Which home upgrades offer the highest return on investment?
If you’re planning on selling your home, even if it’s not for the next couple years or so, you’re probably already considering what types of home improvements you can invest in to help increase your home’s value. If you have considered this, you’re probably wondering just where you should put that money to ensure that it doesn’t end up being a waste. And you’re not alone here; determining the types of upgrades that allow for the highest return on investment varies based on several factors, of which we will discuss in detail in this article.
While there are some numbers and statistics to show which upgrades are proven to recoup the project’s cost, these numbers are not always correct as they vary based on the neighborhood, market and quality of the upgrades themselves. For example, according to the Remodeling Cost Vs. Value Report, deck additions will recoup 81% of the cost. This isn’t always true, however, as a flimsily built deck will quite obviously not add any value. Likewise, if a huge deck is built on a small home in a neighborhood where decks are not a common trend, it is more likely that your new deck will either not affect your home’s value or worse, take away from it. Similarly, while appliance upgrades are said to add value, adding a $10,000 stove to a home that’s worth $200,000 doesn’t make sense, and certainly doesn’t make a difference in your home’s value.
So, what improvements yield the highest R.O.I?
Upgraded flooring is an incredibly important feature of your home, and regardless of the neighborhood and market, you will see an instant increase in property value with hardwood flooring. If you’re looking to increase the value, it is strongly recommended to consider swapping out that carpet for neutrally colored hardwood flooring. As indoor air quality becomes more of a priority, the allergen and bacteria holding fabric we call carpet is becoming obsolete. Neutrally colored tiles in your bathroom and kitchen are also a welcome upgrade, as their durability and water-proofing qualities make them a popular and stylish option.
An otherwise nice kitchen can be diminished by outdated cabinet fixtures, dark and dingy lighting or old, leaky faucets. If you’re on a tight budget but looking to maximize your home’s worth, inexpensive upgrades like new brushed steel cabinet and drawer hardware or brighter lighting can transform the overall look and feel of your kitchen. When selecting lighting fixtures, keep in mind that aesthetic specific chandeliers will only appeal to a small niche. Opt for lighting that is bright and comfortable, in a style that’s timeless and universally enjoyed. You might also consider installing a deeper sink (if your current one is shallow) and a new faucet. Pull-down, dual stream faucets that allow for the filling of large pots are becoming more popular, and many prospective buyers find this a luxury to have.
With our society spending an average of 1 hour and 45 minutes in the bathroom every day, it’s no wonder that bathroom renovations are becoming more and more favorable. While bathroom additions have proven to increase your home’s value by up to 20% (wow!), there are many options for upgrading your existing bathroom as well. If your bathtub or shower seems like it will never get shiny, no matter how much you scrub it, it’s definitely worth replacing it with a new one. This will immediately improve the look and feel of the bathroom, especially with sliding glass doors that create a sleek, modern appearance. If your home is in a predominantly older neighborhood, you may want to consider adding a bench seat in your shower for easy access and convenience. Other upgrades that will add value are lighting, sink, counter and vanity replacements. Storage is highly valued in the real estate market, so a vanity with drawers and cupboards is more favorable than a pedestal sink. Floating vanities are also gaining popularity, though you should try to keep your upgrades as neutral and timeless as possible, as they will also be an attractive addition. Keeping up with the latest trends is not always the best bet, as they are always changing.
While major kitchen remodels are less likely to recoup their cost, minor kitchen renovations (between $15,000 and $20,000) will bring in an average of 66% of your investment. This may not seem like an incredibly high amount, and it is true that kitchen remodels do not add the highest value, but kitchens are typically the first place that prospective homebuyers look and so updated kitchens will help your home sell faster. The most important thing to keep in mind when remodelling a kitchen is to avoid going overboard with upgrades that are uncommon in your neighborhood or are personalized to you or to a small niche of prospective buyers. The last thing you want is to invest $30,000 into a home that’s worth $200,000 in a neighborhood where homes typically sell for $175-$200,000. Make sure your renovations are priced within the local market to ensure you maximize your R.O.I.
Kitchen upgrades that will always appeal to prospective home buyers include islands, upgraded appliances, durable and easy to clean flooring, storage space and stone countertops. But, avoid adding a built in desk, as these spaces typically never get used.
One of the best ways to increase the value of your property is to build an income suite. The obvious benefit of this is the monthly income that covers some, or all, of the mortgage payments. This is an extremely positive feature that many prospective home buyers will be interested in. However, like any of the home improvements mentioned above, this heavily depends on the location. If your home is in an established family neighborhood with little to no income suites, you’d do best to leave the income suite out. However, if you’re in a trendy neighborhood that has a high demand for suites, your guaranteed to make your money back. An important factor to consider when designing an income suite is the practicality and functionality of the space. You need to make sure that future tenants will be able to use and live comfortably in the space, which means maximizing square footage, adding adequate storage and ensuring the suite is bright. Your contractor will be able to help design a universal layout that will appeal to a wide range of renters.
If you plan on staying in your home, the types of upgrades you opt for can and should be personalized to your style and needs. However, if you’re specifically upgrading to help sell your home faster and for more, it is highly recommended to stay with neutral options. From paints to cabinets, try to use colors, textures and patterns that are timeless and appeal to pretty much everyone. And if you only take one thing from this article, let it be this: do not add upgrades that out-price your home for the local market.
Learn more about the best home renovations Calgary has to offer.