Whether you’re an investor looking to flip a house for a profit or a homeowner trying to make practical improvements, it’s important to know which renovations actually add value to your property and which ones end up costing you.
If you want to give yourself a big, beautiful new kitchen that you are going to use and love for years to come, go ahead and make it happen. But you should know that it will give you a very low return on your investment (ROI).
A renovation that costs $1,000 and has an ROI of 100% will end up adding $1,000 of value to the property, which means you will break even when you sell. So, if you want to add value to a house, you are going to want to stick to renovations that have an ROI of over 100%.
Here are a few renovations that have such a high ROI, it actually pays to do them.
Adding A New Roof
Buyers want a solid roof over their heads. That’s why adding a new roof was ranked as the number one renovation to add value to a home in the 2017 Remodeling Impact Report from the National Association of Realtors.
Sellers who spent an estimated $7,500 on adding a new roof increased the sale price of a house by $8,150, which means they saw an ROI of 109%. Adding a new roof helps with sales so much that nearly half of the realtors polled suggested owners should do this renovation before trying to sell.
If buyers keep getting cold feet, it might have something to do with the old insulation in the house. You can fix that by installing loose-fill fiberglass insulation in the attic. This cheap renovation provides an ROI of around 107%, according to Remodeling Magazine.
It can also be a good way to attract and entice potential home buyers that are environmentally conscious or simply want to save on their electricity bills. Adding insulation can save homeowners anywhere between 10% to 50% on their heating and cooling bills, which can make buyers feel like they are making a good investment.
You won’t have to pay a dime to paint the interior of your house if you are the one behind the brush, according to a HomeGain survey from 2012. At an average cost of $967, painting interior rooms, removing wallpaper, and covering watermarks, increased the final sale price of a home by $2,001, which means you can recoup 107% of the cost. You can bring the sale price up even more if you paint rooms the right color.
However, painting the exterior of a house does not give you nearly as high of an ROI. Even if you save on labor costs by doing the paint job yourself, you only stand to recoup around half of your expenses. So, it might be better to leave that renovation project to the new owners.
Electrical & Plumbing Repairs
If you know how to repair leaking pipes, fix broken outlets, replace old faucets, or update electrical wiring, you could increase the price of your house by a shocking amount. At an average cost of $808, sellers who DIY’d these repairs could expect to increase the sale price of their home by $3,175, which is an ROI of 293%.
Getting the grass to be greener on your side of the fence can be one of the most cost-effective renovations of all.
Performing a standard lawn care service has an ROI of 267%, according to the National Association of Landscape Professionals. More than half of the realtors polled suggested that sellers should perform lawn care, which includes 6 applications of fertilizer and weed control on a 2,835 square-foot lawn, before trying to sell.
Giving your house curb appeal can also attract new buyers who walk by and see the ‘For Sale’ sign sticking out of the perfectly cut grass.
Remember that these numbers are all averages and estimates, so you are not guaranteed to see the same ROI for your renovation. However, if you are trying to sell a home that’s not on par with the rest of the neighborhood, doing renovations with an ROI of less than 100% can still bring the value of the property closer to the rest of the neighborhood, which can be enough to make the renovation worthwhile.