What Are The Best Home Improvements – The CPA’s View

Home improvements are exciting. An extra room or a new pool is something that anyone would be happy about. But as a real estate professional and investor, you know that return on investment (ROI) is what matters.

But many home improvements are poor decisions from a financial perspective. It’s not always obvious which home improvements make the most sense financially. Some of the worst home improvements in recouping your costs are the most popular.

Here are some of the worst offenders for the money: 

1. Adding a main suite. Master suites are standard in modern homes but not typical in older construction. Think about the house in which you grew up. Odds are there was not a large main bedroom with an attached bathroom. 

• This building project is among the worst when recouping your costs. You can expect to only get about 52% of your money back at selling. Part of the charm of older homes is in the styling. Leave the main bedroom alone. 

2. Sunroom addition. Most of us like big windows and lots of natural light. If you’re in a house with small windows, it might make sense to add a sunroom instead of adding more oversized windows. Unfortunately, a sunroom is one of the worst home improvements to make when looking at the financial picture. 

• Homeowners can expect to get back $0.49 for every $1.00 spent. 

3. Adding an oversized garage. If you’re like most people, your garage is crammed full of cars, bikes, lawn tools, and all your stuff that won’t fit in the house. An oversized garage can appeal to those who want some space and order. However, most prospective homeowners view an oversized garage as space that won’t get used. 

• Instead, consider cleaning out the garage you already have. Get rid of the stuff you don’t use. Sweep it out and paint the interior. You might already have enough space to make it work.
• If you build a garage, you’re only going to get back around 54% of the cost. 

4. Extra bathroom. This is a widespread addition, but it only yields a 53% return at sale time. Plumbing is expensive and adds considerable cost to this project. Consider how much an extra bathroom means to you.
5. Home office. A home office is less appealing to homebuyers than it used to be. With wireless Internet, a person working at home can choose any room in the house to set up shop. It’s also easy to head to the local coffee shop or an outdoor location. 

• Converting a spare bedroom to a home office will only deliver back 46% of the cost. 

6. Getting a backup generator. Backup generators yield about 60 cents on the dollar when you sell your house. Those in areas more prone to natural disasters tend to see a better recoup rate. Also, it’s more of a challenge to lose your heat in Minnesota in winter than in south Texas, so the location has a lot to do with your return on investment.
7. Adding a pool. Unless your home is in Florida, California, or Texas, adding a pool can be a detriment to selling your house! Many potential homeowners are driven away by the costs and trouble of maintaining a pool that they would only use for a small portion of the year. 

The only home improvement that pays for itself is replacing a wood entry door with a steel door. All other home improvements are money losers to varying degrees.

Also, remember that half of the cost is labor for most projects. If you can do the work yourself, practically all home improvements will yield a small profit. Some can even result in a considerable profit.

Of course, if you intend to stay in your home for many years instead of using it as a rental or investment, follow your desires when choosing home improvement projects. They’ll bring you enjoyment for many years to come!

If you’re improving the home to get more money at sale time, think of these returns on investment and go with the ones that will most increase the value and saleability of your home.