Investing Wisely: Unlocking the ROI of Home Improvements

If you're like thousands of other homeowners planning to tackle a home improvement project this year, you might find yourself weighing various options. Your decision might hinge on your budget, your DIY skills, or the availability of materials. But what if you could base your decision on the return on investment (ROI)? Let me share some insights that might help you out.

In my 23 years of showing homes, I've learned that buyers form an opinion of your home the moment they arrive. The same goes for family, friends, and visitors. So, if you want to make a stellar first impression, focus on the front of your home—what we call 'curb appeal.' This includes the lawn and landscaping, driveway and sidewalks, front entry, garage door(s), shingles, exterior paint, and even clean windows. Generally speaking, this is where you'll get the best return on your investment.

A positive first impression often colors people's perceptions as they tour the rest of the home and property, sometimes causing them to overlook or dismiss negative aspects that might have been deal-breakers otherwise. While this approach won't work for everything, it can certainly make a difference.

Moving beyond curb appeal, you've probably heard the old saying, "Kitchens and bathrooms sell homes." While this holds true and these rooms can significantly impact your home's value, they're also the most expensive to renovate. Another area that can add value is a finished basement, but this too can be a pricey endeavor. These are projects I'd rarely, if ever, recommend unless you plan to stay in the home for a few more years to enjoy them, as the return on investment is generally not favorable.

So, how can you determine which home improvement projects will yield the greatest return? Of course, you can always reach out to me for advice—I'm more than happy to lend an ear and offer my insights.

Another valuable tool is the annual Cost vs. Value Report (CVV) published by Zonda Media, detailing home renovations that offer the best ROI. It provides national averages as well as regional and city-specific data. To estimate costs, the CVV team uses building product data and labor statistics. To determine value, they survey more than 6,000 Realtors. The 36th annual report for 2023 was recently released.

Last week in my newsletter, I polled my readers and asked which home improvement they thought would yield the highest resale value (by %) nationally. Nearly 70% voted for a major kitchen remodel, while only 1 individual voted a garage door replacement and 2 others voted for a roofing replacement.

Here are the actual percentages of ROI for the various home improvements:

1. Major Kitchen Remodel (Upscale) 31.7%
   
   
2. Garage Door Replacement  102.7%
   
   
3. Bathroom Remodel (Upscale) 36.7%
   
   
4. Roofing Replacement (Asphalt shingles)  61.1%

Although it may seem counterintuitive that replacing your garage door or roofing would have a significant ROI and add value to your home, it actually provides a much higher ROI than the popular kitchen remodel.

I wish you the best with your upcoming projects and am always happy to share the knowledge I've accumulated. I can recommend contractors who've been vetted by myself and my clients, and drawing from my experience with buyers, I can offer valuable advice on what matters most to them. I never want you to spend money on anything that won't benefit you, whether you're planning to sell next week or two years from now.

Norwalk IA Real Estate – Jon Niemeyer, Broker/Owner/REALTOR® at EXIT Realty North Star. I list and sell real estate in Central Iowa including Norwalk, Des Moines, West Des Moines, Cumming, Indianola, Carlisle, Waukee, Urbandale, Grimes, Clive, Johnston, Ankeny, Altoona, and Pleasant Hill in the Counties of Warren, Polk, Dallas, and Madison. Call Jon Niemeyer at 515-490-4675.