Home Remodel Projects That Pay Off

Question: We’ve been considering making some repairs to our home and doing a few remodeling projects. If we decide to sell our home in a couple years, will this be a good investment or are we wasting our money?

Answer: Realtors are frequently asked this question and the short answer is “maybe”. Typically, the safest advice given in this situation would be to maintain the functional aspects of the home at a bare minimum.

According to a newly released white paper entitled the “Remodeling 2010-11 Cost vs. Value Report”, there are significant variances in the cost a homeowner will recoup regarding their renovation decisions. According to this study which was tailored to the West-South-Central part of the country, the three most advantageous remodeling projects to embark on include: (1) replacing a dated or damaged garage door, (2) replacing a cosmetically challenged front door, and (3) remodeling or adding an attic bedroom. In the study, each of these items were predicted to recoup over 100% of the actual project cost with the entry door project returning a whopping 156% of the replacement cost (upon the subsequent sale of the home). Other items ranking high in the return-on-investment category include window and siding replacement along with enhancing the overall entrance of the home.

Popular remodeling projects like a major kitchen and bathroom renovation proved to be less beneficial returning only about 70% of their investment. And, while upgrading one’s kitchen may enhance a home owners living experience, it may not be prudent if a possible home sale is a few months or years out. There are some projects to perhaps eliminate from consideration unless one plans to be in their home long enough to realize substantial personal enjoyment from them. These items include the addition of a composite deck attached to the home or enlarging a master suite. Both of these enhancements yield slightly more than a 50% return on investment and may not prove to be worth the effort and expense.

For those looking for someone to help foot the bill on a home improvement project, there are some interesting tax credits made available courtesy of your Federal Government. Homeowners can receive a tax credit for installing certain wood or pellet stoves; energy-efficient furnaces; water heaters and air-conditioning systems; insulated roofs, windows and doors; and wall and ceiling insulation. The tax credit covers 30% of the purchase costs, up to $1,500.

Upgrading one’s heating and cooling, which can be as much as 50% of the average home’s energy bill, may be a good investment. If a furnace or heat pump is more than 10 years old, this may be the ideal time to replace it. You’ll have to hurry though because all improvements must be in place and equipment in service by December 31^st to qualify for the tax credits. * To request the complete “Cost Versus Value Remodeling Report”, send an email to HSVinfo@sbcglobal.net with the word “Remodel” in the Subject Line.