Deciding which home improvements add the most value to a property remains one of the biggest challenges facing both homeowners and real estate investors. Installing the right home improvements can maximize your return on investment (ROI).
All too often, misconceptions result in terrible remodeling choices. Those implementing poor home improvements may fail to create additional profits for their investment. Furthermore, installing the wrong fixtures can lead to recouped costs and serve to devalue the property as a whole.
So, what home improvements will yield the best returns?
Focusing investment funds on key home improvements will increase your ROI. Particular areas to focus on include: curb appeal, neutral paint applications and key room additions.
According to Inman News, garage doors, adding decks and replacing front doors can result in high yields for an investor. Still, this can often mean seeing just 75% of the dollars invested recouped.
The recently published study reveals the average cost of popular home improvement projects in 81 U.S. cities. Of particular concern, however, are reports that suggest average projects witness a 50% return or less on investments. Knowing which home improvements to invest on can mean the difference between success and failure.
However, like everything else in real estate, remodeling project ROI is also highly dependent on “location, location, location.” Depending on where you live, home improvements can greatly affect your ROI in different ways.
Materials and labor costs can vary between locations. In other words, do not plan on copying investors in New York while you yourself are investing in Northbrook.
Recognize the most in demand features for specific locations. What may be in demand in one region may be disliked in another.
So whether you are flipping houses, want to increase your investment returns, or just make smarter home improvements, consult a professional to get some feedback on your plans. Make sure you get multiple bids on contractor work and are ready for overages. Consult an appraiser and determine what real, tangible difference plans will make to actual appraised value.