Want to add value to your property, but not sure which improvements are most worth your time, effort and—especially—your money? The heady fix-and-flip days of 2006 may be long gone, but certain renovations still increase your property’s appeal and add to its value.
Every year, Remodeling.com puts out an annual Cost vs. Value report on the top home renovations with the biggest payout (as well as a list of the ones to avoid). The data in this report is a great way to test our assumptions about what adds the most value to our homes. So, without further adieu, let’s check out some of the findings from this year’s Cost vs. Value report and find those home renovations with the best ROI for 2014.
Is Renovation Worth the Effort and Cost?
In a nutshell, yes—if you choose your projects wisely.
But first, a bit of good news: A 2013 study from Harvard University found that for the first time in years, the home renovation market is on the upswing, and it’s projected to keep growing through 2014 and beyond. Data from Remodeling’s 2014 Cost vs. Value Report supports the conclusions from Harvard, noting that the cost-to-value ratio—which has been on the downslide since 2006—has increased by 5.5 points since 2013, the largest increase in more than a decade, and is due in large part to rising home values.
Here are the most cost-effective renovations for 2014.
One of the most worthwhile renovations is also one of the simplest: A new front door. Welcoming guests or potential renters into your property with a brand-new new door not only improves your property’s first impression and ups its curb appeal, but it also returns 96.6 percent of costs into your home’s value.
But not just any door will do. For the best ROI, choose a door constructed from 20-gauge steel. With an average cost under $1,200, this relatively small improvement goes a long way. Entry door replacement gained the most cost-value ratio points, increasing from by 11 percent from 2013 to 2014.
Back it Up
Another surprisingly cost-effective renovation for 2014 has a lot to do with this winter’s severe weather. Installing a back-up generator gained 28 percent from 2013, representing a 67.5 percent return of value. Of course, the average price of this project is large, as well, at almost $12,000, but the ability to keep the power—and heat—on during a winter storms is a big draw.
Deck it Out
People love to have a comfy place to sit and enjoy a sunny day, and adding a deck to your property is the perfect solution. Decks also represent a good ROI, but, interestingly enough, the type of deck is key. While wooden decks returned 87.4 percent of value, composite decks only return 74.3 percent of cost, despite their tendency to require less maintenance.
Flowers in the Attic
Finally, if you’ve been dreaming of transforming that musty old attic into a dream bedroom, now’s the time to do it. It’ll cost you—the average attic re-do comes in at $49,438—but you’ll recoup more than 83 percent of your investment, an increase of almost 16 percent year-over year. Attic remodels not only increase your livable space, but they’re becoming increasingly popular as more generations choose to live under one roof.
[…] making such a large investment, you must get your finances in order. This includes paying off any credit card debt and creating a budget for how you plan to pay your […]
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?