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8 Home Improvement Projects with the Highest Return On Investment



Working in Real Estate, one of the top questions I get from my clients is what are the best renovations to do that will get me the most ROI (Return On Investment)? That is a GREAT question! Here is what I’ve found…


If listing your home is in the foreseeable future, it's essential to know which improvements are most likely to pay off when you sell. Whether you’re thinking of selling in the next six months or a few years down the road, remodeling with ROI in mind is a smart move. Your home is a huge financial investment, and any money you put toward it should not only increase your enjoyment of the home now but also add value that you’ll recoup when you sell.


Here are eight home improvement projects known for holding their value.


1. Kitchen Upgrade or Complete Kitchen Renovation


You know all those shows you've seen on television where they've totally gutted and rebuilt a kitchen and bath? If you want a healthy return on investment, you need to forget about those shows. Seriously… The best return -- and we're talking 98.5% to 102% -- is on minor kitchen remodels.

A minor remodel is primarily cosmetic and doesn't rearrange your floor plan. In other words, you're not removing a wall in your kitchen and relocating cabinets. It's about reimagining how each space can look through cosmetic enhancements.


For example: A minor kitchen remodel may involve refacing cabinets and drawers, adding new countertops, recessed lights, and flooring. You might also replace the oven, sink, and fixtures. In other words, it's about improving all the elements that make a room look amazing.

According to the 2019 NAR National Remodeling Impact Survey, a midrange minor kitchen remodel is likely to cost an average of $22,507 with an average resale value increase of $18,123. That an 80.5% cost recovery. However, midrange major kitchen remodels cost an average of $66,196 with an average value increase of $41,133. That’s just a 62.1% cost recovery.


Seller tip: Avoid upgrades that make your home the most expensive in the area. Most homebuyers would rather buy the least expensive home in a fantastic neighborhood than the most expensive property in a so-so neighborhood.


2. Bathroom Remodel or Bathroom Addition


A minor bathroom remodel consists of projects like replacing the tub, toilet, sink, vanity, and fixtures. You may also want to replace the old tile surround and recaulk everything.


The average mid-range bathroom remodel will cost you $20,420 and result in a $13,717 increase in resale value. That’s a 67.2% return on investment. On average though, an upscale bathroom overhaul will only recoup about 56% of your investment.



If you have space and can add a new bathroom, it can cost up to $60,000 however you'll likely recapture around 86.4% of the cost when you sell. If you live in the home long enough to enjoy the extra bath yourself, that's a win/win.


Seller tip: The value is in having another bathroom. Only pay for upgrades like a rainforest shower, heated floors, or a towel-warming rack if you're buying them for your pleasure. Unless you live in a luxury home, you're unlikely to recoup the cost of luxury upgrades. So be cautious about spending too much on a bathroom upgrades otherwise you will likely not recoup those costs.


3. Exterior Updates


Let's face it; the first thing we notice when we drive up to a house is its exterior. If the house looks like it hasn’t been painted in decades, the lawn is overgrown, and the mailbox appears to be falling apart, it's nearly impossible to see it as a potentially beautiful home. Whether they’re viewing your exterior photo in an online listing, driving by, or attending a private tour or open house, it’s imperative that your home makes a good first impression.


A report by Zillow looked at 135,000 photos from old houses across the country to see how paint colors impact sales. They found that homes with charcoal, or smoky to jet black doors sell for $6,271 more than expected. Considering that a door paint job can cost approximately $100 to $400, a bucket of black paint is a stellar investment.


Also, 29% of sellers spruce up the landscaping as part of their pre-sale prep.


You may also want to consider adding more exterior living space, like adding a deck! While it won’t technically add to the square footage of the inside of your home, having an outdoor living space is really popular right now. The space adds additional livable square footage and allows for a lot of versatility in use whether you want to host a party or just have space to grill or relax outdoors.


The average wood deck addition will cost you about $13,000 with an average increase in the resale value of $10,000, that’s a 76% return on investment. A composite deck doesn’t fare quite as well though with an average ROI of about 69%.


4. Additional Living Space like a Basement or Attic conversion


Living space retains a fair share of value. For example, a family room addition offers an average return at resale of 83%. A basement remodel can cost an average of $47,000 but will recapture about 64%, and an attic bedroom conversion can cost $80,000 and typically provides an average return of nearly 56%.



As you can see, adding additional living space can get pricy especially if additional structure is needed. So, building out existing spaces or adding exterior living space is a great way to do this at a fraction of the cost.


Seller tip: If you plan to convert an attic, consider adding a bath. Buyers will feel as though they're walking into a suite.


5. Replacing Windows and Garage Door


There's nothing particularly exciting about having replacement windows installed or replacing your garage, but boy, can they pay for themselves. In some cities, the average homeowner recoups more than they spent on the windows and same with your garage door. In others, you'll get close.

Here's why: Living in a home with energy-efficient windows can cut down on your utility costs year-round. Even if you recover the average return at resale of 89.6%, you've practically paid for the windows.


Additionally, when you replace the garage door, it not only helps with the outside aesthetics, but you can get a large recoup in your investment. Typically, a garage door replacement will cost you $3,600 but it will give you a 97.5% ROI.


6. New Wood Flooring


Sprucing up flooring is another common task, taken on by 26% of sellers. According to NAR (National Association of Realtors), you will actually recoup 100% of the cost of refinishing your hardwood floors at resale. And, if you install new wood flooring you will recoup roughly 91% of the cost. Most buyers are looking for hard wood floors, especially in the main living areas so having new hard woods in those areas are typically a good investment depending on its current condition and price range of the home.

Seller Tips:

  • Deep clean wall-to-wall carpets. Replace them if you’ve had pets or they are in rough condition.

  • Buff out or refinish hardwoods, especially if there are visible scratches or stains.


7. HVAC Replacement


Although this doesn’t sound like the most exciting renovation to add to the list, it is one of the top things Realtors recommend to replace because it has an 85% ROI and typically only costs around $8,000. The age of the unit is frequently asked among buyers when looking at homes.


8. Roof replacement


Like the new HVAC replacement, this isn’t the most exciting type of updates but still very important! According to National Association of Realtors, it can give you up to 107% ROI!! Average cost to replace is around $7,500 but when buyer hears there is a new roof, that is a big plus in their eyes!



If you are looking for some ideas for low-cost improvements that are best for resale, these are great ideas:


· New Interior Paint

· Smart Home Technology (ex. Smart thermostats, voice-assistant-controlled light bulbs. They can help you home compete against new construction homes, which often come packed with smart home features.

· New lighting (fixture updates in bathrooms, kitchen and dining room)

· Minor Outdoor landscaping (ex. Pulling weeds, keeping shrubs trimmed etc.)


What if I can’t afford home improvements before listing?


Sell as-is: When you sell as-is, you make it clear to buyers that you won’t be making any repairs before closing. You’ll want to adjust your listing price to accommodate for that fact. Note that buyers may try to negotiate the price even lower, especially if the property is in bad shape.


Offer a credit at closing: If your buyer’s inspection uncovers any issues in the home, you can offer a credit to the buyer that will allow them to make the repairs after closing. Often, the credit the buyer requests ends up being higher than what the cost would have been if you had completed the repairs ahead of time.


Bottom Line

Ultimately, you may not recoup the full cost of most large renovation projects when you sell your house but you can tailor those large renovations to smaller more cost effective ones that give you the most ROI.

Let’s connect today to determine if you should renovate before you sell, or if your house is ready to list with just some minor touch-ups.



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