Real estate tends to increase in value (appreciate) over time, but there are improvements you can make to your home that will further increase— or decrease— its value. Both home renovations (cosmetic changes) and home remodels (structural changes) have a good ROI (return on investment), but sometimes you’ll end up paying more for these upgrades than they’re worth. Here’s how to know which home upgrades will increase your property value.
Square Footage: More is More
Home upgrades that will increase the square footage, or add more physical space/make your home feel more spacious, will usually always increase your home’s value. If you have outdoor space, consider building it onto your home. If you don’t have the space to expand outwards, you can always finish your basement or attic. Finished basements and attics have an ROI of up to 75% because they can be used as additional bedrooms and can even be converted into mini-living spaces.
If you can’t do either of these, no worries— you can consider opening up your home’s floor plan to create an open-concept home. This type of floor plan appears to make your home bigger and more spacious. No matter which route you choose to take when adding more space to your home, remember that you should never try to attempt these kinds of projects on your own— unless you’re a licensed contractor who knows how to tear down walls and/or create a liveable space that adheres to building codes.
Many people tend to forget about the outside of their home, which can be a huge mistake since the outside is the first impression— which is known as curb appeal. Enhancing your home’s curb appeal entices buyers to buy your home, and they’re even willing to pay about 7% more if the outside looks nice. Some upgrades to your curb appeal to consider making include:
- Garage door replacement
- Paint touch-ups
- Stone veneer
- Updated mailbox and house numbers
Basic maintenance such as mowing and watering your lawn and power washing your home are also great ways to keep up with your home’s curb appeal.
Minor Kitchen and Bathroom Renovations
The kitchen and the bathroom(s) are considered to be the most important rooms in a home, so you’re more likely to see a return on your investment if you invest in minor renovations in either or both of these rooms. An entire kitchen or bathroom remodel isn’t necessary (unless these rooms are in dire need of an update), as you won’t see much ROI this way. All that needs to be done is updating the fixtures and hardware, and you can also invest in some new countertops and flooring for each room.
Look to “Universal” and “Smart” Upgrades
Universal home designs refer to a home design that can accommodate anyone, regardless of their ability level. A universal-design home should include features like walk-in showers/tubs with grab bars, wider entryways and hallways, multi-level countertops, and adequate lighting throughout the home. These homes also tend to be single-story, but multi-story homes can have sleek residential elevators installed.
Having smart home devices in your home also increases its value because these devices are known to make a home more energy-efficient. Some examples include smart thermostats, smart light bulbs, and energy-efficient appliances. The majority of people are willing to spend more money on a home that will save them money in the long run.
Know the Best Upgrades for Your Area
Finally, and most importantly, you should know which home upgrades are best for the area that you live in. For example, if you live in an area where it’s cold most of the time, adding a pool to your backyard may decrease your property value. On the other hand, if you live in Florida, adding a pool to your backyard may increase your property value.
The bottom line is that you’ll want to spend money where you know you’ll see an ROI— especially if you choose to use a HELOC (home equity line of credit) to pay for these home upgrades. Because your home’s value naturally appreciates (in most cases), you’ll want to use this equity in the smartest way possible.
Even if you don’t plan to sell your home in the near or even distant future, it’s still a good idea to consider one or more of these home upgrades. This still increases the equity you’ve earned on your home, and you can use a HELOC for more things than paying for home upgrades— you can use this to pay off debts as well.