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Best Value Home Renovations

Posted By Jim On 07/29/2005 @ 10:07 am In Personal Finance,The Home | 8 Comments

Over dinner last night the topic of what the best return on investment renovations were and I went with the generally accepted addition of a full bathroom as the highest return. After scouring the internet, I found this great site [3] that listed their opinions – I’m inclined to believe, if not the absolute numbers, that their relative place on the list is probably accurate. Tops is the addition of a full 2nd bathroom, average cost of $12k, and a payback of 100%. The worse is to finish the basement, which my friend correctly identified, at a cost of approximately $8k and an average 15% return.



This is the table, with some items removed (which I thought you couldn’t accurately quantify, like landscaping is so broad), from the site:

Home Improvement Avg. Cost Return %
Finish a Basement $8,000 15%
Build a Swimming Pool $10,000 25%
Add a Garage $15,000 40%
Replace Roof $6,000 50%
Replace Siding $10,000 60%
Sunroom $25,000 60%
Home Office $6,000 60%
Bathroom Remodel $7,000 70%
Replace Windows $6,000 70%
Add a Fireplace $3,000 75%
Add a Deck $6,000 80%
Kitchen Remodel Major $30,000 80%
Kitchen Remodel Minor $8,000 90%
Attic Bedroom $10,000 90%
Add 2nd Full Bathroom $12,000 100%

The article they have written is very good, I suggest you read it, because it puts some substance behind the numbers and the article makes good sense. Ultimately though, they say that you shouldn’t go by ROI as your reasons for the improvements. If you will enjoy it aesthetically or it will bring happiness to you personally if you have the improvement done, then you should value that more than its ability to increase your home’s value.


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[3] great site: http://doityourself.com/enjoyinghomes/nottorenovate.htm

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