The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.
Home improvement projects can cost a lot of money when done correctly. Homeowners that are interested in selling their home for a profit in the future want to focus on home improvement projects that are going to provide them with the best return on their investment.
Larger endeavors like renovating kitchens and bathrooms are commonly chosen as the main projects to improve a home, but these projects can often cost much more money than you will get back when you sell your home. Focusing on home improvement projects that boost your property value is a smart way to ensure that your money continues to work for you, even after it has been spent on labor and materials.
According to research conducted by Remodeling Magazine (www.remodelingmagazine.com), which has been tracking these trends since 2002, here are the home improvement projects that will provide you with the best return on your investment.
Entry Door Replacement (steel) 96.6% (Entry Door Replacement (fiberglass) 70.8%)
According to the study, the single best investment that you can make in your home is replacing the entry door with a steel entry door. Homeowners that make this investment can expect a return of 96.6 percent on the money spent. The average price of the project investment is $1,162, making it a relatively low cost home improvement project to undertake. Replacing your entry door with a fiberglass entry door will only return 70.8 percent of your investment.
Replacing the entry door will also enhance the curb appeal of the home by transforming its appearance, potentially increasing the interest of potential buyers. If you are replacing a door that has been on the home for more than a decade, it may also give you significant energy savings by reducing the amount of air escaping your home from around the door.
Deck Addition (wood) 87.4% (Deck Addition (composite) 74.3%)
The addition of a wooden deck to the home is another home improvement project with an excellent return on investment, averaging an 87.4 percent ROI. Decks and patios are a great way to expand living space at a low cost, generally costing about a tenth as much as expanding rooms in a home. These are also versatile spaces that can be used throughout the year for different functions. The addition of a composite deck has an ROI that is a bit lower at 74.3 percent.
Siding Replacement (fiber-cement) 87.0% (Siding Replacement (vinyl) 81.6%)
Another good home improvement project with an excellent return on investment is replacing the siding on your home, which can significantly enhance the curb appeal of a home that is being sold. You want potential buyers to see siding that is clean and well cared for, giving them confidence that the rest of the home has been cared for as well. On the other hand, worn or damaged siding can reduce the value of your home by about 10 percent.
Replacing the siding on your home with new fiber-cement materials offers a return on investment of about 87 percent. Fiber-cement siding is generally viewed as high quality and quality is one of the most important traits considered by buyers when searching for a home to buy. Replacing damaged siding can also improve the energy efficiency of the home, resulting in savings on your utility bills after the project has been completed.
Vinyl siding is less expensive than fiber-cement siding and is easy to install, allowing many homeowners to tackle the product themselves with the help of a few friends or family members. The types of vinyl siding available today have long warranties and fade resistant finishes, guaranteeing that your siding will look great for years to come. Replacing the siding on your home with vinyl siding gives you a return on investment of about 81.6 percent.
Attic Bedroom 84.3%
Adding an extra bedroom to your home can result in a significant boost to your property value. Turning an attic into an attic bedroom is a great way to take a rarely used space and turn it into something that is functional for your family or for the people that will be purchasing your home from you. This project has an average return on investment of 84.3 percent and the project costs are generally low because the walls and ceiling of the room already exist.
Minor Kitchen Remodel 82.7%
Remodeling the kitchen area is a task that many homeowners undertake before attempting to sell their home. This is because the kitchen is one of the most used areas of the home, resulting in wear and tear on everything from the counters to the floor to the appliances. Doing minor remodeling to a kitchen area provides an average return on investment of 82.7 percent. Minor remodeling involves replacing the appliances, the lighting, the flooring, the countertops, or the cabinetry.
The average cost of the minor kitchen remodels in the report was $18,856, including labor costs. However, many of the tasks required for a minor kitchen remodel can be completed by the homeowner in a few hours, which can significantly decrease the cost of the remodel. Any tools that are needed can generally be rented from a home improvement store like Lowe’s or Home Depot.
Knowing which projects offer the best return on investment will help you make better decisions on where to invest your remodeling dollars. Whether making your space more livable for your family or improving your home to get a better sale price, focusing on the projects that give you the best return on investment is a smart way to increase the value of your property.
How about you all? Which home improvements projects have you completed which you felt like provided a good financial reward?
Share your experience by commenting below!
Picture: http://en.wikipedia.org/wiki/Handyman#mediaviewer/File:FEMA_-_42428_-_Home_Repair_after_Flood.jpg
