Return on Investment for Home Improvements

Regional Desirability

• The desirability of an improvement project for your area is the single biggest factor in determining if the return makes it a smart move. Heated sidewalks may be a great idea for a home in Northern Minnesota set on a hill that really gets a good return, but the same would not be said for a home in Arizona with heated walks. A sun room may be a profitable project in Florida but a loser in Maine. The project has to be one that is practical and appealing for the area.

Perceived Value

• Ask yourself if you would pay more for a house that had that feature. If the answer is no, then maybe you should only complete the project if you are staying put for a long time or your enjoyment of the results are worth the cost. If the answer is yes, then how much more would you pay? Consulting a reputable area Realtor to find out how much more a home in your area with the improvement would have in mind is worth may help you decide.

Overdoing or Personalizing

• Even if an improvement project has a great record of return in your area, it is easy to overdo or personalize a project to the point where it does not have a great return. Retiling a bathroom is typically a solid project in terms of return on investment, but if you insist on Italian marble tile at $100 a square foot when a good quality porcelain or travertine tile can be had for less than $10 a square foot, you will get a return based on the cost of porcelain or travertine. You must find the line between doing a quality job with quality materials and spending too much. Likewise, if you do the bathroom retiling in lime green tile, don't plan on getting a good return either, since the first thing that most people will think when entering your home is not how much more your home is worth, but how much it will cost them to change the tiling.

Project Scale

• The scale of the project needs to be in proportion to the value of the home and comparable sale prices in your neighborhood. Doing a $40,000-$50,000 kitchen remodel in a home that is only worth about $120,000 in a neighborhood of comparably priced homes does not make sense. While potential buyers may think your house is nicer and would pay more, it is unlikely they will pay $30,000-$40,000 more for your home than the one with the unimproved kitchen down the street. You may wish to again consult a Realtor before committing to a large and expensive project.

Solid ROI Projects

• Certain projects always have a good return if done well, in a way that appeals to a wide range of buyers and within reason. According to Remodeling magazine, minor kitchen and bath remodels always uphold around 75-80 percent of their value. Wood decks, especially in warmer climates and scenic vacation areas, hold between 80-100 percent of their value. Replacing windows with vinyl windows, and wood siding with cement-fiber or vinyl siding, holds about 80-90 percent of its value. The national winner for projects that return more than their value is replacing a front door with a steel door.