The rental market is hot right now! Rental prices are on the rise, so if you own investment property you are in a good place. Maybe you have been considering making some upgrades to ensure you get maximum rental income, have a choice of renters, are able to keep your renters for longer periods of time, or you are thinking about future resale value. If you own property and you are considering a remodel or just some upgrades, here are some suggestions of what to do to get the best return on investment.
The consensus seems to be that replacement gets a better return on investment when possible and acting within the suggested upgrades. In a resale market the use of durable, low-maintenance materials in replacement products appeals to home buyers who increasingly are looking to reduce both the operational cost and maintenance cost in their homes. So if you are thinking long-term, consider durability and easy of care when you embark on a remodel project. Of course this will help reduce maintenance at your rental property and therefore the same consideration for low maintenance products holds true for landlords.
Today’s Top 10 Update/Remodel Projects
These are projects that upgrade the home and are done within the container of the existing structure. They are focused on updating worn out spaces, not making the home a masterpiece. Replacement adds immediate curb appeal which is important in a rental market as well as a sales market. The upgrades listed below are ranked in order of return on investment.
- Replacing exterior siding with upscale fiber cement. Siding pays back a whopping 78%, on average, of the $13,461 average cost. The most cost-effective thing you can do to your home this year is to replace old siding with new, higher-end fiber cement.
- Replacing an entry door with a midlevel 20-gauge steel door is an inexpensive upgrade at $1,238 on average, but it pays back 73% and greatly improves curb appeal.
- A midrange attic bedroom remodel involves popping out a dormer for a 5-by-7-foot bathroom with shower, insulating and finishing the walls and ceiling, adding four windows, extending the heating and air conditioning and improving wiring and lighting. The payback is 72.5% on the $50,148 expenditure. More living space is being sought as adult children are driven back to their parents’ homes by the shaky economy and as older parents join the households of their adult children. An attic remodel is the cheapest way to add space and a bathroom within the house.
- A basement remodel is the next most cost-efficient way to add living space, although code requirements for headroom and exterior doors can make that project more complicated and more expensive.
- A midrange minor kitchen remodel paid back 72.1% of the $19,588 investment. Included are new laminate countertops and new sink, faucets and appliances. The floor is untouched and cabinets are kept in place but refaced with new hardware added. This is simply a facelift, not a complete remodel to a chef’s kitchen.
- A midrange garage door replacement may not be high on many wish lists; it’s one of those jobs that you do because it’s needed. But it adds curb appeal and function, and it pays back 71.9%, on average, of the $1,512 average cost.
- A high-end garage door replacement recoups almost as much: 71.1% of the $2,994 average cost.
- A new wood deck earns back 70.1%, on average, of its $10,350 cost at resale this year.
- New foam-backed vinyl siding replacement keeps the house warm and pays back 69.6% of its $14,274 average cost. The average project involves 1,250 square feet of siding, including trim.
- New midrange replacement vinyl siding upgrades the look of the home and pays back 69.5% of the $11,729 average price.
- Upscale vinyl replacement windows have a 69.1% payback on the $14,328 cost. The project involves replacing 10 double-hung 3-by-5 windows. The new windows are low-emissivity glass and are insulated with simulated wood-grain trim.
*Based on the MSN article, “10 remodeling projects that pay back the most” and the article: http://www.remodeling.hw.net/2011/costvsvalue/article/trends.aspx
Question for our readers: What remodel/replacement projects have you done? Have they paid off in the end? How do you determine which items will give you the highest ROI?