The Everest Equity Company, Inc. - RESIDENTIAL / COMMERCIAL MORTAGES

Have you been saving up money for a home renovation or remodel?

Before calling your builder, consider these trending upgrades for ROI.

Money spent on your home is always money well spent!

Did you know that on average, upgrades to your home provide a 70% return on investment? Whether you’re renovating an old space or adding a new one, home improvements can increase your home’s value and immediately enhance your quality of life.

Imagine how you’d decorate a new bedroom, prepare meals in your new chef’s kitchen, or enjoy time in an in-ground swimming pool. The possibilities are endlessly exciting!

But that doesn’t mean all renovation projects are created equal.

In this uncertain economy, you have to be thoughtful about the ways you spend your money and how a big project might affect your home’s future value. While some enhancements deliver a high return on investment, others may only make a small ripple in your profit pond—or worse, no return at all.

This month, the experts at Everest Equity are exploring all things home improvement: ROI edition.

If you’re considering taking out some kind of home equity or renovation loan to fund your dream project, you’ll want to keep these tips in mind. And remember—our experienced loan officers possess a wealth of information when it comes to financing options. You know who to call!

Three paths to profit

Before diving into the best home upgrades for ROI in 2023, let’s explore the three major home improvement categories based on their value-add history. The dollar signs let you know how high of a return you can expect when embarking on a project.

Long-term improvements ($$$). Projects include finishing an attic or basement, adding a bedroom or bathroom, or putting on a major addition.

Short-term improvements ($$). Projects include remodeling a kitchen, updating an existing bathroom, or adding a new deck or patio.

Potential improvements ($). Projects include installing a backyard swimming pool, investing in landscaping, or any kind of exotic upgrade.

Each of these improvements would bring immense joy to almost any homeowner! But if boosting your home’s worth is the ultimate goal, you have to put immediate pleasure aside and start assessing some key factors for ROI.

For instance, while a high-end spa shower or patio hot tub may occupy your dreams, such an investment may only yield a very small profit in the long run.

Likewise, some of the most expensive home projects may seem intimidating due to the time and cost investment (think: a complete kitchen makeover or third-story addition). But time and again, these projects consistently prove the most profitable at the time of resale.

“Adding another bedroom is a surefire way to increase your home’s value,” says Sam Fine, Residential Loan Officer at Everest Equity. “Anything that adds square footage to your living space is always going to deliver a good return on investment.”

Follow this golden rule when putting money into your home. You may need to spend big or even borrow to make it happen, but this is how homeowners get the most bang for their buck.

Let’s talk numbers

Calculating the potential return on investment for your project is technically impossible because of (4) variables:

The location of the home
The current real estate market
The type of project
Timing of the project

These factors will always be different, so it can be difficult to estimate exactly how much return you will see on any given upgrade. That said, many homeowners will have a real estate appraiser come to their home and evaluate how the project will impact its value.

Known as an “as-completed appraisal,” this process is a common step when applying for a home renovation loan. But if you want to do the math yourself for peace of mind, follow this handy formula.

Home renovation ROI calculator

Net gain (estimated profit) – cost of home improvement (how much you paid) = ROI

The ROI reveal

If you’re ready to start your home renovation journey, set sail with this practical list in mind. Experts agree that the following remodeling projects will give you the greatest advantage at the time of resale. But please note—we left out the big ones!

Because of economic uncertainty, inflation, and other factors, many homeowners are choosing more modest home renovations for 2023-2024. If you’re unlikely to sell your home any time soon, adding square footage is still a smart renovation idea considering short- and long-term payoff.

According to Mr. Fine, “Adding a bedroom is known to add 15% to a home’s resale value. But in the short-term, imagine what you could do with the additional space.”

Which is at the top of your list? Your friends at Everest would love to hear!

Top 10 Home Renovation Projects for ROI 2023-2024