The Surprising Home Renovation That Usually Pays for Itself
Investing in a home renovation or remodel can improve the livability of your home and even increase the resale value when it comes time to sell. When you choose to renovate your home, you may want to consider what projects will garner the most return on investment, even if you’re not selling anytime soon. Remodeling magazine released its 2019 Cost vs. Value Report, comparing the cost and return on many common home renovation projects. Out of all of the repairs evaluated, replacing a standard garage door with an upscale model, tended to recoup 97.5% of the cost when it came time to sell.
Garage door replacement especially paid off in New England and the Pacific Region. In states like Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, and Connecticut the project added an average $267 to the home’s resale value. Out West, in states like California, Oregon, Washington, and Alaska, the project added an average of $900 to the home’s resale value, equating to a 23.8% profit.
Following garage door replacement, adding manufactured stone veneer to the home’s exterior tended to deliver the second-best ROI. Nationwide, the upgrade recouped almost 95% of its cost when the home sold. Coming in third, was a minor kitchen remodel, recouping 80.5% of the cost when the home was sold. Other popular renovations did not yield as much in returns. Adding an upscale master suite only recouped 50.4% of the project cost and adding a standard backyard patio only recouped about 55.2% of its cost.
When investing in a home renovation or remodel, it’s important to consider the lasting impact of your project. Projects that align with specific tastes may not add as much value as projects that improve the functionality of your home. For example, you might be in love with adding a tile backsplash in your kitchen, but before you do that, consider the health of the faucets, dishwasher, and other appliances. Even if you do not plan on selling your home anytime soon, investing in functional renovations like energy efficient appliances could save you more in ongoing utility costs while you are still living in your home.
Homeowners who choose to renovate or remodel their home can finance the project in a number of ways. In some cases, it will make sense to do a cash-out refinance. With a cash-out refinance, the homeowner will refinance the total amount owed on their mortgage plus the amount of cash they would like to withdraw. A cash-out refinance is a new loan origination, and with that will come closing costs and other lender fees. Depending on the extent of the renovation, the homeowner may want to consider renovation financing. With a renovation loan, the homeowner can finance the cost of the renovation project with the total amount of the mortgage loan. A renovation loan will also be a new loan origination that includes closing costs and other lender fees.
If you would like to price out the cost of a home renovation or remodel, let me know. We can explore financing solutions to find the best way to pay for your project.
Sources: Apartment Therapy, Remodeling Magazine