I've been a little lax on writing blog posts lately! I'm actually writing an ebook about how to buy a home that has been eating up a lot of my time. It will be primarily used as a marketing tool, but I'm also planning on sending it to my first-time buyer clients when we begin working together so they can use it as a guide post when starting the process. If anyone reading this is interested in reading, I'll be happy to send you a copy! Anyway, that's the reason why I've been lacking a bit on the blog posts and why they have been less detailed than most. I'll get back into the swing of things when I'm done with this book (I will also be writing a Seller's version)!
Today's post is a retrospect on upgrades and renovations made throughout 2015 and a comparison on the various returns on investment that they provided. The article and infographic that we will be using is provided by RealtorMag and is entitle, "2015 Remodeling Impact:Return vs. Joy." The data in this infographic was gathered by various Realtors and gauges not only the financial ROA, but also the owner's "joy" ROI, meaning their enjoyment of the upgrades on a scale of 1-10. The financial scale is registered as a recovered percentage of the cost of the upgrade as a percentage. The higher the percentage is, the more value the upgrade adds to the home. However, most of these upgrades do not net the seller more right away because they paid outright for the renovations themselves. Keep in mind that these costs are typical costs for the average homeowner. If you can get the job done at a bargain, it will certainly net you more. They have broken these renovations up into interior and exterior. The interior category contains 12 upgrades and the exterior category contains 8. For the sake of impact, we will highlight the top three of each category.
Top 3 Upgrades
1. Hardwood Refinish - 100% Recovery of Funds and 9.6 Joy Score
Refinishing your existing hardwood floors usually adds more value than installing new engineered or laminate hardwood floors. Engineered and laminate hardwood floors are much cheaper than installing real hardwood floors and more people seem to be using laminates and engineered floors than hard woods nowadays. True hardwood floors are still very expensive and the work is labor intensive. However, if you already have hardwood floors, refinishing them makes a massive difference and costs a fraction of installing new hardwood. When I rehab a home, if there is existing hardwood, I opt to refinish that floor over adding new flooring every time (as long as the flooring is salvageable). In this case, the cost of refinishing the floors was retained by the added equity, which makes it a solid improvement. And the owners ranked the improvement very high on satisfaction at nearly 10%!
2. Insulation Upgrade - 95% Recovery of Funds and 8.7 Joy Score
Second on the list of interior upgrades is the insulation upgrade. This is definitely not one of the more sexy improvements on the list, but it is certainly one of the most effective. Also, improving insulation is quite cheap in relation to most of the other renovations on the list. Rolls of insulation are quite inexpensive and they are often easily installed by the homeowner under the home, in the attic and in other exposed areas. Most home buyers are going to greatly appreciate the upgraded insulation when looking at homes. I have, however, been hearing from many inspectors and contractors recently that insulation under your home can actually cause more harm than good. Our climate is very wet and that insulation can retain moisture that can cause high humidity under the home leading to many bigger issues in the future.
3. New Wood Floor - 91% Recovery of Funds and 9.5 Joy Score
In contrast to the number one upgrade on this list, the number three upgrade is adding new wood floors to your home. If you do have existing hardwood floors that can be refinished, I would definitely recommend that route. However, if you do not have any hardwood to refinish and want to change the flooring in the home, I would recommend adding new hardwood. As the survey suggests, the homeowners that did this recovered 91% of their funds and they rank this upgrade as a 9.5 on the Joy scale. If you insist on real hardwood, go right ahead! But, I would suggest that you look into laminate hardwood floors. They are usually far less than hard woods and they make an array of options that look great including many that have trendier finishes like white washes and hand scraped machining.
Top Three Upgrades
1. New Roof - 105% Recovery of Funds and 9.6 Joy Score
Installing a new roof is the only upgrade on this list that will immediately net the homeowner any gains. This upgrade shows a 105% return, which is an additional 5% gain over the initial investment. It also shows a 9.6% joy score, which is quite high. From experience, I know the power of getting to market a newer roof to home buyers. A new roof can be one of the most expensive upgrades for a home and home buyers absolutely love the thought of a new roof. Typically, roofs last from 20-30 years depending on the quality of the shingle, so it is inevitable that your home will need a new roof at some point. It is wise to have this done before selling the home (if it needs it) to increase buyer confidence.
2. New Garage Door - 87% Recovery of Funds and 9.5 Joy Score
This is the second most effective exterior renovation. It is actually surprising to me that adding a new garage door can have a greater effect than say adding new windows. However, the most obvious improvement that a new garage door can make is to increase the curb appeal of the property greatly! Most home buyers will decide if they like the house or not in an instant and increasing the curb appeal is a sure fire way to increase the likelihood that a buyer will bite. This upgrade also provided a 9.5 on the Joy Scale, which shows that the homeowner is also in favor of the new garage door.
3. New Vinyl Siding - 83% Recovery of Funds and 8.9 Joy Score
The third most effective improvement is no real surprise to me. Adding new vinyl siding to a home not only increases the curb appeal like a new garage doors, but it also makes the home feel much newer while decreasing home maintenance. Vinyl siding is incredibly easy to care for. Essentially, all you have to do it pressure wash it from time to time to keep it looking new. It is also no surprise to me that this upgrade scored an 8.9 on the joy scale as it surely makes the homeowner feel like they have a brand new home!
That’s all for now! I hope you’ve enjoyed this post! I’ll be sure to write some more extensive posts like this when my books are all done.
Remember to keep me in mind when you or anyone you know needs a Realtor!
Troy Franklin Gandee