Knowledge Bank Back to Articles

Upgrades That Pay Off

What to Watch Out For and How to Spot a Predator

Whether you're selling an investment property or flipping a house, there are thousands of projects you could take on in order to help increase the value of the property before you sell. However, not all improvements are created equal. Since you probably can't do every single upgrade that you'd like to, we'll let you in on the secret projects that will be sure to pay off - making certain you'll get the most bang for your buck when that property sells. And be sure to make a special note that the numbers below are only averages, including single-homeowner renovations; you could stand to see a return that triples your investment. Take a look below:

Number one in almost every situation is the bathrooms. Bathrooms have an average recoup rate of 102 percent - that's a great return on your investment. A minor bathroom update including sink, bath, tile, floors, toilet, vanity and fixtures will cost around $10,500, and a recently renovated bathroom like that will generally bring in an average of $10,700 at resale. Fresh paint and a tub re-glaze are inexpensive options that can really make an old bathroom look brand new. Bleaching grout and re-caulking around the tub can really take years off an outdated bathroom as well.

Believe it or not, the second best return comes from outside the house - landscaping. With an average recoup rate of 100 percent, fixing up the yard can make a big difference in drawing in potential buyers. Creating an interesting landscape won't require tons of cash, but possibly a little hard work (unless you plan to hire a gardener). If the grass is greener on your side, buyers will be attracted to the property much more than one with a dried-up, brown lawn. Sod costs around 30 cents per square foot so depending on your yard size, it shouldn't be a major expense. You could do a 5,000 square foot yard for about $1,500. Adding native plants that are hardy but beautiful will make a big impact for little money as well. And with a resale rate of 100 percent, that's a project that would be well worth your effort.

If the kitchen in your property needs a minor update, meaning mainly cosmetic as opposed to a complete overhaul, then taking on the project will get you an average 98.5 percent return on your investment. The average kitchen remodel costs $14,913 and is worth $14,691 at resale. This nearly $15,000 investment should cover floors, countertops with sink and fixtures, oven, and 30 feet of cabinet and drawer re-facing. Simple touches that will impress buyers include recessed lighting, lit cabinets, and uncluttered spaces. Try to make the kitchen appear as roomy as possible by choosing a light paint color and lots of cabinets to stow kitchenware.

The next update may not be feasible in every property, but if you can swing it, it's worth the investment. Adding an attic bedroom may not spring to mind when considering improvements to your property, but it can get you an average resale rate of 92.5 percent. If your property happens to be located in the western side of the country, you may get closer to a 105 percent return! An attic addition costing $39,188 can cover a 15' x 15' bedroom, 5' x 7' bathroom with a shower, a closet, four new windows, and a 15 foot skylight. Not to mention, you can then market your property with one more bedroom - and that's major value added.

Another great way to invest in your property is by finishing off the basement. The average cost of adding a 20' x 30' entertainment area complete with wet bar, laminate flooring, recessed lighting and a 5' x 8' bath is just over $51,000. And on average, you will get about 90 percent of that back when you sell your property. And again, if your property is out West, you'll get more like 108 percent recouped. But before taking this project on, you'll want to make sure your basement is in proper shape - that means no flooding. If flooding is an issue in your basement, there are several ways to remedy the situation: try putting in bigger gutters, re-sloping the yard, or adding French drains. Be sure your solutions work before putting in the time and money - you want a wet bar, but not in that sense.

Replacement windows are often not a luxury improvement, but a necessity for older properties. Nothing can turn a potential buyer away faster than rotten, old stuck-shut windows. And with a recoup rate of nearly 90 percent, there's no reason to skimp on this update. The cost will vary depending on the size of the house, but replacing ten standard size windows will cost about $9,700, of which you'll get an average of about $8,700 back upon sale. However, if you happen to be renovating in a big city, you're actually likely to get more cash back than what you put in. Properties in Miami, Seattle, Orlando, Boston, Chicago, San Francisco and New York City get a recoup rate of over 100 percent on replacement windows. But, if you're in the sweltering deserts of Las Vegas, where windows rarely need opening, you'll get less than 62 percent payback. So, take a look at your region and decide if replacement windows would be worth the extra cost for your property before going all out.

A final high-paying improvement is new siding. If your property is in need of a facelift, siding can be a quick fix with a great recoup rate of 95.5 percent. The average national cost of replacing 1,250 square feet of vinyl siding is $7,239 and you'll get $6,914 back at resale. If you want to go a little more upscale, spring for fiber-cement siding - it will costs you around $10,400 but it has an amazing return rate of 103.6 percent. Either way, replacing your property's siding makes a big impact to potential buyers and pays off with a decent return in the end.

Out of the innumerable options for property improvements, the above choices will net you the most cash back when you're ready to sell. You won't want to waste your time and money making improvements that won't recoup your costs at the sale, so you can safely ignore home office renovations, family room additions and fancy master suite additions as these are some of the improvements that won't pay off very well. While you may not be able to make all of the improvements we listed, choose the most needed from the list and watch your money come right back to you.