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Home Improvements

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.

Which home improvements give the best payback?

There are a number of factors that go into determining how well a project will pay back. Payback value largely depends on current market conditions in your area. If the market is ‘hot’ and homes are selling fast, you can expect a higher payback value.

The type of project you do and how it fits in with other homes in the area can have a big influence on payback as well.  If you put money into the wrong type of improvement, you may not get it back.  However, if you are smart about where you invest, you can make money. Payback is better on improvements that are in demand and conform to neighborhood standards. For example, adding a second bathroom in a neighborhood where most homes have two bathrooms will yield a high return on investment.  However, building a large addition that makes your home twice the size of the other local homes won’t pay back as well. Likewise, an improvement heavily customized to your wants and needs won’t pay back as well as something more common to general needs and preferences.

Another factor to consider about payback value is the cost of the improvement. If you can do the work yourself, you can significantly cut the cost of the project and greatly improve your chances of 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%
  • Add a room – 55%
  • Build a pool – 45%
  • Finish a basement – 40%