Well, not all home improvements increase your property value, but careful research before beginning a renovation project could save you money down the road. There are certain renovations that could increase your value when you decide to sell your home, and that you can enjoy for the years you live in your home.
Some home improvements are definitely more profitable than others, Kitchen and bathroom renovations tend to return about 90% of your investment when you sell your home. Adding rooms or finishing a basement tend to return less than 50%
There are a number of factors that go into determining how much return you will receive when you sell your home, but in general, it depends on the market conditions prevalent in your area when you decide to sell. If your area sells quickly, you may get a higher percentage than when market conditions are slower.
The return on your renovation project will also depend on how it fits with other homes in the area. Payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will improve your value. Adding a large addition when other homes in the neighborhood are smaller will likely not be a solid investment.
Highly customized renovations that meet your wants and needs, but are not typical in the area, won't pay back as much. Another factor to consider is the cost of the renovation. If you can do the work yourself, the cost will be lower and improve the chances of getting a good return.
Here are some estimates of return percentages compiled from several published surveys:
- Kitchen remodel - 90%
- Additional Bath- 90%
- Bathroom Remodel - 80%
- Install Central Heating - 90%
- Install Central Air - 75%
- Replace Windows - 70%
- Add a Room - 55%
- Build a Pool - 45%
- Finish a Basement - 40%
Do your homework before authorizing a renovation. Get multiple estimates and choose contractors carefully. It's rare to get 100% of the cost of a renovation back. Remember, you are renovating to improve your present living conditions.....with an eye towards improving your property value when you sell.