Best Home Improvement Projects for Return on Investment

Posted by Alisa Peterson on Monday, November 23rd, 2015 at 2:05pm.

Driving through Bel Air, Beverly HillsTrousdale Estates, the Bird Streets, and Hollywood Hills, the constant construction traffic is simultaneously encouraging and frustrating. The traffic caused by the construction trucks and crews is compounded by narrow, windy roads in the above mentioned areas. However, seeing so many construction projects underway is wonderful when considering the investment people are making into their homes and their neighborhoods in so many areas in Los Angeles. It's hard to see the changes in the neighborhood and not be inspired to do some work on your own home. One of the most important questions to ask before undertaking a project on your own home is "What are the best home improvement projects for return on investment?"

kitchen renovations are among the best investments for home improvement projects

While thinking of your return on investment (ROI) is especially important if you are thinking about putting your home on the market for sale in the near future, it doesn't necessarily have to be the most important factor when working on your home. Your home is a place you should love to be in and should be the way you want it to fit your lifestyle (within reason and  H. H. Holmes' Murder Castle is a good exception to the rule). A great resource is the annual Cost vs Value Report. The Cost vs. Value Report compares the average cost for 36 most popular remodeling projects with the value those projects retain at resale in 102 U.S. markets.

In the report, the following projects received the highest ROI in the city of Los Angeles in 2015.

For mid range priced projects:
Entry Door Replacement (steel) - 149.7%
Minor Kitchen Remodel - 117%
Window Replacement (vinyl) - 114.7%
Deck Addition (wood) - 113.9%
Garage Door Replacement - 111.9%
Basement Remodel - 106.3%
Bathroom Remodel - 99.6%
Attic Bedroom Remodel - 96%

Here are two upscale versions of the above projects:
Window Replacement (vinyl) - 108.4%
Garage Door Replacement - 103.1%

To put this into perspective here is a description of mid-range verses upscale for the same project:

Garage Door Replacement Mid-Range:
Removing/discarding existing 16x7 foot garage door and tracks. New door is 4 section, uninsulated, single layer, embossed steel on galvanized steel tracks but reusing original motor. Using only two coats of baked-on paint, galvanized steel hinges, and nylon rolls. With a 10 year limited warranty. Cost of the work would be $1,859, resale value would be $2,079.

Garage Door Replacement Upscale:
Still removing/discarding same size door and tracks and reusing the original motor. However the 4 section door is now on heavy -duty galvanized steel tracks. The door is now high tensile strength steel with two coats of factory-applied paint and foam insulated to minimum R-12 with thermal seals between pinch-resistant panels. Windows are now in the top panel with 1/2 in insulated glass. This comes with a lifetime warranty. Cost of the work would be $3215, resale value would be $3316.

Now compare the same projects ROI with the nationwide average comparison.

Midrange Priced Home Improvement Projects Comparison

Mid Range Projects:
Entry Door Replacement (steel) - 101.8%
Minor Kitchen Remodel - 79.3%
Window Replacement (vinyl) - 72.9%
Deck Addition (wood) - 80.5%
Garage Door Replacement - 88.4%
Basement Remodel - 72.8%
Bathroom Remodel - 70.0%
Attic Bedroom Remodel - 77.2%

Upscale Priced Home Improvement Projects Comparison 

Upscale Projects:
Window Replacement (vinyl) - 74.9%
Garage Door Replacement - 82.5%

Common projects in Los Angeles have significantly better resale value than nationwide average for the same projects. Maybe because the weather in Los Angeles is much more temperate compared with the rest of the nation or because the combination of low inventory and low mortgage rates, the real estate market in Los Angeles is still continuing to climb. Whatever the reason, there are plenty of projects to do to upgrade your home and get a great ROI. Be sure to keep in mind the purpose of the project. If the project is to enhance the owner's comfort for the foreseeable future, have fun making it personal. However if the project is to upgrade and then eventually sell, keep a neutral palette in mind. Projects that are done in a style that are too taste specific could limit the buyer pool.

For advice on preparing your home to sell, contact a Realtor for a no-obligation consultation.

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5 Responses to "Best Home Improvement Projects for Return on Investment"

Rajiv Pathak wrote: These details really helped in giving an insight into the upgradation of homes, both from a resale & an enhancing perspective. I also got clarity on details of ROI on common projects in LA versus the ROI on similar projects across the States.

Posted on Tuesday, April 5th, 2016 at 2:30am.

Jim wrote: I'm a real estate investor and property manager in Raleigh ( http://www.spmtrianglerentals.com/ ). Do you think that the above holds true for increasing the attractiveness and rental fee for and of a tenant? From my experience, renovating the curb appeal is always a good move but when it comes to renovating the inside, it seems to always depends on the tenant. Do you believe there's some areas that all individuals seem to value more?

Posted on Monday, February 6th, 2017 at 11:33am.

Alisa Peterson wrote: Thank you for reading our blog Jim! These stats were done with a focus on resale but I do believe some can apply to rental rates as well. You would have to look at the stats for your area specifically but in LA increasing curb appeal and updating bathrooms and kitchens do garner higher prices.

Posted on Monday, February 6th, 2017 at 7:42pm.

eMoov wrote: You don't have to do every home improvement just because you want it. There are projects that will be helpful if you want to upgrade the value of your property. Bathroom remodeling, kitchen remodeling and window replacement are the most common of them. Those projects will not only increase the value of your home, but will surely make your life better and more comfortable.

Posted on Sunday, June 25th, 2017 at 5:48am.

Washington State Kitchen and Bath wrote: This will surely help many people on deciding what they will prioritize before remodeling their house. Glad to know those best home improvements that will make a good return on investment.

Posted on Tuesday, September 26th, 2017 at 8:45am.

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