Home Improvements with Highest ROI

Point of Interest

Not all home improvements are created equal. Smart decision making on how to renovate your home can lead to big gains in the future.

Improving and remodeling your home starts with what you and your family want or need. However, that’s not the only consideration when determining the best home improvements.

Most people know that one day they will need to upsize, downsize, relocate, or just want something new. This will require selling their home. By choosing the best home improvements that meet their immediate needs while also bringing the highest return on investment, homeowners can get the best of both worlds.  

Home renovations with the highest return on investment

1. Manufactured stone veneer

Replacing a section of the front of your house with an adhered manufactured stone veneer will run you on average just under $10k. Thanks to a serious boost in curb appeal, though, you may be able to get over a 95% recoup on your investment. While this upgrade may not be right for all houses, it is one of the renovations with the highest return on investment throughout 101 U.S. markets in 2020.

2. Garage door replacement

While many builders pay attention to detail throughout the house, the garage door often gets neglected. You’ll find many custom houses across the country that have standard 16×7 garage door on tracks. Replacing this garage door with a four-section garage door on heavy duty galvanized steel tracks will cost $3,695 on average, but will bring in an investment recoup of 94.5%. Not bad for a second place finish on the list of best home improvements.

3. Minor kitchen remodel

Improving the quality of your kitchen will increase your home value to a certain extent. According to the Remodeling magazine Cost vs. Value study for 2020, a midrange kitchen remodel has an average job cost of about $23,452 with a 77.6% cost recoup. Keep in mind, though, that your neighborhood and local comps will ultimately determine the maximum amount of upgrades you can make while recouping your costs and still seeing a nice return. On the upside, minor remodels like new shaker style wood panels and drawer fronts, new hardware, new cooktops and energy efficient refrigerators do well in many markets.

4. Siding replacement: fiber-cement

Homeowners who have homes with siding have a few options to choose from to increase their home value. One of the best ways to recoup your investment is to replace your existing siding with fiber-cement siding, which will cost you on average about $17,008 and give you a return on par with a minor kitchen remodel. It’s proof that curb appeal can be everything when it comes to selling your home. You won’t get potential buyers in the door if you can’t get them interested from the street.

5. Siding replacement: vinyl

If the price tag for fiber-cement siding is too high, a slightly less expensive option (on average) for replacing your siding is vinyl siding. By replacing the existing siding with new vinyl siding and all factory trim, you can see a recoup of nearly three-quarters of your investment. The average cost of vinyl siding in 2020 is $14,359, and your potential return could be a little under $11,000.

6. Window replacement: vinyl

One of the best home improvements you can make that will bring on average over 70% recoup is vinyl window replacements. The average job will run you about $17,641, but by replacing your existing windows with Low-E, simulated-divided-light vinyl windows, you can help future homebuyers to save money on energy costs while increasing the curb appeal of your home.

7. Deck addition: wood

Across the nation, the average cost of adding a wood deck is about $14,360, but in areas of the country where outdoor living is important, a wooden deck addition can recoup 72.1% on your investment. With an average cost of just under $15,000, it’s not cheap to add on a deck, but the increase in recreational space will be great for your family and to entice future buyers.

8. Window replacement: wood

If you’d like to take window replacements to the next level, you can upgrade the interior and exterior wood features of the windows. The project will cost you — on average, the cost to do this is about $21,500 — and the amount you recoup versus just replacing the vinyl, but the extra touch may be enough to push a home sale over the edge. Remember, home buying is not always just about dollars and cents — it’s about making your house marketable to buyers.

9. Entry door replacement: steel

The least expensive home improvement on the list is replacing your front door. Replace your existing door with a reinforced steel door with a dual-pane half-glass panel will run you less than $2,000 on average and you can expect to see nearly a 70% recoup. This replacement can also increase security, energy savings and curb appeal, all at the same time.

10. Deck addition: composite

If you’re looking for your home’s outdoor living space to stand out amongst a sea of wooden decks in your area, you can look into building a composite deck attached to your home. With an average price tag of just under $20,000, the composite deck upgrade is around $6,000 more expensive than installing a wooden deck. The higher cost also means this option produces a lower average recoup than a wooden deck upgrade. However, differentiating your deck from the others can be an important factor when deciding on the right upgrade.

What types of renovations are the worst for resale?

While many home improvements can help resale, some can hurt your resale value. The pain can come in the final selling price or a house that won’t attract interested buyers. The list of the worst home renovations starts with decisions that are too bold or too personal. Sure, you might love hot pink and think having your initials painted on the bedroom wall is cool. However, you severely limit your potential buyers when you make these design choices — and in turn, the value of your home can take a hit with potential buyers.

Additionally, home renovations that can’t be supported by the market or neighborhood can be even more expensive in the long run. For example, upgrading a kitchen to chef-level standards might fly in an upscale, high net worth community. However, you’re going to struggle to recoup on that investment in middle or lower class areas.

The bottom line

When deciding what renovations you want to make to your home, you need to find the balance between your current and future needs. Homeowners who are planning on staying in their home for a long time should put more focus on what they want rather than what will make their home attractive to buyers. Homeowners who are looking to sell soon should focus on ROI and what buyers in the area may be looking for when purchasing.

Jason Lee

Personal Finance Contributor

Jason Lee is a seasoned copywriter with a passion for writing about banking, tech, personal growth, and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill set with the rest of the world.