly improves quality of living. Turning an attic into a bedroom is great for a child to have their own space or for a spot for guests to sleep. It’s a roughly $50,000 job for electricity, framing windows and walls, insulation, and finishing but buyers love extra bedrooms and the ROI is almost 85%.
• Deck (Wood) – A deck could have both peace of mind and curb appeal value as it aesthetically adds living space to the exterior of your home. A $10,000 deck offers a return of a whopping 88%.
• Home Office – The cost versus value report for 2014 lists a home office as only a 48% ROI. That being said, if a home office enables you to telecommute and save gas money as well as vehicle wear and tear while eradicating a long drive back and forth to work, then the return is much higher.
The one thing to remember about reinvesting in your home is that since barely anything offers a 100% ROI, it’s not always recommended to renovate just to sell. Because of this it’s important to take energy efficiency, curb appeal, and quality of living projects into account for what you’ll enjoy the most while still making money… someday.
Christian Sculthorp is a marketing representative for the Ottawa General Contractors, a full service home renovation and custom home company. He’s passionate about getting people great bang for their buck – whether it’s through marketing or home renos.