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Pouring money into your home by adding a master suite or overhauling your kitchen might make it look better, but it doesn’t necessarily mean you are upping its worth. While it’s true that some improvements will make your home more attractive to the next buyers, some buyers might not be as interested in (or more specifically, be willing to pay for) certain upgrades. 

A home is an investment, and you should consider how any work that goes into it could boost its value. This checklist will help you determine which types of projects are likely to see a higher return on investment (ROI) and which ones you should think twice about.

4 ways to increase your home’s value

  1. Repair and replace instead of remodel. After watching a few hours of home improvement TV, you might feel inspired to knock down a wall or rip up a kitchen. But kitchen and bathroom remodeling projects average about a 63 percent ROI while replacement projects average about 74 percent.1 Instead of a full kitchen remodel, consider simply repainting the cabinets or updating your fixtures.
  2. Choose function over fashion. Keeping your house structurally maintained is one of the biggest ways to appease buyers, who want to know it is in good shape (and will likely conduct a home inspection to reveal any major issues). So, replace that leaky roof for a potential 105 percent ROI.2 Not only will you feel more secure, but you could increase the appeal—and value—of your home.
  3. Spruce up the curb appeal. A basic upgrade to how your home looks from the outside leaves a great first impression for potential buyers. Consider adding shrubbery, smoothing out a walkway, replacing your front door or upgrading siding. Exterior projects have a nearly 75 percent ROI nationally, as opposed to 63 percent on interior projects.1 Spending around $4,750 on a basic landscaping upgrade could earn you returns of $5,000.2
  4. Boost your energy efficiency. Adding attic insulation has the highest overall ROI of all midrange remodeling projects.1 And, upgrading appliances will not only add visual appeal, you’ll also likely save money in living costs for yourself and for future buyers, as the energy efficiency will lower your utility costs.

Challenge: Check to see if your city or state offers incentives for choosing energy-efficient appliances.

4 types of projects to avoid

  1. Rethink major additions. Adding a master suite is one of the most popular—and tempting—home improvement projects. But its ROI is among the lowest of all projects. Remember: Bigger jobs require more labor and will be more expensive. An upscale master suite addition earns you back only about 60 percent of the dollars you put into it.1
  2. Limit the luxury upgrades. If you’re making a cosmetic change, it can be tempting to justify picking the highest-end finishes. But keep in mind, an upscale bathroom remodel only has about a 59 percent ROI.1 So while you may want to get the heated floor tiles in the bathroom, it could be more worthwhile to invest in hardwood floors in the living room—54 percent of homebuyers are willing to pay more for hardwood.3
  3. Skip single-purpose projects. Thinking about installing a pool? What about a basement entertainment center? Think again. Investing in something that serves only one specific purpose isn’t always the best idea. If the next buyer doesn’t want it, they might not be willing to pay for it. Instead, consider something like finishing a basement, which adds livable and usable space that people can adapt to suit their needs.
  4. Pause before prioritizing personal taste. Does your dream kitchen feature butcher-block counters or a subway tile backsplash? While it might look trendy for now, a major kitchen remodel—one that might be uniquely suited to your style—recoups only about 65 percent of cost.1 However, if a big remodeling project will make you happy (say you value cooking with your family or hosting dinner parties) and you are planning to stay in the house for a long time, it may be worth it to satisfy your tastes.

Keeping your home in good condition is ultimately more useful—and valuable—than filling it with gadgets or amenities for future owners to maintain, especially if those owners don’t value the same things.

 

3 Key Takeaways
  1. Your home is an investment—think about how any work that goes into it could increase its value.
  2. Consider projects that show that your home has been well-maintained throughout the years.
  3. Bigger projects require more labor and will be more expensive as a result.

Level up

Your home is an expression of your lifestyle and your values, but it’s also a means to appreciate your wealth over time. Keep moving forward toward all your home-based goals!

1 “2017 Cost vs. Value Report,” 2017, Remodeling Magazine

2 “7 Home Remodeling Projects With Top-Dollar Returns,” May 22, 2017, HouseLogic

3 “5 Luxurious Ways to Boost Your Home's Resale Value,” Oct. 6, 2015, Investopedia

This content is educational in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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