Upgrading your kitchen, bedroom, or patio can seem like an excellent investment. Making your home more functional or pleasing has to increase its value, right?
However, some home improvements don’t offer a good return on investment. You want to get the most out of your home improvement dollar, especially if you’re using a home equity loan or line of credit to fund the projects. Here are some tips for deciding which upgrades are worth investing in.
Smart Home Improvements
What qualifies a home improvement project as a wise choice, is one that adds equity or value to your home. Upgrading plumbing, adding square footage, or building a pool are all examples of adding equity to your property. Adding gold crown molding to your ceiling is simply cosmetic and wouldn’t necessarily add value to your home.
Here are more examples of wise home improvement choices.
Repairs and maintenance to keep your home running smoothly are always a good investment. For example, replacing your roof will ensure that your home remains protected from the elements and potentially costly damage. If you replace your roof just a few years before you sell your house, it can also be a selling point for potential buyers.
Upgraded heating and cooling systems can also be smart, especially if you already have ductwork in place. A new energy-efficient furnace or air conditioner should offer value to buyers — and you if you’re staying in the house.
Kitchen upgrades are likely to offer great value. New lighting, modern appliances, and better or more cabinets are valuable improvements. Be mindful of your budget prior to purchasing certain types of appliances. The highest-end appliances may not provide a return on your investment in a modestly priced home or a small kitchen, whereas more budget-friendly models could be a wiser purchase.
Bathroom renovations can also be a safe bet. New tile, fresh paint in a neutral color, a tub upgrade, and new cabinets will make your bathrooms more appealing. As with kitchens, keep your upgrades comparable with other homes in your neighborhood and price range to get the most value.
Adding fresh paint in any room or to the exterior is also a good choice. Repainting areas in your home is essential if you’re covering up less appealing colors or removing outdated wallpaper. Don’t skimp on the prep work before you paint. Properly preparing the surface before painting will ensure that your paint not only lasts longer but may allow you to use less paint and will ensure that potential buyers are pleased with the effort.
Outside, you might want to invest in landscaping, patio, or deck upgrades. Unless you’ve got your heart set on something specific, try to keep your outdoor projects simple. Focus on creating a pleasing look that fits well with your neighbors. Installing expensive irrigation systems may not be a wise choice unless they can help improve efficiency and are common in your area. The same goes with fancy decks, gazebos, or sheds. You will sell your home more quickly with a simple outdoor space, rather than through extensive and expensive renovations to your yard.
Home Improvements That Don’t Offer Value
Trendy upgrades that may be out of fashion in the next few years don’t tend to offer a good return. Wall-to-wall carpeting can also be a poor investment, as many buyers may plan to rip it out and replace it with an easier-to-clean laminate, vinyl, or wood floor.
Basement, attic, and garage renovations are often unable to recoup their costs, although they may help sell the house. One example of a garage renovation that may not pay off is converting your garage into a spare room or office. Buyers won’t have a place to park their cars or store tools if you do a garage renovation without thinking it through first. An exception may be turning a basement into a separate apartment with its own entrance, bathroom, and kitchenette. Buyers may be willing to pay more for these potentially income-producing options in areas zoned for short- or long-term rentals.
New windows and doors may not offer a good return on investment either. You may find that the efficiency improvements of new windows or the safety upgrades of a new door are worth it to you, but don’t expect buyers to pay more for them.
That’s not to say that you shouldn’t upgrade your home as you wish and as you can afford — there’s nothing like finally getting that dream shower spa or convection oven. If you dream of an add-on, just keep in mind that these projects may not give you a return for your investment.
Need some advice on how to pay for your planned improvements? Home equity loans and lines of credit are perfect for home upgrades. Make an informed plan, set a budget, and love the results.