Pacific Region’s Best Home Projects For Greatest ROI In 2014

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Do OutdoorRemodels Equal A Better ROI Than Indoor?

flickr photo credit: Jay Cross
flickr photo credit: Jay Cross

While browsing through Twitter the other day I followed a link from @FreddieMac which asked, “Did you know fixing up your home’s exterior will give you the biggest bang for your buck when renovating?” Well, I had always thought that the kitchen and bath remodels were the best investment in a home remodel, so I delved a little deeper in order to learn more about this and tell you all about it.

You can contact me, John Conca, at 530-306-3494, if you are searching for a home anywhere in El Dorado county, or if you are ready to sell your home. I’d be happy to discuss your options with you. You can find new Placerville listings here.

Who’s This Roi Guy, Anyway?

ROI, or Return On Investment, is a calculation of the difference, in percentage, of the total cost of a project versus the amount of money you get back when you sell the house. So if you paid $73,000 for a Sunroom addition and when you sold the house and the value of that sunroom added $32,000 to the home price, then the ROI is .44, or 44%. To get that you just divide the value added to the home by the cost of the project and you come up with the ROI.

10 Best Home Projects For Greatest ROI

flickr photo credit: Images Money
flickr photo credit: Images Money

According to the Remodeling 2014 Cost vs. Value Report© 2014 Hanley Wood, LLC, the top 10 projects for the best return on your investment for the Pacific states (HI, AK, CA, OR, WA) range from 92% ROI to 113% ROI with a median ROI of 102%. Complete data from the Remodeling 2014 Cost vs. Value Report can be downloaded free at  www.costvsvalue.com.

Due to the Cost vs Value report’s strict licensing and re-use guidelines I’m just going to give you the top 10 projects with the greatest ROI value. These are essentially the smartest projects to get moving on for the biggest payback when it’s time to sell your house.

10. Deck Addition (composite)

9. Bathroom Remodel

8. Garage Door Replacement

7. Window Replacement (vinyl)

6. Window Replacement (wood)

5. Basement Remodel

4. Attic Bedroom

3. Minor Kitchen Replacement

2. Deck Addition (wood)

1. Entry Door Replacement (steel)

 

Points To Consider

flickr photo credit: Michele Turbin
flickr photo credit: Michele Turbin

The Cost vs Value report differentiates between “midrange” and “upscale” projects and since I couldn’t find anything explaining the differences and because most people are more likely to look into midrange remodeling projects, I only included those. You’re not missing much; the upscale project’s ROI are less impressive.

There may be a difference between the whole Pacific region ROI and local ROI. For instance, installing a wood stove in Pollock Pines, CA will give a much higher ROI because there are some winter snow storms that knock out the power in Pollock and a your central heat and pellet stove will go out leaving you cold unless you have wood heat. That same wood stove in a similar house in Cameron Park where the storms rarely knock out power (and snow plows aren’t needed to help fix the problem) will probably be less important to potential buyers, so it isn’t likely to increase the value of the Cameron Park home as it is the Pollock Pines home.

One more very important consideration, which I hope you take away from this post, is your neighborhood. If your house is not quite meeting the standards of the other houses in the neighborhood, you will do very well to add that one extra bedroom or the missing deck that all of the neighboring houses are boasting. Meeting the buyer’s expectations will always give you an excellent ROI.

But Which Projects Earn Extra Money?

flickr photo credit: 401(K) 2012
flickr photo credit: 401(K) 2012

If spending a bit more on a project doesn’t cause any reciprocal damage such as interest on credit or additional cost for maintenance on the extra square footage (someone has to clean that area and keep it warm) and you want to put money into the project that will give you the most money back, then you’ll want to look at the projects that have an ROI over 100%, meaning that you get more money out of the project than what you put in.

This is, of course, all based on the numbers provided by the Cost vs Value report. Out of the top 6 projects, which all earned over 100% value, the project that earned the sellers the most money back in their pockets was remodeling an attic into a bedroom; remodeling the basement, and adding a wood deck coming in at second and third.

Was Freddie Mac Wrong?

Taking those numbers into consideration, I think Freddie Mac and I were both off base a bit. According to the Cost vs Value report, a minor kitchen remodel earned these sellers an average of $782 back, but didn’t earn as much as a remodeled attic bedroom, basement, or wood deck. I see that the kitchen remodel doesn’t quite take the cake (pun intended. and sorry.)

Additionally, while the steel entry door replacement, the wood deck, and the wood window replacements all made higher than a 100% ROI; the windows only earned each seller an average of $271; and the new steel entry door, which came in at 1st place for the highest ROI, only earned the sellers $143.

Decide For Yourself

flickr photo credit: Garrett Coakley
flickr photo credit: Garrett Coakley

Maybe ROI just shouldn’t be the deciding factor. After all, I’ve shown that the projects that result in the highest amount of cash-in-pocket for the investment (or “bang for your buck”) once the house is sold are mostly indoor remodeling projects as opposed to outdoor projects. So unless you’re going to add 10 new steel entry doors to your home before selling (which I can’t recommend) you’d do much better remodeling the attic or basement. Sorry, Freddie.

Of course, if money is tight and you want to do one thing for your home that won’t end up depreciating in value, then adding a steel entry door replacement is the project for you. Not sure whether you should tackle a remodel on your own or hire a professional? Give my Home Projects- DIY Or Go Pro? post a gander.

 

I hope this post serves you well. Please feel free to browse my website and follow my blog for updates on local events, real estate news, timely home maintenance suggestions and tips for buyers and sellers.

 

 

 

 

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