Digital wallet payments are convenient and secure.
Get upfront pricing, guaranteed savings, and a discounted rate on your auto loan. Members save an average of $3,106 off MSRP.
Earn 1.05% APY on your money with an Alliant High-Rate Savings Account.
The National Education Program is open to Alliant members between the ages of 5 and 17. Apply by Friday, August 18, 2017.
Return to The Money Mentor Blog
By Thomas Muellner
Perhaps you, too, have let your mind wander while binge watching the latest season of Fixer Upper, House Hunters, or another show within the HGTV canon.
”…A new breakfast nook really would make that corner pop… Of course, we’ll also need to knock out the living room wall… And it just makes sense to throw in some built-in shelves to match those dreamy butcher block countertops while we’re at it…”
Because who doesn’t want a demolition day of their own, right?
While it’s easy to get swept up in the excitement of made-for-TV home renovations, knowing which types of home improvement projects can increase the value of your property the most is a whole different story.
The good news is that money invested in maintaining and upgrading your home generally comes back to you, at least in part. According to the 2017 Cost vs. Value Report, published by Remodeling magazine to demonstrate the return on investment (ROI) of common home projects, homeowners can expect to see an average of 64.3 cents on the dollar in resale value gains for every dollar spent.
That means a $10,000 renovation has the potential to increase the selling price of a home by about $6,430, on average. This assumes it’s an appropriate project for the property and fits within what’s recommended for the market.
If you’re ready to roll up your sleeves (or hire a capable contractor), here’s how to get the best bang for your buck on your next home project.
Before choosing the colors for your new master bedroom, think about any foundational issues that might be affecting your home. Does the furnace need to be replaced? Are toilets always getting clogged because of old plumbing? Has the roof or foundation had any major damage over the years?
By addressing structural concerns early and often, you can save yourself headaches and costly repairs down the road. What’s more, there’s a ton of value in shoring up the essentials. For example, a roof replacement averages about $20,000, yet nationwide data show that homeowners can expect to see a $14,214 lift in their home’s value once it’s been installed.
This becomes even more important if you’re considering selling your home in the near future. New home buyers expect to walk into a fully functional space, even if in older homes. If you’re unsure of what needs repair, hiring a home inspector early on in the process to highlight key issues can be a great first step.
Believe it or not, the imported marble tile floors you’ve had your heart set on, while gorgeous, may not yield the same lift in home value as a number of more pragmatic projects.
On the “beige” end of the spectrum, installing fiberglass insulation in your attic costs just $1,343, yet it can increase the value of your home by more than $1,400 overnight, according to national data. Similarly, putting up new siding or replacing your front door can generate a handsome return that’s nearly dollar-for-dollar.
Conversely, fringe projects, like installing a backup generator or adding a backyard deck, tend to see more of the building costs absorbed by homeowners. Common pet projects like updating the bathroom or remodeling the basement fall somewhere in the middle, with homeowners able to tack between 60-70% of building costs onto the asking price when they’re eventually ready to sell.
However, there are always exceptions. For example, if your home has only one bathroom or a limited number of bedrooms, converting extra space or building additional rooms so that it’s on par with more modern designs is typically a safe bet in terms of ROI.
As with foundational needs, hiring a realtor or home decorator for a one-time consultation early on in the building process can be a helpful way to gauge how your home compares to others in the community. It’s a small price to pay to generate design ideas and understand how your home stacks up in the market.
Just like no two homes are alike, the needs of each homeowner and family are unique. Before sinking cash into a new project, talk with your loved ones and make a plan for the future. If you intend to stay in your home for many years before selling, the immediate financial benefit of certain home improvements may not matter. Instead, you may want to focus on projects that’ll add to the enjoyment of your daily life.
For example, if you love to cook or entertain, you may opt to invest in a brand new kitchen with updated appliances or an outdoor patio where weekend guests can mingle. On the other hand, if you’re delighted by evening baths and a blossoming wardrobe, you may consider adding a master bedroom or bathroom suite.
By prioritizing what’s important to you and your family, as well as what’ll help give your home a financial lift, you can be sure you’ll find a project that’s both fun and cost-effective. So, pause Netflix and ditch the remote – “demo day” is right around the corner.