Home renovations can be costly - but can also offer serious return on investment.

The best – and worst – home improvements for ROI

July 13th, 2016 by

Home renovations can be costly - but can also offer serious return on investment.

When it comes to home improvement projects, some renovations offer more return on investment than others. Before you go pumping lots of money into your home, consider the facts about which projects offer the highest ROI – and which may turn your home into a costly money pit.

Highest ROI home improvement projects

Kitchen and bath remodel 
Studies regularly find that a tasteful kitchen and bathroom remodel can offer strong ROI. This is due to the fact these rooms get significant use. Presenting a clean and well-appointed bathroom or kitchen can lead homebuyers to consider the entire home to be in better condition.  

"They're the most expensive areas of the home in terms of construction," architect Steve Straughan told HGTV. "And they're where people spend time in their homes."

In particular, current trends point toward people remodeling their kitchens and bathrooms in more traditional, utilitarian styles. Opt for natural, easy to clean materials like wood and stone when redoing bathrooms and kitchens. When it comes to bathrooms, skip the big whirlpool tub and go instead with a walk-in shower.

"Most people don't have time to take a bath," Straughan said. "So a lot of time you're giving away all that square footage for a tub that rarely gets used."

Adding an extra bathroom, while a significant investment, has also been proven to make a home more desirable. Multiple bathrooms are a highly requested amenity for many homeowners.

Focusing on the basics
Some of the more valuable investments you can make in your home are less visible ones. For instance, reinforcing a home's foundation to prevent moisture leakage can have a significant impact of the value of a home. Other foundational renovations like roof replacements and replacing doors and entryways offer strong ROI.

Otherwise, simply adding space to a house's footprint can also be a moneymaker for when you sell. 

"In the last couple of years there have been a lot of requests for additions," general contractor Don Sever told HGTV. "Everything from adding a sunroom to doubling the size of the house."

Risky ROI moves

Specialty rooms and amenities
Having a room that serves a specific – sometimes narrow – purpose can be a risk when it comes to investment. While home theatres‚Äč, exercise rooms or am indoor greenhouse may be appealing to some, you may turn off potential homebuyers and reduce the overall value of your home.

Closet expansions
Even added on to a master bedroom, a closet expansion rarely offers the kind of ROI that homeowners crave. This is because they are typically most costly than homeowners looking to renovate may anticipate – and homebuyers simply aren't that swayed by a larger or smaller closet. 

Window replacements
Replacing windows can add a lot of value to a home, due to both improved curb appeal and greater energy-efficiency savings that come from plugging drafts and gaps. The problem is that they also cost a a lot. Bankrate quoted David Pekel, national secretary for NARI and the president of Pekel Construction & Remodeling, as saying that a full-scale window replacement can cost anywhere from $26,000 to $50,000. Keep in mind the overall value of your home and whether or not such a significant investment will ultimately pay off in the way you want it to.

A fiberglass front door
While replacing a front door – as we mentioned above – can offer good ROI, the material you use is important. Steel doors are inexpensive and resilient, making them a smart investment. Materials like fiberglass may be more attractive and desirable, but aren't nearly as long-lasting, thus leading to potential loss of value down the line. 

Most importantly, if you do make any significant improvements, be sure to contact your home insurance broker to update the value of your home on your policy. Fundy Mutual offers acclaimed low rates and friendly service. Call us today to learn more.