How much will your home makeover cost and is it worth it?
With the debate between renting vs owning a home continually raging on, I’d like to chime in with a few advantages to owning a home. Here are some things I particularly like about home ownership:
- You have the freedom to do whatever you want to your house (within code). I like the fact that I can customize my home at will.
- You can invest in your home by applying some work to it.
- You experience good old-fashioned “pride of ownership”.
You can feel a bit better about spending money on your home, knowing that you are contributing to making it more valuable. In many cases, we can remind ourselves that we can “get some of our money back” when it comes time to sell our house. For the majority of homeowners, our homes are our biggest assets, which we don’t have a choice but to maintain. So the assurance — that whatever money and effort we pour into it isn’t a complete waste — is a nice bonus we get with home ownership.
So as someone who loves puttering around the house, doing decorative tweaks as a hobby, I get into home improvement projects for those very reasons:
- to address the nesting instinct
- to enjoy the actual process of design, creation and construction inherent in the project
- to enjoy the positive results and fruits of labor achieved by the project
- to make my house more valuable.
That last bit about “adding value to my house” has some caveats though. Not all projects will pay for themselves or even put coins in your pocket, so knowing those projects that add value can help you make decisions about where to apply your home budget.
From readings I’ve made, I picked up this handy list that shows what modifications add to the value of your home, and what may detract.
Things That Add Value To Your House
Stuff that adds value:
- Kitchen remodel
- Nice bathroom
- Decorating your home with elements that have mass appeal
- Going with local trends: if your neighborhood boasts homes with high-grade appliances, then upgrading yours would be a wise investment
- Master Suite
- Curb appeal and landscaping: this will typically account for a 5% to 10% differential in price between your home and similar homes in your area.
- Good windows
- Additional storage
- Basement
Things That May Take Away From Your Home’s Value
Some of these home elements have been called “liabilities”. If your home were to go on sale, these elements may actually turn away potential homebuyers.
- Swimming Pool
- Missing or small garage
- Bad home layout
- Old appliances and systems (plumbing, electrical infrastructure)
- Ugly decor
- Roof in poor condition
- Location
- Lack of maintenance
- Inspection problems such as structural damage or hazards
- Unusual, custom designs or unique renovations: this may shrink the pool of interested homebuyers
- Anything that makes your house the most expensive on the block
For more details on those things that can alter the value of your home, check out this Bankrate article.
Return on Investment on Home Improvement Projects
I also came across some return on investment (ROI) details for specific home improvements, which you can see calculated through this nifty HomeGain tool. Here are some results I put together using this tool, and some information from Sound Money Tips and a Demesne (2007 ROI for Home Improvements) article:
| Project |
Job Cost
|
Resale Value
|
Average
ROI |
|---|---|---|---|
| Clean and Declutter |
$186
|
$1,557
|
837%
|
| Lighten and Brighten |
$224
|
$1,089
|
486%
|
| Yard Improvements |
$611
|
$1,607
|
263%
|
| Staging or Improving Room Organization / Furniture Layout |
$647
|
$1,579
|
244%
|
| Plumbing and Electrical |
$464
|
$849
|
183%
|
| Surface Updates To Kitchen and Bath |
$1,468
|
$2,173
|
148%
|
| Paint Interior |
$897
|
$1,202
|
134%
|
| Flooring |
$816
|
$1,093
|
134%
|
| Carpeting |
$802
|
$1,027
|
128%
|
| Paint Exterior |
$957
|
$1,158
|
121%
|
| Wood Deck Addition |
$10,347
|
$8,835
|
85.4%
|
| Siding Replacement |
$9,910
|
$8,245
|
83.2%
|
| Minor Kitchen Remodel |
$21,185
|
$17,576
|
83%
|
| Window Replacement (wood slightly higher) |
$10,750
|
$8,750
|
80% avg
|
| Bathroom Remodel |
$15,789
|
$12,366
|
78.3%
|
| Major Kitchen Remodel |
$55,503
|
$43,363
|
78.1%
|
| Attic Bedroom Remodel |
$46,691
|
$35,771
|
76.6%
|
| Basement Remodel |
$59,435
|
$44,661
|
75.1%
|
| Two-Story Addition |
$139,297
|
$103,010
|
73.9%
|
| Garage Addition |
$53,897
|
$37,467
|
69.5%
|
| Family Room Addition |
|
|
68.6%
|
| Sunroom Addition |
|
|
59%
|
| Home Office Remodel |
|
|
57%
|
And check out this interesting table from Demesne that shows differences in home improvement projects’ ROI depending on geographic location.
Each part of the country has its hot improvements. Where a kitchen or bath remodel can accrue a nifty ROI in the West, note that the hot ticket on the East Coast were improvements that would save energy or maintenance.
| Region | Return On Investment (Average %) | ||
|---|---|---|---|
| Highest | Midrange | Lowest | |
| West Coast | Minor Kitchen Remodel=103.5 | Bathroom Remodel=96.6 | Deck addition=108 Window replacement=100 |
| East Coast | Vinyl Siding Replacement=85.5 Window Replacement=77.8 |
Bathroom Addition=55.4 | Home Office Remodel=52.8 |
| Midwest | Minor Kitchen Remodel=74.2 Bathroom Remodel=68.6 |
Deck Addition=75.2 | Home Office Remodel=48.1 |
| South | Fiber Cement Siding Replacement=89.6 Minor Kitchen Remodel=85 |
Family Room Addition=74.4 | Home Office Remodel=62.8 |
Note that these are average figures and so any quotes you get may vary widely from these numbers. But the important thing is that we are able to see which projects provide more “value” relative to others, which is one factor to weigh when deciding on how we could utilize our home renovation budget.
Other Resources
If you’re interested in additional resources, there are good books out there that can help prepare you for a home remodeling job or that can give you ideas on how to “dress” your home and get it ready for sale. They may be worth reading before you spend your hard-earned dollars on your home repairs. Here are a few I’d suggest:
- How to Increase the Value of Your Home: Simple, Budget-Conscious Techniques and Ideas That Will Make Your Home Worth Up to $100,000 More!
- Improve the Value of Your Home up to $100,000: 50 Sure-Fire Techniques and Strategies
- Home Renovation Checklist: Everything You Need to Know to Save Money, Time, and Your Sanity
Basic Guidelines For Getting The Best ROI On Your Home Improvements
From MSN Money, here’s how to get the best bang for your “home remodeling” buck:
#1 Think like a buyer. Shoppers appreciate neat and clean surroundings!
#2 Spend your budget on those things that are most visible. Apply your money on things you can see before addressing those things that are less visible, unless of course there is an urgent need to fix those things “under the covers”. For instance, if you’re experiencing major trouble with your plumbing pipes, then don’t defer repairs, or problems can escalate with water damage and so forth. But with all things equal, put the money on stuff you can see.
#3 Take care of the easy stuff that have the highest positive impact. Get rid of dirt, trash, clutter, anything nasty that bothers the senses. Resolve those things that can turn people off to your home or bring down its value.
So thinking about ROI is all well and good. But remember that house makeovers are not just about doing those things that are most “money-efficient” and which will add value. In our case, our main motivator for making home improvements has been to give our family additional enjoyment. If the changes we’ve made do return us some dollars when we sell our house, then that would be icing… but who knows… with all the work we’ve done to our home, we’d be hard-pressed to ever leave it!
Image Credit: Douglas Currie
Great post!
I am writing a blog about all things related to home improvement and DIY projects… I am trying to cover everything… It is going to take some time to cover it all… but I have a good start….
Stop by and leave a comment if you want me to write a specific DIY project post.
http://www.handymanfixhomerepair.com
Hi Mr. Handy Man,
I’d love to take you up on your offer! I’ll rack my brain for some DIY article ideas and let you know!
Great information. Just remember the ROI numbers may change, as the real estate market is a little unsteady right now.
I’m in the process now (tomorrow) of landscaping the yard and putting in a small deck in the back. I don’t plan on selling any time soon, so this is more just to make our home more pleasant for us to kick around in the summer, but I know in the back of my mind I’m thinking it bodes well for the resale also.
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When I help a seller prepare a home for sale, I always find it sad that they will do upgrades and maintenance for the new owner, but never have done any of it while they could have enjoyed it. A while back I had a client put in tile, update the carpet and paint, and she said it was such a shame she was leaving because she loved the house now more than ever. My advice is to look at the economic impact of updates, but keep in mind that there are intangibles like quality of life and enjoyment that are hard to put a price on.
joe
You mentioned that a swimming pool is actually a liability and this is so true, most people see a pool as great thing. But do not look at the cost of upkeep, after owning a swimming pool company I can tell you that they can be a pain !
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Keeping up in style nowadays is very demanding to do especially if you do not want to be left behind. Starting from clothes, shoes, bags, jewelries and other accessories completing one’s fashion is a must know-how or else you’ll be considered as a fashion disaster. These things are not the only priorities when it comes to being on the trend, actually, even homes are also kept in-style through the guidance of contractors offering services of home improvements.
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There are numerous types of home improvement and remodeling jobs one can apply to transform his or her house similar to those chic and stylish homes everyone see on magazines or on television. And an example is, kitchen renovations. Giving your kitchen a makeover will be a pleasant surprise especially for your moms. Remember, it’s her most favorite place in the whole household so giving it a touch of change and style accordingly to the latest trends in kitchen renovation will surely make her happy and enjoy more all the cooking all day. Modern designed countertops whether you’ll be using tiles or granites will definitely do good for sure.
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Awesome post! I think I’d better get out a broom and a paint brush…
Ed: I don’t typically allow the use of keyword terms on comments, thanks.
This information was emminently useful. It will come in handy also when we rent our house in Texas.
Here are some home remodeling organization tips:
1) If you are being your own General Contractor, keep an expandable folder (“redwell”) with individual folders inside for each trade. For example, I have an expandable folder for each house that I’m working on, and inside are manila folders labeled “Plumbing”, “Electricity”, “Tile”, etc.
2) Local building codes require a certain number of electrical outlets in a room. However, some electricians will slap the receptacles into the walls in an unattractive configuration when you consider where the phone and cable jacks are going. Tell your electrician exactly where you want the outlets and jacks to be (and how high you want them as well). This is especially true if you have an idea where you want your furniture to go and you want to hide the outlets and jacks behind the furniture.
3) Here’s one of my favorite home remodeling tips that’s easy to forget: Be sure that your painter saves you some paint in the cans for touch-ups and duplication later.
4) Before the plumber (or any contractor, for that matter) digs into the ground, you need to call your local utility locator service to come out and mark the underground utilities. This will prevent your contractor from accidentally digging into and damaging the existing services. If you neglect to have the utilities marked, you could face very large repair bills that the utility companies will require you to pay.
5) One of the classic home remodeling tips is to maximize resale value by spending your money “where the water is”. This means kitchens and bathrooms. Also, having a good trim carpenter install fine crown molding, etc. can really dress up your house.
Ed: Thanks for these tips Berna, they are greatly appreciated!
Local building codes require a certain number of electrical outlets in a room. However, some electricians will slap the receptacles into the walls in an unattractive configuration when you consider where the phone and cable jacks are going. Tell your electrician exactly where you want the outlets and jacks to be (and how high you want them as well). This is especially true if you have an idea where you want your furniture to go and you want to hide the outlets and jacks behind the furniture.