Every homeowner has their list of home improvement projects. Some are smaller do-it-yourself items like painting the shed or adding raised garden beds, while other projects like kitchen remodels and adding a three-season porch might require hiring professionals.
Home improvement projects can be for aesthetic and/or practical purposes. Perhaps your family has expanded and you need to add square footage to increase comfort, or perhaps you’ve grown tired of the stained cabinets and double-basin sink in the kitchen.
This is the exciting and stressful – and, of course, expensive – part of owning a home.
Whatever your motivation or whatever the size of your home improvement project, it’s important to know that home upgrades add value to your home in meaningful ways, and, though some projects can be very costly, the overall return on your investment can make your additions and improvements seem a lot more affordable in the long run.
Today I thought it might be helpful to go over some of the numbers on various projects to give you a better idea on potential investment returns. As we’ll see, bigger headaches and invoices don’t always mean bigger returns.
Of course, you should never see your home simply as an investment, and additions and renovations on your house shouldn’t be seen only as investment opportunities.
Still, having a good idea on the true value of certain home improvement projects can help you prioritize your list of to-dos and give you a more accurate idea of their true costs.
Let’s start with adding a garage. This is a common addition many homeowners consider. Garages are a great addition to any home, especially here in New England. The luxury of keeping your car sheltered from the elements, and the additional storage space is very appealing, which is why garages add significant value to a house at resale.
According to PocketSense, the addition of a garage has on average an 81% return on your investment. That means that more than $4 out of every $5 you spend on adding a garage will come back to you in added value to your home.
Renovating your kitchen is another common home improvement project. Updating and upgrading your kitchen can be one of the easiest ways to add good value to your home. The kitchen is often the most important room during a home sale. Most home buyers strongly prioritize the condition and layout of the kitchen when looking for a place.
Ramsey Solutions estimates the return of investment on a kitchen remodel is around 51%.
Perhaps you’ve outgrown your home but would rather build out or up than go through the hassle of buying and moving into a new house.
Adding square footage also adds considerable value to your home. Though expansions can be expensive, every 1,000 square feet added to your home increases a property’s value by 30%, according to a study conducted for the National Association of Realtors.
That’s a sizable increase in home value. As a word of warning, additions – whether adding a room off the first floor, adding rooms to the basement, or building a second floor – are very costly, can be time-consuming and require lots of patience throughout the process. But it’s reassuring to know that your perseverance will be worth it in the end.
Adding a sunroom might be a more affordable option for some. Three-season porches also help add value. You can expect to recoup around 50% of the cost for building a sunroom when you sell your home.
A more modest project with a big upside on your return of investment would be to add a bathroom out of the existing square footage in your home. Opendoor.com reports that adding a bathroom in your home can increase your home’s value by as much as 5.7%.
While I don’t advocate for homeowners to constantly crunch numbers to see how they might optimize their home values, home improvement projects are a necessary part of owning property.
Of course, your home is more than property, more than a commodity to be bought and sold. I hope your list of home improvements are based on making your house into the home of your dreams.
But you should feel reassured knowing that the money you’re putting into these projects – all the time and sweat poured into the process of perfecting your home – adds not only intrinsic value but actual, quantifiable value to your home’s overall worth.
If you’ve made recent renovations or additions and would like to know how they’ve helped increase the value of your home, please reach out to me for a free marketing analysis!