Renovations That Give You a Return on Your Investment

Adding a new backsplash in the kitchen might boost your home value.

Adding a new backsplash in the kitchen might boost your home value.

Whether you’ve decided to finally get around to fixing up that fixer-upper or plan to give your starter home a bit more traction when you put it on the market, it pays to keep a few things in mind when you renovate. For one thing, you’ll almost never receive a dollar-for-dollar return on renovation investments. And the longer you wait to sell your home after the renovation, the less return you tend to receive. So don’t expect that dropping $10,000 to make the fanciest kitchen in your subdivision will boost your home’s value by 10 grand when you sell the house in a dozen years. However, selecting the home-improvement projects that provide the biggest bang for your buck will help preserve a good deal of your renovation budget when you sell.

Windows

Swapping those crummy single-pane aluminum-frame windows for energy efficient wood or vinyl frame double-paned windows doesn’t just add a bit of curb appeal to your home. It also adds value. New windows can recoup 65 percent to 78 percent of their cost when you sell your home, according to Smart Money and Bankrate.com. The average home saves $126 to $465 a year in heating costs when you upgrade from single-pane to Energy Star windows, according to the U.S. Environmental Protection Agency. This provides additional value to the home.

Kitchen

A kitchen remodel goes a long way toward catching buyers’ eyes, whether you are simply adding a few new fixtures or replacing your cabinets, floor and countertops. Don’t just go for cosmetic upgrades, however. Functional upgrades such as dual ovens and wine coolers can also boost your home’s value. Just try to rein in the spending wherever possible. It’s unwise to spend more than 20 percent of your home’s value updating your kitchen, according to Apartment Therapy. The good news is, you can expect to recoup 70 to 80 percent of your kitchen remodeling investment in increased home value when you move, as long as you don't overdo the job.

Bathrooms

Buyers tend to check out the bathroom facilities with a keener eye than living spaces, so putting money in bathrooms can help lift your home’s value dramatically. Expect to spend about $10,000 upgrading a basic bathroom to a midrange setup, with modern walk-in showers, posh fittings and high-end lighting fixtures. You can also expect to see about a 90 percent return on the investment when you sell the home, according to Bankrate.com. You’ll need to spend more to add another bathroom to your floor plan. In addition to the added convenience, you can expect a bathroom addition to increase your home’s value by about 65 percent of its cost, according to Smart Money.

Decks

Outdoor living spaces are becoming more popular with homebuyers. Adding a deck dramatically increases your home’s usable outdoor space. It might also increase the home's total square footage, depending on how home sizes are calculated in your area. Costs can vary significantly depending upon the materials and labor you use, but it's usually a worthwhile investment that recoups about 80 percent of its cost, according to Bankrate.com and Apartment Therapy.

About the Author

Wilhelm Schnotz has worked as a freelance writer since 1998, covering arts and entertainment, culture and financial stories for a variety of consumer publications. His work has appeared in dozens of print titles, including "TV Guide" and "The Dallas Observer." Schnotz holds a Bachelor of Arts in journalism from Colorado State University.

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