Renovations with rewards
Once you’re clear about your reasons for considering renovations, you can assess the wisdom of various changes and upgrades. The average home renovation costs about $15,000, so you want to be comfortable about how you’re spending your money.
The renovation that will provide you with the biggest payday is the separate suite. Whether you finish your basement and turn it into an apartment or create one on another floor of the house, a secondary suite will provide regular income to offset your mortgage payments or pay for that winter getaway to a tropical beach.
An income-producing suite isn’t a renovation that you can personally enjoy, however. The usable renovation that offers the most monetary return when you sell your home is the kitchen. Homebuyers assess kitchens and bathrooms first when they are considering a purchase, and kitchens today have become gathering places. Open plan layouts place the kitchen at the center of activity. Therefore, a modern kitchen adds to the value of your home.
Another value-booster that’s often overlooked is the addition of solar panels to a home.
While solar panels may not be exciting in the way a new kitchen is, they’re a worthy investment. According to one study, solar panels increase the real estate value of a home by an average of 4.1 percent. On top of that, they reduce your energy costs—often enough to recoup the installation price in relatively short order.
How much does it cost to renovate a kitchen?
When it comes to kitchen remodeling, less is more. Remodeling your kitchen can indeed increase the value of your home, but it’s unlikely to give you an overall positive return on investment. Remodeling Magazine’s 2018 Cost vs. Value Report found that major kitchens only saw their value recouped by an average of 59%, whereas minor remodeling jobs recouped 81.1% of their value.
By Remodeling Magazine’s standards, a “major kitchen remodel” means new semi-custom cabinets, a high-end sink and faucets, all-new appliances, plus new floors, walls, trim, and ceiling. This type of renovation carried a hefty price tag of USD $63,829 on average.
A minor remodel, meanwhile, was largely cosmetic: new cabinet fronts, laminate countertops, and a fresh coat of paint on the walls and trim. This also includes replacing outdated large appliances. This type of remodel had a more modest average price of USD 17,193. It’s worth noting that this “minor remodel” is actually still rather substantial; you can make a meaningful change to your kitchen for a whole lot less than $17,000.
If you want to increase your home’s value to sell it in the near future, a big kitchen remodel might not be your best move; you’re unlikely to see a positive return on that investment. Minor cosmetic updates are much more effective in this case. A fresh coat of paint and a new floor go a long way. If you plan on continuing to live in your home for some time after the renovation, you might want to give a kitchen remodel more thought. After all, you should be able to recoup 50-80% of the renovation cost when you sell, and you’ll get to enjoy the updates yourself for a few years.
One big caveat is that returns on investment for renovations can vary a lot geographically. Realtors in some cities report that major kitchen renovations actually provide significant positive returns on investment. If you’re unsure, you might want to have a chat with some local realtors to get their take on the subject.
Impractical upgrades
If adding resale value to your property is uppermost in your mind as you consider renovations, there are a number of upgrades and changes you should cross off your list.
A swimming pool tops the list of sinkholes for your money. Unless you are installing it because you wish to enjoy it, a swimming pool, which costs anywhere between $10,000 and $100,000 to install, is an impractical addition to your property, one whose value you usually won’t recoup. In fact, it may turn potential buyers away.
Swimming pools can be expensive to maintain and buyers may view them as dangerous. If there are children in the family, supervision, and safety are always issues, and lawsuits loom large in some people’s minds. Sometimes, buyers offer for homes on the condition that an above-ground pool be removed or an in-ground pool be filled in.
Extensive landscaping may also warn off potential buyers. As lovely as your property may look with all the horticultural niceties, not everyone wants to devote their free time to the upkeep of groomed walkways or myriad beds of flowers. They may view it as a burden or an expense, if a gardener is required to keep it looking fresh.
Once upon a time, people dreamed of having wall-to-wall carpeting in their homes, but today, it’s an investment that generally won’t pay for itself. People are much more conscious now of the chemicals used in processing carpeting and the allergens that it may trap. Conversely, installing hardwood floors in your home is a desirable upgrade; these floors can add to the value of your home, especially if they are original, rather than a new material.
Consider bones, not cosmetics
HGTV host Mike Holmes, the contractor, cautions anyone doing renovations to consider practical upgrades along with the income-producing changes. Anyone buying a home will expect the furnace, air-conditioning, plumbing, and electrical systems to be in good working order, so it’s important to ensure that any problems are addressed. Consider these investments as part of the home’s regular maintenance.
