PHH Home Loans Blog

Which Home Improvements Are The Best for Your House

October 11th, 2016

Luxury house backyard. View of walkout desk with patio table set and basketball court

You want to remodel something in the house. Perhaps you’ve lived there long enough to know what you want to change. Maybe you got a tax refund or a great bonus, and want to invest it in your home. In the back of your mind, you’re probably thinking “What will give me the best return if I decide to sell” And that’s a great question to ask.

But First…

While it’s good to think about the monetary return on investment, you should also spend some time thinking about the emotional one as well. If you spend most of the time in your kitchen area, perhaps that’s going to bring about the best return rather then remodeling bathrooms that look clean and function well.

Or perhaps you want a swimming pool. Rarely does a pool pay off in resale value, but maybe it’s your dream to have pool parties, or spend the summer with an iced beverage on a floatie. Your enjoyment of the upgrade should be taken into account otherwise you might resent the remodeled room.

There are five types of remodel projects per You can read about them in more depth here.

1. Home Maintenance and Repair Projects
2. Curb Appeal Projects
3. Neighborhood Norm Projects
4. Appraisal Booster Projects
5. Lifestyle Projects

What Doesn’t Usually Pay Off

  1. Swimming Pools, Spas, Lap Pools, Tennis courts – most buyers are not interested in taking on what will be an additional cost for maintenance. Additionally, this is something that will increase insurance as it’s a liability (attractive nuisance)
  2. Home Office – A limited number of buyers work out of their home, and won’t be as interested. This Old House likened it to buying a convertible if you never put the top down.
  3. Over-remodeling – When you put in warmed, Italian bathroom tiles, or the most expensive kitchen appliances, you are the only one who is going to appreciate it.
  4. Family room
  5. Window and Roofing
  6. Custom additions (wine cellars, home theaters)

What Does Usually Pay Off

  1. Bathrooms – a midrange bathroom remodel often gets the best return
  2. Kitchens – again, midrange is going to pay off faster
  3. High-end siding replacement
  4. Add-Ons – If you have 1.5 bathrooms in a neighborhood that averages 2-3, adding in a bathroom will be a huge return on investment. However, if you already have 4, and add a 5th, you won’t get a return.
  5. Attics – if big enough, you can put a small office or bedroom up there
  6. Basement

Things To Keep In Mind

Just because a project is expensive does not mean it will yield a bigger pay back. Painting the entire house inside and out isn’t very costly, but can have a huge return because the place looks new.

If your remodel is adding on a room, keep it in the same architectural style as the rest of the house. The flow will feel consistent, and future buyers may not even know it was an add-on.

Consider your neighborhood. If you spend $100,000 to upgrade to a gourmet kitchen with sub-zero refrigerators, and the average home in the neighborhood sells for less than $500,000, you are not going to get your money back. You will have your happy factor from the years when you used it, but no one else will pay the extra for it.

You can do a partial upgrade instead of the whole enchilada.

Avoid the unusual unless you plan on staying in your home for the rest of your life. Stick to neutral tones and porcelain tile floors, showers and backspashes for bathrooms and kitchens.

Don’t pull equity out of your home if you plan to sell in the next three years.

So, to conclude, the longer you stay in your home, the more you will recoup your investment. Balance the project with what is going to bring you the greatest joy. If you plan on staying in your house for a long time, you can invest more in areas that may not pay off as quickly as if you were planning on selling within two to three years.

Also, talk to a Realtor who specializes in your neighborhood what they have seen as the best investments for remodeling.

What do you want to remodel in your home?

This is not a commitment to lend. Loan programs, rates and terms subject to change without notice and are subject to property and credit approval. For informational purposes only. Restrictions may apply. Your real estate professional is not a mortgage lender. Please contact your Loan Officer for information about mortgage products and your eligibility for home financing. PHH Home Loans, LLC, 1 Mortgage Way, 3rd Floor, Mt. Laurel, NJ 08054. NMLS ID # 4256 ( Arizona Residential Mortgage Licensee #BK 0907270; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Illinois Residential Mortgage Licensee #MB.6759865; 100 W. Randolph, 9th floor, Chicago, IL 60601, 800-532-8785; Minnesota - This is not an offer to enter an interest rate lock-in agreement; Missouri in state office located at 2458 Old Dorset Road, Maryland Heights, MO; Ohio Certificate of Registration MB.804019. Equal Housing Lender.
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