Article | 3:05 min read

The Best Home Renovation Projects for ROI


Huge renovation projects were in vogue with homeowners in recent years, but 2015 could see a bucking of that trend. Craig Webb, editor-in-chief at Remodeling Magazine, said adding square footage will likely take a backseat in the coming year as more people target smaller projects that offer bigger return on investments.

Webb pointed to Remodeling Magazine's 2015 Remodeling Cost vs. Value Report, which stated small and exterior projects have a better chance to recoup costs than larger remodels [1].

"Our Cost vs. Value Reports in recent years indicated big-ticket projects such as attic bedrooms and basement remodels were enjoying ever-bigger payoffs," Webb said in a press release. "For 2015, however, the simpler and lower-cost the project, the bigger its cost-value ratio - three of the four projects that cost less than $5,000 are ranked in the top five for cost recouped, and the other two are in the $5,000 - $25,000 price range."

The report compared construction costs with resale values for 36 midrange and upscale remodeling projects in more than 100 markets across the nation. It's the 17th straight year the report has been conducted and offers impressions from real estate agents of what those projects should add to a home's value at the time of resale.

What Projects Should a Homeowner Tackle?
Chris Polychron, president of the National Association of Realtors, has a solid grasp on the hurdles homeowners face when seeking a renovation project that adds value to their home.

"It can be a daunting task to even decide on what home improvement projects to undertake, let alone to physically tackle and complete them," Polychron said in a release [2].

But like most real estate agents, Polychron knows the value of curb appeal. Exterior renovation projects offer something that interior projects can't: They improve the look of a home to those passing by, a crucial aspect when trying to sell a home.

That's one reason why a steel entry door replacement continues to top the list as one of the best home renovation investments. Remodeling Magazine reported a steel door replacement recoups 101.8 percent of the cost at the time of resale. That's 5.2 percent more than the previous year when it was on of the best investments on the list. It's the only project estimated to net more than 100 percent of the cost at resale, according to Remodeling Magazine, which stated the average steel entry replacement costs $1,200.

Other Projects to Consider and Avoid
The next five best projects for recouping value included adding stone veneer to the exterior of a home, garage door replacement, siding replacement with fiber cement, vinyl siding replacement and a wood deck addition. All five of those projects are estimated to recoup more than 80 percent of the cost at resale.

Other projects offering solid returns for homeowners include a minor kitchen remodel (79.7 percent return), wood window replacement (78.8 percent) and foam-backed vinyl sliding replacement (77.6 percent).

"This report is a fantastic resource for homeowners looking to add value to their house without breaking the bank, but every community is different," Polychron said.

Two of the worst projects for recouping value were sunroom additions and a home office remodel. A sunroom addition provided just a 48.5 percent return. An office remodel wasn't much better at 48.7 percent. Those were the only two midrange projects estimated to recoup less than 50 percent of the costs on a national scale.

For upscale projects, a master suite addition was the worst renovation project for recouping costs. A master suite costs roughly $236,000 but only nets a little more than $126,000 at the time of resale.


[2]. Small, Exterior Home Improvements Offer the Best Value Investments in 2015, Say Realtors®


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