Which Renovations Yield the Highest Return on Investment?

Home renovations are a popular idea for homeowners looking to improve and update their space. Making changes to a home can add value to the home and the neighbourhood in which the home is located. The rewarding feeling of seeing a transformation take place is one reason many invest in renovating their home. But, which renovations will yield the highest return on investment?

Cost vs. Benefit

When undertaking a renovation it is important to keep the cost of the renovation in line with the benefit that you will receive from it. A great way to determine this cost versus benefit ratio is to consider potential expenses including the cost of materials, labour, permits, and furniture or items associated with the renovation, as well as the potential return on investment that the project could bring.

Weighing Your Options

When deciding on a renovation project, the return on investment can be a major factor in your decision-making process. When weighing your options, some of the highest rate of return projects include:

• Kitchen remodel: Ranked the highest in return on investment at an average of 73.7% nationally this project has a high cost but a high value.
• Bathroom remodel: Receiving a return of around 70.4% an upgrade of the bathroom is not only popular but offers a good return.
• Attic bedroom conversion: Coming in with an average return of 60.7%, the cosy room addition invites a good return.
• Basement renovation: Although this project is the most disruptive it can yield returns up to 70% when done well.

Other Considerations

When deciding on a renovation project for your home, it is important to consider its impact on both the value of the home and impact on lifestyle. If the renovation project does not add to the value of the home, then it may be more cost effective to wait or invest in a project with a greater return. Additionally, when selecting a project, it is important to consider how it will impact your lifestyle and the reason for renovating in the first place.

Checking Comparable Properties

When weighing a potential project, it is important to look at comparable properties and determine a potential price point for the completed project. Realtors, contractors, appraisers, and other industry professionals can help evaluate a potential project and the value it may bring to the home.

Return on Investment

The value of a renovation project is ultimately determined by the return it yields on investment. When determining the return, consider any costs associated with the project including labour, materials, permits, and post renovation costs. Additionally, consider the resale value of the home after the project is completed.

The Future of Renovations

When making decisions about a renovation project, it is important to consider the future. Is the addition something that will appeal to buyers in 3 to 5 years? Is the style of the renovation something that you will still appreciate down the road?

Financing the Project

Before embarking on a project it is important to ensure that the finances are in order to cover the cost of the project. This includes factor in materials, furniture, labour, and any additional costs that may crop up during the renovation process.

Renovation Renovators

When selecting a contractor for the project, it is important to ensure that the contractor is properly licensed, insured and experienced in the type of project you are undertaking. It is important to speak with the contractor and ensure that they are well equipped to handle the project you have in mind.

Safety First!

When beginning any project it is important to ensure the safety of the home and those working on the project. This includes factors such as structurally sound walls and roofing, electrical safety, and the use of any hazardous materials and tools.

The Bottom Line

When renovating with the future in mind and making decisions based on research and reliable industry professionals, it is possible to undertake a project that will not only help increase the value of your home but also bring you joy for years to come.

Conclusion

In conclusion, when addressing the question of which renovations yield the highest return on investment it is important to consider a variety of factors. You will need to consider the cost of materials, labour, permits, and furniture or items associated with the project as well as a potential return on investment. Additionally, you’ll need to assess the future of the project by looking at comparable properties, speaking with industry professionals, making sure safety is foremost, and ensuring you can finance the renovation properly. Ultimately, a successful renovation project is one that helps to increase the value of your home and also brings you joy for years to come.

What percentage of investment returns do remodeling projects typically generate?

The exact percentage of investment return generated by a remodeling project depends on the overall goal of the remodeling project and the level of complexity of the work involved. Generally, the investment return generated by a remodeling project can range anywhere between 15% and 80%. Additionally, the quality of workmanship, materials, and design can also greatly affect the amount of return on investment generated by the project.

What is the average cost of a remodeling project?

The average cost of a remodeling project varies greatly based on the scope of work, materials used, and size of the space being remodeled. According to HomeAdvisor’s 2020 Cost Report, the average cost of a remodeling project in the US ranges between $19,800 for a minor kitchen remodel and $136,000 for a major remodel.