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When it comes to selling your home, there are a lot of factors to consider – and that includes figuring out which renovations will give you the best return on investment. Obviously, you want to make your home as attractive as possible to potential buyers, but it's important to keep in mind that not all renovations are created equal.
Return on investment (ROI) is influenced by other factors
The ROI from a home renovation will depend on the well-being of the real estate market in your area and how much you originally paid for your investment. Other factors to consider are the location of your property, and how your property compares to similar homes in the neighborhood. However, some general trends can give you a good idea of which home renovations are most likely to pay off.
What Home Improvements offer the Best Return on Investment?
The real estate appraisal company, Harrison Bowker Valuation Group, has compiled a report on the average return on investment for different types of home renovations in Alberta, Canada.
On average, the following home improvements offer the best return on investment:
Interior paint - 80 -110%
Kitchen renovations – 75-95%
Ashphat roof – 75-95%
Windows – 75-90%
Bathroom renovations – 50-75%
Best Interior Improvements
When it comes to interior renovations, painting is one of the most cost-effective and high ROI options, with an average return of 80-110%. If you're looking for a more significant renovation, a remodeled kitchen can provide a maximum ROI of 95%. Go with an average quality improvement if you are looking to maximize your returns.
New flooring is also a popular renovation option, and while it doesn't offer the same ROI as painting or kitchen remodeling, it can still provide a solid return of 60-80%. Stay away from flooring material, such as cork, as it does not yield the same return on investment.
The cost to finish the basement can be anywhere between $35,000 and $50,000 (although much higher now given our inflation), and it will add 50-75% of its cost to the overall value of the home.
Best Electrical, Mechanical and Plumbing Improvements
Electrical, Mechanical, and Plumbing Improvements can greatly improve quality of life and offers a good ROI. Here are three of the best improvements in this category:
1. Hot water tankless: A tankless water heater is more efficient than a traditional one, and offers an ROI of 65 - 85%. It may also help you save on water heating costs.
2. New high-efficiency furnace: If your furnace is more than 10 years old, it’s time for an upgrade. A new high-efficiency furnace can save you up to 80% on your heating costs.
3. Solar panel retrofit: Solar panels are a great way to reduce your reliance on fossil fuels and save money on your energy bills. A solar panel retrofit can save you 40-75% on your electricity costs.
Best Exterior Improvements
The best exterior investment is an asphalt roof with a 75-95% return on investment, which can also help sell your home faster. Replacing old windows with new, double or triple-pane models can also have a major impact, both aesthetically and energetically. New windows can improve your home’s insulation, making it more comfortable in both hot and cold weather. And, like a new roof, they can also increase your home’s value by upwards of 75-90%.
Finally, skylights are another great way to add both style and function to your home. Well-placed skylights can brighten up even the darkest rooms, and can also help to reduce your energy costs by allowing natural light in during the day. So, when it comes time to renovate your home’s exterior, keep these key upgrades in mind for maximum impact.
Best Landscaping Improvements
Landscaping is a renovation that can potentially have a high return on investment. For example, a raced deck has an estimated ROI of 50-75%. This means that if you spend $2000 on the renovation, you could potentially get back $1000-$1500.
The same goes for fencing and curbing, with an estimated ROI of 60-75%. If you're looking for more affordable options, consider installing a sprinkler system or replacing your sod. These improvements can increase the value of your home by 20 to 50%.
Where not to spend the money
There are also some home renovations that you may want to put on hold, especially if your goal is to get the most out of your money. These include an outdoor hot tub, jacuzzi, gas fireplace, senior walk-in tub, tree removal, reinsulated attic, and skylight, all of which contribute ≤ 50% of their cost to the overall value of the property.
Conclusion
So, if you're planning to renovate your home, it's best to focus on projects that will give you the best return on investment. Interior painting, new flooring, and remodeling a bathroom are all good choices. And while building a basement can be costly, it can still add value to your home. When it comes to the exterior of your home, the best investment you can make is an asphalt roof. And finally, avoid wasting your money on renovations that won't pay off, like an outdoor hot tub or jacuzzi.
Date Source: https://www.harrisonbowker.com/wp-content/uploads/2018/03/HB-Home-Reno-Guide-2019-FINAL.pdf. “The information provided in this blog is ‘as is’ with no guarantee of accuracy or completeness.”