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Cost vs. Value: Which Renovations Provide the Best Return on Investment?

If you’re getting ready to start a new home renovation project, you no doubt already have a good vision of what the finished product will look like. Maybe you’re looking to improve your living space or simply want to improve the functionality of your kitchen or bathrooms.

Whatever your primary goal is, home renovations can be a great way to breathe new life into a property with a modest budget and enough time to see the project through. However, because of the potential long-term value of a home, it’s important to understand what the ROI (Return On Investment) could be before you start tearing down walls or changing building layouts.

Understanding ROI in Home Renovation Projects

While most home renovation projects are designed to improve or enhance certain elements of the home, it’s important to understand that not all of these changes will significantly impact a property’s long-term value. This is where understanding the concept of ROI is important.

Your ROI is calculated by recognizing all of the relative costs associated with a renovation project against the amount of money you expect to recoup in the event you ever sell your home. However, depending on certain variables, not all of the money you spend on a renovation should be expected to be returned on a dollar-by-dollar basis.

Some variables that come into play when factoring in your renovation ROI are the status of the real estate market in your area, the location and age of your home, and the types of updates you make. Although certain renovation choices may bring more “value” to yourself as a homeowner, this doesn’t mean that other individuals will view them similarly. Some may view the modifications as more valuable, while others may view them as less.

Kitchen Renovations

When thinking about a type of home renovation that’s likely to be a good long-term investment, kitchens are always a great idea. While not every homebuyer cooks as much as the rest, this doesn’t change the fact that everyone relies on their kitchens in one way or another.

To get the best ROI for your kitchen upgrades, it’s important to think about the most functional modifications you can make without destroying your budget. Kitchen renovations can be minor or major, so it’s important to think about exactly what you want to achieve before getting started.

If you’re just looking to “freshen” up the look of the space, new countertops or cabinetry is a great option. Upgrading to modern energy-efficient or stainless steel appliances is another guaranteed way to add more value to your home and attract a wider range of potential home buyers if you ever decide to sell.

Bathroom Upgrades

Bathrooms are another essential area of the home and a good place to consider when choosing a home renovation project. Having outdated or inefficient bathroom setups can be a considerable detractor when showing homes for sale, so they’re typically a good place to look when trying to add more value to a property.

Just like your kitchen, bathrooms have a balance of aesthetics and functionality, so it’s important to carefully consider where and how your budget is best used. Depending on how old the bathroom is, there is the possibility of needing to evaluate the current plumbing to see if it needs to be replaced. In the event the plumbing is adequate, upgrading fixtures to those that reduce water consumption not only helps to improve the look of the bathroom but can also help save on monthly utility bills. 

Exterior Improvements

While you may not consider your front or backyard as the most important element of your property, its current state can actually have a large bearing on how valuable the home is perceived. Since first impressions matter in real estate property selling, your curb appeal is another area that could provide a positive ROI when investing in certain improvements.

There are several different exterior renovation projects that can provide higher investment returns. For starters, landscaping and gardening are simple but effective strategies to give your home a more welcoming appearance. You could also consider doing some siding replacements to not only modernize the look of your property but also help to improve its energy efficiency.

Outside of these types of modifications, your roof is another critical element of your home. While the average lifespan of roofing tiles can range significantly, depending on how old your property is and the type of weather you experience, it can be worth it to get a professional roof inspection and make improvements or replacements as needed.

Other Notable Renovation Types

While kitchens, bathrooms, and exterior upgrades are some of the more common home renovations, there are also other types that can provide a positive ROI under the right circumstances. Some of these include:

  • Basement Finishing – Adding an additional living space in your home by converting a basement is a great opportunity to add more value to the home. You could change the layout to support a completely new living space or turn it into a home theatre or game room.
  • Deck or Patio Installations – Having an expanded outdoor living area can be a major draw for certain types of home buyers. This will depend, however, on the area you live in and if the climate supports spending more time outdoors.
  • Energy-Efficient Upgrades – Sustainability has become an important consideration for many modern homeowners. By investing in energy-efficient upgrades like new insulation, better quality windows, and high-efficiency HVAC systems, you’ll be able to lower monthly utility expenses while also helping to reduce carbon footprints.

Make Smarter Choices on Your Home Renovation Projects

Renovating your home can be a rewarding experience but also profitable when making the right choices. By understanding the potential return on investment for different projects, you can avoid making costly renovation mistakes while gradually increasing your property value.

Author Information

Author Name: Rebecca Denis

Author Bio:

Rebecca Denis, Head of Design at Revive Real Estate, is an accomplished and highly creative interior designer with over ten years of experience in the industry. With a passion for transforming spaces and a keen eye for detail, she has successfully completed numerous projects ranging from commercial spaces to custom show homes.

Img source : shutterstock

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