Home improvement projects can boost the value of your home more than you might think, but you need to calculate remodeling costs, including the price of materials, labor, and disposal after contractors finish the job. If you do it right, you can fetch an ROI between 50 and 80 percent of costs!
That said, when most homeowners consider home improvements, they think of remodeling kitchens or bathrooms. While these projects are most common, they’re also the most expensive and are notorious for having a low return-on-investment – if any at all.
Although not every home improvement will increase a home’s market value, and some renovations like an elaborate kitchen may turn off potential buyers in certain instances, if you’re looking for ways to lock-in ROI during your next home improvement project, this article goes over the basics of how to get the most for your money.
What makes planning for home improvements problematic?
You might be struggling to plan your project, which is normal for first-timers who’ve never had to make home improvements, but the bottom line is this: costs vary and can easily go over-budget if you’re not careful.
At a basic level, the price of home improvements increases based on:
- Room size
- Room type
- Age of the structure
- Underlying maintenance issues
- Scope of the project
It’s easy to overlook that some home improvements look simple but come with an extravagant, eye-popping price. You may not know that projects like replacing bathroom cabinets are some of the most costly. On average, a newly remodeled bathroom can cost anywhere between $2,500 and $25,000. That’s an enormous swing, so that’s why you have to plan meticulously beforehand, down to the penny if you’re on a tight budget.
New lighting fixtures will cost you anywhere between a couple of hundred bucks, if you do it yourself, to well over $2,000 if you want the latest technology installed. Updated counter-tops will cost about $1,000 on the low end, exceeding $5,000 on the high end if you insist on using top-quality materials.
The three-fold challenge you face is determining the project’s scope, selecting the quality of the materials, and cost control.
How to control costs during home improvements
Most homeowners calculate the cost of building materials and get an estimate of labor expenses from a trustworthy contractor. Many reputable contractors will give you an honest assessment of costs, but the truth is that it’s difficult to pinpoint – even for home improvement professionals.
Here’s a quick example: let’s say that you’ve nailed down costs to about $15,000 or so for a minor kitchen remodel, which is about the average price for most projects. But what happens when contractors run into a snag like a ruptured gas line that needs repairing to finish the project? What about the cost to remove old materials from the property and properly dispose of them?
These are only two “hidden costs” for home improvement, so the rule is to price-out materials, labor and assume the project will go way over budget. That’s why it’s smart to use your financing and never take out a loan for even minor remodeling. There are scenarios where a loan can supplement financing for renovations, but you’ll mostly want to use personal funds.
Overall, to control costs, don’t tie your hands with a strict, inflexible budget!
Popular home improvements in 2020
Remember the era of floral patterned wallpaper and linoleum flooring? During the ’60s and ’70s, homes featured a different aesthetic than modern houses. When that fell out of favor in the ’80s and ’90s, the wallpaper and linoleum had to go, too.
Home improvements always follow trends, and those change and shift over the years, so certain home renovations are now more popular than others. Here’s a short list of a few trendy home improvements that are proving to yield a higher-than-average ROI these days:
- Replacing a garage door
- Adding stone veneer to the exterior
- Vinyl siding replacement
- Adding a wood deck
These four projects each come with a great ROI compared to most other projects.
Keep these figures in mind as you plan. Replacing a garage door costs about $3,500 if you go for quality, but the resale value recoups about 95 percent of the installation cost on average. Also, the cost of adding stone veneer to exterior doorways runs about $9,000, but you can recoup 95 percent of that cost.
Of all home exterior trends, stone veneer is becoming popular, improving curb appeal as well. Interestingly, the ROI of vinyl siding and adding a wood deck varies widely depending on the type of materials you want. Generally, these two projects have an ROI of about 75 percent, which still far exceeds the ROI for bathroom and kitchen remodeling.
Indeed, these popular home improvements will change in the coming years, so your task as a homeowner is to stay up-to-date on the latest trends to secure a great ROI down the road.
If you’d like to know more information about home improvement ROI, contact us anytime to speak with a real estate pro.