The Best and Worst Home Upgrades for ROI

Upgrades to Consider When Building a New Home

When you’re building a new home or remodeling your existing home, it’s smart to choose upgrades that will not only make your house a home, but pay you back when it comes time to sell. Getting 100% of what you spend back rarely happens, but some upgrades yield more payback than others.

High ROI Upgrades

When deciding what upgrades or improvements are on the top of your list, consider the basic systems first. Nothing will turn potential buyers off faster than a wet basement or leaking roof, no matter how amazing the rest of the house looks. And for good reason – repairs and/or replacement of basic systems can be expensive and they aren’t fun. Remodeling magazine, a trade publication for professional remodelers, concurs that upgrades with the highest return on investment (ROI) are the basics of construction – siding, roofs, and windows. They aren’t nearly as sexy as a new soaking tub, but are better investments in terms of ROI.

Upgraded kitchens and bathrooms continue to be smart investments. When compared to other rooms in the house, they can be the most expensive to upgrade – and most buyers who have done any amount of research know it. Provided the basic systems in the house are up-to-snuff, an upgraded kitchen can contribute greatly to the bottom line when selling a house, therefore it’s a smart place to spend your money. So when you’re building a house, don’t skimp on the kitchen or bathrooms. And when considering upgrades to an existing home, these rooms tend to pay the highest dividends.

Fireplaces are a long-loved amenity by homeowners, so it’s no wonder investing in one or more fireplaces will add value to your home and make it easier to sell when the day comes. Fire features add not only warmth to a home, but unmatchable ambiance and character. Recently, Houzz named hearths and fire features top home trends for 2016, and fireplaces ranked #1 in a 2015 report of must-have home features from Realtor.com. See all the options from Heatilator here.

Other upgrades that will boost your home’s value when it’s time to sell are those things that enhance curb appeal – think upgraded garage doors, a new front door, and well-manicured landscaping. When compared to large ticket items like siding, windows and kitchens, they are relatively inexpensive, which makes them worthy of consideration.

Not-so-High ROI Upgrades

On the flip side, some upgrades are much less likely to recoup the money you spend. They are the kind of upgrades that will enhance your life, but are less likely to provide payback.

For instance, while a home office remodel, complete with built-in shelving and office furniture, may be appropriate for your life and work, it may not suit the next owner. It’s better to retain flexibility and avoid over-customizing rooms, especially bedrooms.

Another upgrade to carefully evaluate is a swimming pool. Installing one may bring many hours of entertainment to your family, but that’s where the payback typically ends. Depending on the area of the country where you live, some homebuyers don’t want the maintenance and expense of owning a pool. This can become a detriment when it comes time to sell.

Also, if you’re thinking about knocking down a wall between two bedrooms to create an elaborate closet or sitting area, be prepared to accept a lower price for your home. Reducing the number of bedrooms, no matter how amazing the new space, usually makes the house less sellable.

Do you see the theme here? The home upgrades with the highest ROI are those things that appeal to the masses. That being said, there’s nothing wrong with adding a pool or converting two bedrooms into one large room, as long as you understand the payback may not be as great as a new roof, kitchen, or fireplace.