Recoup Remodeling and Addition Investments

by HomeAdvisor

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When undertaking large remodeling and home addition projects, it is smart to research your local real estate market to find out if your project will return your investment when it is time to sell. Depending on where you live, the right project may return 100% of your investment. That is why research is the smartest way to begin any remodeling project.

Recoup Your Remodeling Investment
Remodeling projects should be done when you are planning to stay in the house for several years, not simply for the sake of trying to increase resale value. Since you can't guarantee that you will get a decent return, it makes the most sense to remodel when you will be able to enjoy the benefits in the long run. Only minor remodels should be considered if selling is your primary goal.

Here is a sample of returns for some of the most popular home remodeling projects. Statistics are compiled from multiple published surveys and based on major cities within states:

  • Minor Kitchen Remodel: 125% (Connecticut)
  • Basement Remodel: 98% (California)
  • Bathroom Addition: 96% (Missouri)
  • Major Kitchen Remodel: 92% (Kentucky)
  • Bathroom Remodel: 90% (Oregon)
  • Exterior Paint: 90% (Pennsylvania)
  • Master Bedroom: 86% (Florida)

In general, across many real estate markets, kitchen and bathroom remodeling consistently offer the highest percentage return on your investment (80-100%). Bathroom and family room additions offer a fairly high return also. A master bedroom remodel can potentially get a high return.

Certain projects such as converting a basement or an attic into functional living space varies widely from region to region. The same is true for deck additions.

Remember Curb Appeal
Repainting the exterior of your home also shows decent returns in most markets. When preparing to sell your home, at least sprucing up your exterior paint is important. Without curb appeal, potential buyers will not even stop or get out of their car to give your house a chance.

Repainting is only part of curb appeal, however. A well-manicured lawn and attractive landscaping will grab buyers' attention as well.

Keep Your Home's Original Design Intact
When considering a remodeling project or addition, you should not only do research in your local real estate market, but also look around your neighborhood. Any improvement you make should be consistent with other homes on your block.

An elaborate addition in a modest neighborhood will stick out and will not provide the return you are hoping for based on the fact that someone who can afford the extra money to buy your home will most likely search in a more expensive neighborhood.

Along those same lines, keep the original design of your home in mind. Stick with either the same materials or complementing ones. Aim for a flowing congruency so that your home remains tastefully appealing on the inside and out.

Think through color scheme and decor in much the same way. Bold, eccentric color schemes that will stay with the house after you sell can deter potential buyers who lean on the conservative side. Being flamboyant with your remodel is a fine idea for those homeowners who plan to stay in their home for years to come. For those of you looking to move in two to three years, choosing neutral colors for floors and walls will benefit you when it's time to sell.

Remodel for Your Needs, Not for Resale
When trying to decide whether or not you should take the plunge and remodel, think of your own needs. If you absolutely want to add on a deck, go for it. If you have a spacious basement and could use a children's play area, don't hesitate.

By concentrating completely on the return you might get from a home improvement project, you are limiting your options and basing your decision on a factor that is constantly changing.

Depending on the economy and the real estate market in your area, as well as other factors, your remodeling return could be more or less than you expect when it is time to sell.

Just remember that for the immediate future, you will determine the value of a luxurious bathroom remodel or sunroom addition. The enjoyment of improving your home for the rest of your time living in it might far outweigh what money you get back when it is time to sell.