Common home renovation projects with the lowest return on investment

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July 28, 2021
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This story originally appeared on 麻豆原创 and was produced and distributed in partnership with 麻豆原创 Studio.

Common home renovation projects with the lowest return on investment

When it comes to your return on investment, not all home renovation projects are created equal. Home-sellers with an eye on maximizing profits are wise to carefully research which improvements will equal the largest profit margins鈥攁nd which projects will barely help the seller break even.

To find the home renovation projects with the lowest return on investment, analyzed data from Zonda Media鈥檚 . The Cost vs. Value (CVV) Report relies on an econometric model that uses construction cost estimates along with economic indicators, such as local market housing, income, and employment, in 150 U.S. markets to create the best estimate of the cost of a project and its resale value.

The projects selected for CVV are ones that are historically common projects done by the roughly 200,000 remodeling professionals and are projects that can be priced accurately. As a result, more elaborate and discretionary projects that include more selections (choices for specific finishes, materials, fixtures, and appliances) that may or may not appeal to a wide range of homebuyers are not included in the CVV analysis. Other common projects that vary significantly in cost depending on region and climate鈥攍ike finishing basements and attics or enclosing a porch鈥攁re not included due to an inability to provide accurate cost estimates.

Twenty-two total renovation projects were selected, and the six with the lowest percentage of construction cost recouped are ranked below. Keep reading to find out which home renovations have the lowest return on investment when it comes time to sell.

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#6. Upscale bath remodel

- Average cost: $75,692
- Average resale value: $41,473
- Percentage of cost recouped: 54.8%

The CVV Report鈥檚 upscale bathroom remodel assumes expanding within the original home鈥檚 footprint a 35-square-foot bath to 100 square feet, moving fixtures, and installing electric in-floor heat, among numerous other upgrades. This renovation may feature attractive amenities like a freestanding soaker tub, high-end fixtures, and a custom drawer base, but it doesn鈥檛 add up to a high ROI.

Instead of springing for an upscale bath remodel, consider more simple cosmetic fixes鈥攍ike replacing broken tiles or fixtures, updating an old backsplash or floor, or installing new countertops. Some metrics suggest nearly a $1.75 return on every $1 spent for these more minor upgrades.

 

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Breadmaker // Shutterstock

#5. Midrange master suite addition

- Average cost: $156,741
- Average resale value: $85,672
- Percentage of cost recouped: 54.7%

Adding a midrange primary bedroom onto a house may seem like a project that will make sellers see your home as turn-key, but it is rarely known to help close鈥攐r bring a noteworthy amount of profit to a sale. One of the best ways to gauge how worthy an investment like this is, is to look at similar homes on your block or in the neighborhood. If primary suites are the norm in the area, it makes more sense to splurge on this upgrade than if the neighbors largely stick to two-bedroom homes. The privacy and relative luxury of a private section of the house won鈥檛 do a seller much good if it puts the house too far above nearby comps.

Rather than creating a new addition, consider working with existing spaces: Converting an unused attic or combining two bedrooms (only if there鈥檚 one to spare) will save as much as 80% on the cost of the buildout and make better use of otherwise wasted space.

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Artazum // Shutterstock

#4. Upscale major kitchen remodel

- Average cost: $149,079
- Average resale value: $80,284
- Percentage of cost recouped: 53.9%

A high-end, major kitchen remodel can be a truly worthy investment for homeowners planning to enjoy the fruits of their labor, but these projects on the whole don鈥檛 add much by way of financial return.

Upscale kitchen improvements cost nearly $150,000 on average and run the risk of not matching a buyer鈥檚 vision for the space. In such a situation, your investment is ultimately rendered moot. All the details of a kitchen only increase the likelihood of your aesthetic not matching a prospective buyer鈥檚.

Any home remodels should also be in line with the overall value of the home: High-end, expensive upgrades in a home worth as much as the kitchen may not be the most worthy investment. As with other upgrades鈥攁nd other remodels with low ROI鈥攊t鈥檚 essential to consider other homes in your neighborhood and whether the upgrades you鈥檙e considering are the norm or the outlier on the block.

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Anatoli Igolkin // Shutterstock

#3. Midrange bathroom addition

- Average cost: $56,946
- Average resale value: $30,237
- Percentage of cost recouped: 53.1%

A midrange bath addition assumes the creation of a 6x8 room off the existing house and over a cement-walled crawlspace. The addition requires all-new fixtures, ceramic tiles, and basic wiring. The addition otherwise replaces everything in the room for about 75% the cost of an upscale remodel but with an even lower return on investment.

Additional bathrooms bring in the best ROI if they鈥檙e necessary鈥攕uch as in a case where there isn鈥檛 already one on the first floor, or if the primary bedroom is a long walk down the hall from a bath. Smarter bathroom investments generally come by way of simple upgrades like nicer hardware or fixing significantly dated tiles or vanities.

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Artazum // Shutterstock

#2. Upscale bathroom addition

- Average cost: $103,613
- Average resale value: $54,701
- Percentage of cost recouped: 52.8%

Adding a brand-new, 100-square-foot master bath to your master bedroom is even worse for your projected ROI than a midrange bath addition. That may be because some of the amenities鈥攆rom in-floor heat to high-end faucets鈥攑roject more of a sense of upkeep and expense than luxury.

Interestingly, different regions in the U.S. tend to have different ROIs for these projects. If you鈥檙e in the Pacific region, for example, you may see a significantly higher return on an upscale bath addition than those in the North Central United States. Be sure to check comparable homes in your area to see if an upscale bathroom renovation makes sense for your neighborhood.

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Artazum // Shutterstock

#1. Upscale master suite addition

- Average cost: $320,976
- Average resale value: $152,996
- Percentage of cost recouped: 47.7%

The CVV report quantifies an upscale primary suite addition as a 32x20-foot room with a crawlspace below and a spacious, attached bathroom. The layout has a few red flags for buyers, though鈥攆rom excessive space that spells expensive upkeep and maintenance to custom bookcases and custom mantle over a high-end gas fireplace. Custom, luxe items are pricey add-ons that a potential buyer may remove anyway.

Additions like this one are best for a current homeowner who鈥檚 intending to stay in the house for years, as these kinds of renovations may not be to a new homeowner鈥檚 liking. If you鈥檙e selling a home that doesn鈥檛 have a primary bed with an attached bath, consider a more modest project with fewer bells and whistles (and a smaller footprint!) to get the highest possible return on investment.

This story was produced and distributed in partnership with 麻豆原创 Studio.

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