Purchasing real estate, improving the property, and selling it for a profit is every real estate buyer’s dream, but not all property improvements are built the same. Therefore, when you invest in property improvements, you want to ensure you’re putting your money in the right places to grow your investment. Not to mention, you want your investment to grow faster than inflation, which is currently sitting at 8.2% in the U.S. in 2022. Furthermore, investments aside, you want to enjoy your property while you live there and make improvements that add to your quality of life. As a real estate broker in Colorado, I’ve seen my fair share of fantastic and unseemly property improvements. Let’s explore which ones are worth your time and money.
Which Home Improvements Add the Most Value?
The most valuable property improvements increase a home’s longevity, enhance its aesthetic, and expand its space. While many factors influence ROI, the following property improvements generate high returns in most cases, across different locations, budgets, and home types.
When it comes to remodeling a house, minor touch-ups and design changes go a long way. According to Remodeling Magazine’s 2022 Cost vs. Value Report, a minor kitchen remodel has a return of 71% versus a major overhaul at 56%. Likewise, a minor bathroom remodel recoups 60% of its renovation value versus a major remodel at 55%.
Upgrades that improve a home’s curb appeal also generate large returns. These include:
- Installing stone veneer siding, which recoups 92%.
- Installing steel external doors, which recoups 91%.
- Replacing garage doors, which recoups 133%.
- Touching up a front porch, which adds $6,000 in resale value.
- Creating an outdoor kitchen, which adds $9,800 in resale value.
- Refreshing exterior paint, which adds $7,500 in resale value.
Property improvements that increase usable space also generate high returns on investment. These may include: converting an attic into a home office, finishing a basement, converting a spare room into a bedroom, or opening the floor plan between the living room and the kitchen.
Which Home Improvements Should You Avoid?
If you want a return on your investment, you should focus on home improvements that help future owners maximize the space. Too often, homeowners make personal home improvements that optimize the space for them but do not translate to the general public. For example, if a homeowner is an artist, turning the unfinished basement into a studio space would benefit their productivity and make the home more useful to them. However, if the potential buyers are not artists, they will see the studio as a burden rather than a benefit. Most buyers automatically correlate irrelevant property improvements with money they have to spend to reverse them, resulting in fewer and lower offers. As a solution, if you want to make personal improvements, also make sure they can be removed when you list your property for sale.
How To Recoup Your Home Improvement Investment
Whether you’re buying, selling, or renovating a home, understanding the costs and implications of property improvements will help you make the most of your money. As a general rule of thumb, you should strike a balance between quality improvements that improve the space for future owners and things you can enjoy while living there. The minute you begin to think about selling, you may even want to get a home inspection or appraisal to flag any issues you could improve before your home hits the market. For questions about buying or selling real estate with property improvements, always consult with your real estate broker to make the best decision for your situation.