With the housing market remaining flat, many homeowners are considering ways to invest in their existing properties to make them more marketable and increase resale values. With construction costs down, now may be an excellent time to renovate — but only if you’ve got a longer term approach. The right remodeling project can more than recoup its costs over a period of years, but as you will see, the immediate return on investment of most projects is typically in the 50%-80% range in the current market.
Below are the five home improvement projects with the best return on investment. The numbers are based on Remodeling Magazine’s 2010-11 Cost vs. Value report, but we focused on projects with an initial cost of over $10,000.
Siding Replacement Average cost: $12,904; Return on Investment: 75.0%
Siding replacement is perhaps the most immediate way to boost a home’s curb appeal. Not only can new siding provide a good return, but it is also one of the least invasive renovation projects you can employ as all the work is done outside your home.
Costs were based on replacing 1,250 square feet of siding and installing new trim around windows. Highest returns were gained using a fiber-cement siding, like HardiPlank, at an 80% ROI. Vinyl and foam-backed vinyl both checked in with a ROI of 72.4%.
Minor Kitchen Renovation Average cost: $21,695; Return on Investment: 72.8%
The kitchen is often the first place homeowners turn when looking to upgrade their homes, however all kitchen renovations are not equal. Best returns were found in minor remodeling jobs — which may include replacing cabinet doors with raised-panel wood doors, installing new countertops, replacing the old sink and facet and installing an energy-efficient oven and cooktop.
Major kitchen renovations produced returns ranging from 59.7% in high-end jobs to 68.7% in mid-range projects. Generally speaking, the more you spend on your kitchen the lower the initial returns tend to be.
Wood Deck Addition Average cost: $10,973; Return on Investment: 72.8%
Adding a deck to your home is one of the easiest and cheapest ways of increasing your living area. Construction costs for a new wood deck average around $35 per square foot, making it possible to add a decent-sized deck, perfect for barbecues and outdoor recreation, for around $10,000.
In terms of return on investment, wood beats the more expensive composite decking material. Decks made from composites like Trex and TimberTech fall between 57.7% and 66.2% ROI, compared with 72.8% for wood.
Attic Bedroom Average cost: $51,428; Return on Investment: 72.2%
If you’re looking to increase your indoor living space, converting an unfinished attic into a bedroom may provide the best bang for your buck. Few factors correlate with high property values like the total number of bedrooms in your home, and renovating an attic helps get around many of the zoning restrictions associated with a home addition.
Our average cost of $51,428 is based on converting an unfinished attic to a 225 square foot bedroom and a 35 square foot bathroom with shower.
Window Replacement Average cost: $13,901; Return on Investment: 70.7%
Newer insulated windows can save homeowners as much as 20 percent in heating and cooling costs, making them especially attractive to prospective homebuyers. The average cost is based on replacing 10 3×5 foot windows and adding matching exterior trim. ROI for vinyl windows (72.1%) edges out that of wood windows (69.4%).
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