5 Home Renovation Projects With Good Return on Investment

 By: Jerry Kronenberg

 

Spring is a popular time for home-renovation projects, but a recent study by Remodeling magazine and the National Association of Realtors found that not all upgrades are created equal when it comes to reselling your place.

"I always recommend making very wise use of your remodeling dollars to get a good return on investment," says Judy Moore, a Boston real estate agent and a National Association of Realtors board member.

"If I walk into a house that has and old kitchen or an old bathroom that needs a ton of work, that might be a problem to sell 'as-is,'" she says.

Here's a look at the five best projects Remodeling found offer the best nationwide average returns on investment.
Putting in a steel front door
Projected return on investment: 85.6%

Moore says this inexpensive fix (estimated cost: $1,137) can improve your home's energy efficiency while making a good first impression on house hunters. "The doorway is very important because it's the first thing buyers go through to enter the home," she says. "If your home's front door is in bad shape and paint won't fix it, it makes sense to install a new one."

Installing fiber-cement siding
Projected return on investment: 79.3%
"Fiber-cement siding is a very popular product on new-construction homes because it's very low maintenance, it doesn't need painting for quite some time and it insulates a home well," Moore says. And while Remodeling predicts you'll spend $13,083 installing 1,250 square feet of prepainted fiber-cement siding and trim, Moore says the job will add to your home's curb appeal -- especially if you live in a cold-weather locale. "Siding is one of the first things to go in [cold climates] because of the weather," she says.

Adding a wooden deck
Projected return on investment: 77.3%
Moore says she's noticed house hunters favoring decks to entertain at home. "Decks are just a great way to enjoy your home," she says. Remodeling calculates that installing a 16-by-20-foot wooden deck with posts, railings and a built-in bench and planter will set you back $9,327.

Garage-door replacement
Projected return on investment: 75.7%
Moore says this upgrade can really boost curb appeal -- again, particularly in cold climates -- even though Remodeling estimates the job costs only $1,496. "Water and snow and things bouncing up from the driveway can easily rot garage doors," she says.

Minor kitchen remodel
Projected return on investment: 75.4%
Study authors defined this job as repainting trim and replacing the kitchen stove, oven, wallpaper, flooring and cabinet/drawer doors and handles (but not the cabinet/drawer interiors).
Remodeling estimates all of that costs $18,527, but Moore says the price is worth it if your kitchen needs work. "If the rest of the house is really nice but the kitchen is a disaster, you're going to get much less for house than you deserve," she says.

Why Your Perfect Home Needs Central Air

When you find your dream home, things just click. The closets may be a bit too small, the AC may come from window units instead of a central system and maybe there's no full-time guest room ... But the place just has that magic.

Still, it pays to think about those shortcomings, which could make it harder to sell when you're ready to move on in a few years. To some extent, the housing market is a fashion industry, and today's styles will sell better than yesteryear's.

A study by the National Association of Realtors says central air conditioning is the most critical of 33 features surveyed, with 65% of those polled rating it very important. So if the home doesn't have it when you buy, think about putting it in. You'll enjoy it and will find it easier to sell for the price you deserve.

Among other highly desirable features: new kitchen appliances and a walk-in closet in the master bedroom. Buyers also preferred homes that were less than five years old, which might surprise those who believe in old-time craftsmanship. The fact is, newer homes are better insulated, have safer wiring and are built to withstand winds that would blow older homes apart.

Not surprisingly, buyers would prefer choice sites such as those on the water. They want basements, and many look for a home with an in-law suite. (Of course, that doesn't mean the in-laws will move in. The suite can serve a grown child who's slow to launch, or function as a better-than-average guest quarters.)

Most buyers still want a traditional living room, even though modern life seems to gravitate to the great room.
Asked what they were willing to spend more to get, a majority of buyers said: a laundry room and den/study/office/library.

Many buyers who were satisfied with their home said they would still like more and bigger closets and a larger kitchen. In fact, 47% of recent buyers undertook a major kitchen improvement quickly, and almost as many upgraded a bathroom.

Of course, buyers' demands vary by region and demographics. In the south, as one would imagine, air conditioning is especially important. And older buyers are more likely to prefer single-story homes.
Obviously, there's no simple rule about what will appeal to a future buyer. But today's shopper would be wise to visit a wide range of homes, not just a few suggested by the real estate agent, to get a sense of the styles popular in the community.

Builders have a pretty good sense of what buyers in the area want, so tour some open houses in new developments. If new homes offer stainless steel kitchen appliances, dedicated laundry rooms, finished basements and bedroom-sized closets, you can bet that future buyers will demand those features -- at a minimum.

Keep in mind, though, that many major home improvements don't add as much value as they cost, so it's probably not a good strategy to buy a substandard home and plan to upgrade just before selling. Get a home that has the features other buyers value, or put them in quickly so you can enjoy them yourself before selling.

By: Jeff Brown