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02.13.2019

Which home improvement projects have the highest ROI?

The average return is 64.3 cents on the dollar.

A cost vs. value report from Remodeling Magazine compares the average cost for 29 popular remodeling projects with the value those projects retain at resale in 99 U.S. markets. If you are looking to add value to your home or get the most ROI for your fix-and-flip, read on.

Top performers: Midrange

The report showed that the average properties within the median range had three of the five projects with the highest returns. These three projects also had the lowest cost incurred. None of them had a higher performance than last year due to the material and labor costs rising faster than the deemed value. Projects with minor remodeling work such as replacing windows and doors yielded higher profitability in comparison to those that required internal work, such as cupboards and countertops. Below is a summary of the top five midrange projects outlining the scope of work and the average cost, resale value and return on investment:

Top performers: Upscale

In comparison to projects within the midrange, properties that underwent significant renovations such as grand entrances, family room, high-end bathroom renovations, opulent master suites, and multistory additions had the most significant year over year increase, rising from 5.6 percent to 7.4 percent. This is as a result of the value exceeding the cost incurred to renovate the property. Consequently, more experienced investors are now opting to invest in higher value properties as the market recovers. Below is a summary of the top five upscale range projects outlining the scope of work and the average cost, resale value and return on investment:

Location

Another factor for consideration is the location of the property. Location impacts both the cost and the value of the property. This is on the basis of supply and demand. For areas of higher demand, there will commonly be a higher return on investment.

Overall profitability

The cost vs. value report found that there was an average return of 64.3 cents for every dollar spent. The potential return of a project will depend on several factors including the nature of the project, upscale versus midrange, the location of the property as well as the base cost incurred. But there is money to be made by smart homeowners and flippers on the sale of their home.

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