Do your current real estate investments lack curb appeal? It could be as simple to correct as cleaning up the outdoor spaces. Other situations, such as neighbors with hoarding issues, proximity to an airport, or poorly rated schools, are out of your control.
Fortunately, you have plenty of options for home improvement projects that can turn things around. And with home prices up 13% over last year, buyers want to get the most value for their money.
If you’re ready to increase home value, we have some ideas.
Take a few minutes to explore ten ways to increase home value and maximize your investment. We’ll also cover three projects that don’t add value.
Why Curb Appeal Matters
Curb appeal and first impressions go together like macaroni and cheese. They both strongly influence how much money prospective buyers are willing to pay for a house.
If you invest in rental properties, curb appeal draws the attention of your ideal tenants.
The street view of a home either makes homebuyers and renters want to schedule a showing or inspires them to scratch the property from their must-see list. If a home looks shabby on the outside, most buyers will assume the same about the condition of the interior.
Even if that first impression is not entirely accurate, you could lose the opportunity to show people that your home has good bones and is beautiful on the inside too.
Curb appeal adds value. Homes with excellent curb appeal sell for an average of 7% more than properties with peeling paint, overgrown lawns, or sagging garage doors.
Things to Consider Before Investing in Home Improvement Projects
Before diving headfirst into a major renovation, knowing if the money, time, and energy are worth the cost is vital. Whether the home could use kitchen and bathroom upgrades or desperately needs a new roof, how much of an impact will the project have on home value?
If you take the time to research the ROI on the projects you have in mind, you’ll get a good idea of what you can expect. Keep in mind the variables that govern home values. They include:
- Supply and demand
Avoid overspending on projects that won’t give you any return on your investment. For example, you may need to invest in new flooring. Unless you’re sure luxury flooring will provide a good return, stick with builder’s grade options.
Considering the variables mentioned here helps build a real estate portfolio that provides an excellent return on your investment.
Make Upgrades to the Exterior First
Many investors start with interior projects like kitchen and bathroom renovations. While your investment strategy should include repairs inside and outside, we suggest completing exterior projects first.
A home’s exterior sets the tone for the rest of the property.
The weather may also govern whether you choose interior or exterior projects first. It’s not as easy to apply new asphalt to a driveway during winter vs. spring. Likewise, you may regret starting an interior painting project in the middle of the dog days of summer.
Since we’re suggesting that you start with exterior property improvement, read on and see why our first project, replacing exterior doors, makes an ideal project to add value to a home.
1. Upgrade the Garage Door
Most people view garage doors as utilitarian. They’re necessary to protect vehicles and personal belongings, but from an aesthetic perspective, they’re not too exciting, right?
Wrong! Upgrading the garage door can help a home stand out in the neighborhood. The right garage door can also add character to a home.
This upgrade is a no-brainer if the current garage door is sagging, dented, or has broken windows and missing panels.
When calculating the cost of a garage door upgrade, don’t forget to include the cost of removing and disposing of the existing door and tracks.
To optimize your investment, look for a door with these features:
- Heavy-duty galvanized steel tracks
- Foam insulation with a minimum rating of R-12
- Windows with ½-inch insulated glass
- Galvanized steel hinges
- Ball-bearing urethane rollers
The total cost to replace a garage door depends on the style and materials you choose as well as the cost of labor.
While you’ll have many opportunities to put your DIY skills to the test, it’s wise to leave garage door installation to the pros. If you decide to take on the project yourself, make sure you understand the conditions of your warranty. A DIY install could void the warranty.
2. Install a Steel Front Door
Replacing the front door is another upgrade guaranteed to increase home value without breaking the bank.
Think about your experiences looking at investment properties—even visiting the homes of friends and relatives—and try to remember what you felt when you arrived at the front door. It’s the first thing you touch when entering a home.
A flimsy, dingy front door conveys negative emotions. It gives a person the feeling that the home isn’t safe or secure.
Steel doors offer several benefits, including:
Regarding the lack of excitement most people feel about shopping for a new front door, you can change that in a second if you think about color.
A front door doesn’t need to be white or beige. Go for a bright, eye-catching color that contrasts with the other exterior elements. Red is one of the most desired colors for front doors—hint, hint.
3. How to Increase the Value of a Home with Stone Veneer
If you’re looking for an exterior project with an excellent ROI, consider adding stone veneer to the exterior walls of your property.
Stone veneer can lend a luxurious feel to any home. When most buyers see it on a home, the gears start turning. A buyer usually places a higher value on a house with stone veneer than one with siding or stucco.
You’ll be pleasantly surprised if you’ve never shopped for stone veneer.
If you buy a high-quality product, it will mimic natural stone yet won’t cost a fortune to install. It’s hand-made and shaped with molds, so it’s easy to work with and attractive.
There’s no need to add stone to the entire house. A small area will suffice. For example, if you have vinyl siding and it’s in good shape, you can add stone veneer to the lower portion.
Stone veneer can bring life to an outdated exterior in a way few other upgrades can offer.
4. New Siding and Increased Home Value
Damaged siding can lead to the deterioration of a home’s structure. It can also create an environment where mold can develop and grow. Gaps or holes in siding also contribute to higher energy bills.
Damaged siding can significantly reduce the value of your home. Upgraded siding can raise your home’s appraised value. New siding can also reduce energy costs.
You can replace old siding with identical materials, or if you want an entirely new look, update with one of the modern siding options.
If you look at other area properties, you’ll likely notice a lot of vinyl siding. It’s the most common material—it shares the stage with stucco—used on home exteriors today.
Vinyl comes in a variety of colors and styles. It’s also one of the most cost-effective options available today.
Other options include fiber cement, aluminum, and wood. We’ve already mentioned stucco and natural stone veneer, but brick is also still popular in some areas.
Depending on the type of siding you choose, you can expect to recoup between 65% and 97% of your investment when you sell the home. It’s something to remember if you apply for a loan to cover the costs.
5. New Windows Increase Home Value
Unless the previous owner invested in replacement windows, you likely have several that are long past their prime. Clues that your property could use new windows include:
- Rotting or decaying window frames
- Windows painted or swollen shut
- Leaky windows
- Condensation build-up
Whether you decide to replace old windows with vinyl, wood, aluminum, or fiberglass, new windows improve the appearance of a home. They can boost the home’s energy efficiency as well.
So, how do replacement windows affect home value?
Installing new windows on a 2500-square foot home runs around $7,500 (for ten double-hung windows). The return on investment is approximately 80%.
6. Kitchen Remodels Pay Off
When buyers start looking for a new home and they see updated kitchen in the real estate listing, it grabs their attention.
Prospective buyers usually consider the kitchen one of the essential spaces in a home. Most buyers will pay more for a home with a remodeled kitchen.
Be careful when planning a kitchen remodel. That dreamy luxury kitchen may not be the wisest investment.
While kitchen renovations generally add value to a home, it’s easy to spend too much, moving the project into the red.
Generally, updating countertops, flooring, and outdated appliances without changing the kitchen’s existing footprint costs between $35,000 and $55,000. This figure assumes a professional does the work.
When you look at cost vs. value, an investor could see up to an 80% return on their investment.
Continue reading to explore budget vs. full-scale kitchen remodels.
The Kitchen Remodel Sweet Spot
While it’s true that kitchens sell houses, the seller isn’t guaranteed to recoup 100% of what they invest in a remodel. It’s all about how you renovate.
Let’s look at the full-scale kitchen update first.
Full-scale Kitchen Remodel
Remember, in this article, full-scale doesn’t include changing the existing footprint or adding square footage to the house. However, it would the following would be included:
Many buyers won’t hesitate to pay more for a home with energy-efficient appliances and granite countertops. Stone countertops cost significantly more than laminate, but you can find laminate that closely mimics granite.
Buyers generally prefer stainless steel appliances.
Flooring options include linoleum, laminate, porcelain tile, and hardwood. The first two are the most cost-effective, but the ones that add the most value are tile and natural wood.
One thing investors should avoid is reducing work or storage space.
Budget Kitchen Makeover
Kitchen makeovers don’t need to cost a fortune. The goal of the budget kitchen remodel should be to update with a clean, modern look.
These projects will do the trick without going over budget:
- Add or update backsplashes
- New sinks and fixtures
- Paint cabinets
- Update drawer pulls and cabinet hardware
All these updates can transform a kitchen, and buyers will notice. The key to kitchen upgrades is finding the sweet spot—the amount of money you invest that adds value without going overboard. As an investor, having a vision of what you can do with your renovations is one key to success.
7. Boost Value with a Bathroom Update
What increases home value more in a buyer’s eye than clean, fresh, modern kitchens and bathrooms? Nothing! But like kitchen renovation projects, homeowners should focus on bath updates that add the most value without breaking the budget.
Bathroom renovations range from $2,500 to $30,000. Cost factors include square footage, quality of materials and fixtures, repairs, and labor rates. It’s possible to get 87%-94% of the amount invested back when the house sells.
Bathroom renovations are like kitchen makeovers. An investor can go all out with a full-scale renovation, or they can keep costs down with a budget makeover.
Full-Scale Bathroom Renovation
When planning a full-scale renovation, consider the following:
- Separate tub and shower
- Walk-in shower
- Heated floors
- New fixtures and hardware
One thing buyers will pay attention to is consistency between the design elements in the kitchen and bathrooms. While the color schemes don’t need to be identical, using the same materials for countertops, fixtures, and flooring creates a seamless, cohesive feel.
Budget Bathroom Remodel
Investors can make a significant impact without spending big money on a bathroom remodel. Here are a few things that will catch buyers’ eyes:
- Shaker-style cabinets
- Granite or quartz countertops
Shopping at big box home improvement stores can help save a significant amount of money. Instead of buying new cabinetry, painting existing cabinets white or off-white will transform the bathroom.
Next, we’ll look at home maintenance upgrades that can add value to a home.
8. How Much Value Does a New Roof Add?
Unlike kitchen and bathroom makeovers, a new roof may not add to the aesthetics of a home—although a roof in disrepair does take away from curb appeal—replacing the roof can add value.
Knowing the condition of the roof on an investment property is critical.
Buyers perk up when they find out the home has a roof younger than 15 years old. That’s because a new roof is a significant home maintenance project with a hefty price tag.
The average cost to replace a roof is $8,000. Most homeowners spend between $5,500 and $11,000. The two most significant cost factors for roof replacements are the square footage of the home and the roofing materials used for the project.
A new roof can increase the appraised value of the home. An investor may recoup up to 100% of the cost when they sell the house.
9. Value of a New HVAC System
Regardless of location, one of the first things prospective buyers want to know about a house is the age and condition of the HVAC system. There’s nothing more irritating than moving into a new home and having the heating and cooling system develop problems during that first winter or summer.
Furnaces have a 15-25-year lifespan. Air conditioners usually last between 7-15 years.
Home inspectors assess the furnace and air conditioning units for damage. A common note found on home inspection reports is HVAC system needs service—not something any buyer wants to see.
Investors typically pay between $1,000 and $10,000 for a new HVAC system. The cost for a new furnace alone is $1,000 to $4,000. A new air conditioner will run anywhere from $1,500 to $8,000.
A new HVAC system adds about 10% to the value of a home. While the return on investment is small, not replacing an aging or problematic system could lead to a buyer asking for a significant amount of money left on the table at closing.
10. New Attic Insulation
You may not see it often in real estate listings but adding attic insulation is something many people assume adds value to a home.
Frankly, most homeowners don’t consider adding insulation when selling. It’s more often an energy-saving measure taken to save the homeowner on their heating and cooling costs.
Adding insulation can help with energy bills and is a cost-effective way to reduce wear and tear on the home’s HVAC system.
But will new insulation add value to a home?
Adding attic insulation costs around $1,300. Savvy home buyers usually see the value in an energy-efficient home. A home with new insulation can sell for about $1,500 more.
After considering the various projects that can add value to a home, it’s beneficial to know more about home improvement projects that usually don’t pay off. We’ll start with something the average buyer isn’t looking for—a swimming pool.
11. Swimming Pools May or May Not Add Value
In some markets, a swimming pool is a preferred feature for homebuyers. In other markets, swimming pools don’t increase the value of a home.
For homeowners in Arizona, Florida, or Southern California, a well-kept pool can boost home value. In-ground swimming pools may increase home value, while above-ground pools do not.
Homes without a swimming pool in areas where most neighbors have pools may experience a perceived decrease in value. If only a few homes include pools, building a pool will likely not impact the house’s value.
Not all buyers want the hassle of owning a swimming pool, including the extra energy and insurance costs. Families with small children may view a pool as a safety hazard.
The cost to build an in-ground pool ranges from $20,000 to $65,000.
Until the recent global health crisis, investors might have seen a 7% increase in home value after installing a pool. Since the beginning of 2020, in markets where residents enjoy using pools year-round, it’s possible to see an increase of around 69%.
12. Garage Conversions Do Not Add Value
For around $10,000, an investor can convert a garage into a home office or guest suite. This is one home improvement that will not increase the value of a home.
Imagine trying to market a home without a garage to a multi-car family.
Even though a garage conversion may add square footage to a home—a selling point under most circumstances—most buyers prefer having a functional garage.
13. Homes with Luxury Upgrades
Every buyer looks at homes with stars in their eyes. They imagine what they’ll do to make the space their own.
Some people love to cook, so they dream of a kitchen with chef-grade appliances and workspaces. Others love elegance and are impressed by marble flooring throughout the home. Another might adore crystal chandeliers and install one in every room.
These luxuries give some homeowners a lot of joy. The average buyers may not feel joyous about paying more for high-end upgrades.
As an investor looking to add value to a home, it’s better to put money into appliances, flooring, and other upgrades that will appeal to a broad audience. Try to keep upgrades in step with the rest of the homes in the area.
Ready to Increase the Value of Your Properties?
Unless you buy a turn-key property, you’ll likely need to invest in at least a few repairs and perhaps several upgrades. You may also need to consider financing to cover these things.
You’ll need to consider several exterior home improvement projects like upgraded garage doors, front doors, windows, and new siding. You may need to renovate the kitchen and the bathrooms. Your investment may require a new roof or HVAC system.
If you need funding for projects that will increase home value, contact the experts at LendSimpli. We specialize in private lending for real estate investors. Reach out today and let us help you secure your loan.