Home improvements 2014: best and worst ROI

Iris Price | Improvement Center Columnist | November 24, 2014

Some home improvements like a kitchen remodel make a real difference in the comfort and enjoyment you derive from your home; others fetch a good monetary return on investment when you put your home on the market. But the best return on investment is when you can have both.

Each year, Remodeling Magazine, a trade publication for contractors and other professionals concerned with remodeling projects, ranks everything from entryway doors to major home additions in the order of which ones provide the best return on investment.

If you are thinking that one day you can recoup all of your investment on the back end, you might have a rude awakening when you go to sell your home. Not every buyer wants a precious fourth bedroom reconfigured as an office or thinks your elegant sun room is worth the extra tens of thousands you're asking for your house. On the other hand, adding a second bathroom to a one-bath bungalow can make your home a winner not just for buyers but for you while you're still living there.

Below are some of the best and worst remodeling projects according to Remodeling Magazine's Cost vs. Value report for 2014 along with the national averages of return on investment for each. A comparison of many mid-range projects to upscale versions of the same project provides evidence that pulling out all the stops on your remodel may not necessarily convert to a better ROI.

Best ROI home upgrades

  1. Wood deck addition. Mid-range, average cost $9,539. Create a simple 16-by-20 foot deck with built-in bench, railings and three steps. ROI: 87.4 percent
  2. Siding replacement, fiber cement. Upscale, average cost $13,378. Replace 1,250 square feet of siding with factory-painted fiber-cement siding. ROI: 87.0 percent
  3. Attic bedroom. Mid-range, average cost $49,438. Convert an unused attic into a 15-by-15 foot bedroom and 5-by-7 bathroom with shower, using space beneath the eaves for closets and storage. Add HVAC, wiring and lighting to code. ROI: 84.3 percent
  4. Minor kitchen remodel. Mid-range, average cost $18,856. Reface cabinet doors and drawers. Replace laminate counters and sinks. Upgrade appliances for energy efficiency. Remove and replace resilient flooring. ROI: 82.7 percent.
  5. Window replacement, wood. Mid-range, average cost $10,926. Replace 10 wood windows, 3-by-5 with double-hung, insulated wood windows and wrap trim to match window cladding. ROI: 79.3 percent.
  6. Window replacement, vinyl. Mid-range, average cost $9,973. Replace 10 windows with vinyl double-hung, insulated windows and wrap trim to match. ROI: 78.7 percent.

For comparison, an upscale (as opposed to mid-range) wood window replacement averages $16,798 and returns 74.0 percent of your expenditure, while an upscale vinyl window replacement costs an average of $13,385 and returns 76.6 percent of the original investment. However, the report does not take into account improved energy efficiency and utility bill savings when calculating your return on investment, nor does it consider your comfort level during winter and summer.

Worst ROI home improvement projects

  1. Home office remodel. Mid-range, average cost $28,000. Install custom laminate cabinetry and built-in workstations and storage. Wire for office equipment. ROI: 48.9 percent.
  2. Sun room addition. Mid-range, average cost $73,546. This is a 200 square foot addition with slab foundation, framing, awning or casement low-e vinyl windows, stone tile flooring and 10 skylights with screens. ROI: 51.7 percent.
  3. Master suite addition. Upscale, average cost $224,989. Build out a 32-by-20 foot suite that includes a bedroom, sumptuous en suite, and kitchenette. ROI: 56.0 percent. For comparison, a mid-range master suite recoups 67.5 percent.
  4. Garage addition. Upscale, average cost $82,311. This is a free-standing 26-by-26 foot, two-car garage, fully finished with epoxy-coated flooring and built in storage. ROI: 58.4 percent. The mid-range version returns 69.3 percent.
  5. Bathroom addition. Mid-range, average cost $38,186. Construct a 6-by-8 foot bathroom with modest appointments. ROI: 60.1 percent. An upscale bathroom addition offers a slightly higher return at 60.6 percent, but the better bathroom ROI comes from doing a mid-range bathroom remodel -- a 72.5 percent return, even better than an upscale bath remodel with a 63.6 percent average return.

Depending on where you live, your ROI for these upgrades could be considerably more -- or less -- than average. The last thing you want is to price yourself out of the market or skimp on features you really need. An experienced local real estate agent can be a good source of advice when it comes to how much is too much to spend on your remodel and which improvements won't impress buyers at all in your area.

Photo copyright by Quinstreet

About the Author

Iris Price is a single Baby Boomer whose antidote to a lack of retirement funds was to launch a long-delayed career as a writer. While others her age concoct bucket lists and travel the world, she bought a new-construction home and obsessively creates lists of must-have home improvements and personal realization goals. She specializes in writing about home services and self-motivation.