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 Which home improvements give the best payback?
If you’re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But, when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more. Things like adding rooms or finishing basements tend to pay back the least.Finishing a basement usually returns less than 50%, so it’s not a project likely to show profit at selling time.
There are a number of factors that go into determining how well a project will pay you back. Payback value depends mostly on determining if the current state of a room such as as a kitchen is currently depreciated! In or words if you totally replace a kitchen that is just a few years old and nothing much was wrong with it, IT DOES NOT MAKE ECONOMIC SENSE to replace it! This is the biggest mistake most home owners make when doing upgrades. Also do not over improve a home for it's neighborhood, it will be a terrible waist of money! A lot also depends on the current market conditions in Pueblo. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.
Ask a professional appraiser such as me to give you an in home consultation as to which home improvement projects will make the most sense. The type of project you do and how it fits in with other homes in the area can have a big influence on payback. If you put your money into the wrong type of improvement, you won’t get your money back. But if you're smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. Building a large addition that makes your home twice as big as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.
The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects:
- Kitchen remodeling – 90%
- Add a bathroom – 90%
- Bathroom remodeling – 80%
- Install central heating – 90%
- Install central air – 75%
- Add a deck – 70%
- Replace windows – 70%
- Finish a basement – 60%
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