Buying & Selling Houses

The 5 Best Home Improvements to Add Resale Value

Expertise: Landlording & Rental Properties, Personal Finance, Real Estate News & Commentary
32 Articles Written
home with white siding and two-car garage with room above

Whether you’re planning to sell your home this year or a decade from now, remodeling projects can improve both the resale value and the appearance of your home. But it’s challenging to know which upgrades are worth the investment and which are a waste of time and money.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

Here are a few home improvement projects to consider that are almost certain to improve your resale value and the look of your home.

1. Minor Kitchen Remodel

Kitchens in older homes weren’t designed to be as functional as they are today. If you’re still cooking in a kitchen that pre-dates your birth, a minor kitchen remodel might be just the thing to make you love the culinary arts again, all while increasing the value of your home.

Upgrade your appliances with energy-efficient models, replace outdated cabinets with newer options, and redo your counters. The average return on investment for a minor kitchen remodel is 81 percent, with the average cost of the project coming in at around $21,000.

Always over-budget for your project. It doesn’t matter what you decide to replace or upgrade—remodeling projects will pretty much never cost less than you anticipate. You can make choices to save money, but in the end, you will almost always end up spending as much or more than you expected.

2. Wooden Deck Installation

Patio and garden of family home at summer

Adding a deck to the back of your home gives you a great place to throw a barbecue, host an outdoor dinner, or even install a hot tub so you can enjoy the outdoors without getting dirt on your feet. It is also a great way to add value to your home, as long as you choose a design made of wood instead of one made of plastic or composite. A wooden deck will cost you an average of $10,500 to build, but most homeowners recoup 85.4 percent of that cost—one of the largest returns on investment that you’ll find on this list.

If you do choose wood, make sure that you’re ready to sand and refinish it periodically to ensure that you can enjoy your deck without worrying about you or your guests getting splinters.

Related: Home Upgrades That Are Seriously Worth Making (Think: ROI!)

3. Garage Door Replacement

When was the last time you replaced your garage door? An old or out-of-date garage door doesn’t just damage your home’s value—it can be downright dangerous. While they were made safer in 1993 when a law was passed mandating that all garage doors be equipped with an auto-reversing feature, they’re still the biggest and heaviest moving object in your home.

On average, you’ll spend around $3,600 to replace your garage door and all the associated equipment, but you’ll reclaim nearly all of that in value for your property. The ROI for a garage door replacement is an astonishing 97.5 percent, in addition to making your home safer while improving the property’s value and curb appeal—all in one neat package.

4. Update or Add a Bathroom

luxury bathroom remodel with gray tiled shower light gray cabinetry white walls and light vinyl flooring

Older homes might only be designed with a single bathroom, but if you’ve got more than two bedrooms, you’ll be hard pressed to sell a home that’s only got one bathroom. Depending on where you live, adding a new bathroom to your house can give you a return on investment of anywhere from 50 to 70 percent. It might not sound like much, but for someone who is shopping for a new home, that extra bathroom could mean the difference between choosing your property or passing it over for another option.

You don't even need to add a full bath—one that includes a bathtub, shower, toilet, and sink. A three-quarter bath, which includes a shower but not a bathtub, can save money while still providing the kind of return on investment you're looking for. As long as your home has at least one bathtub, you're good to go.

Related: 7 Ways to Spend a $5,000 Renovation Budget for Max ROI

5. Siding Replacement

The exterior of your home has a lot to do with your property’s value. They say you never get a second chance at a first impression. And for a potential buyer, the exterior is that first impression. Upgrading or replacing your siding is like giving your home a facelift. Replacing the siding on the entire exterior of your home will usually cost around $14,000, but you will usually recuperate between 77 and 80 percent of that cost in terms of increased property value.

Don’t pick crazy colors or things that will make your home stand out from all the other houses on your block. Part of curb appeal is making sure your home looks like everyone else’s. You can certainly make it stand out in other ways, but don’t opt for choices that are too bold (like neon green siding). That will end up costing you money.

All Around Wins

It doesn’t matter if you’re planning to sell your home next week, next year, or in the next decade—or if you don’t plan to sell it at all and are just improving your property value because you’re going to refinance—these projects can increase your home value while making it more comfortable for you in the long run. Enjoy your new upgrades.

Which projects are you considering for your personal residence? For your investment properties? Why?

Let’s chat in the comment section below.

Anum Yoon is the founder and editor of the millennial money blog, Current on Currency.
    Daryl Luc
    Replied 8 months ago
    Beyond updating a rental property at first acquisition, I do no upgrades during its rental life. Repairs and maintenance only. Remodel projects aren't going to pay for themselves in additional rent, can't be tax expensed and have to be listed as property improvements for depreciation purposes which returns to the first 'why'...they aren't going to pay for themselves until you are around 26 years after completion. I realize that different parts of the country have different trends in what people will pay for when buying a primary residence. I would suggest that a two step approach be taken. First, don't do anything just to sell the house. In some cases, a 'freshening' for curb appeal will sell a home faster, but rarely for more money.....or even for a recouping of what was spent. Second, if moving forward on a remodel of anything (all remodels are major, ask any wife), it should be done with full consideration of your time left in the home. In other words, will it make you and your spouse happy every day after it's completed. And part b...contact your local NARI and get their most recent remodelling payback charts for your local market. They publish yearly and more comprehensive and accurate to your region than your numbers in the article.
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied 8 months ago
    Daryl, The IRS allows you to deduct capital expenditures in the year the money is spent, instead of depreciating them, as long as each invoice or receipt is for less than $2,500. See this link https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ademinimis So you can do a lot of small remodeling projects (such as replacing flooring, countertops, painting cupboards, replacing appliances, replacing window treatments, painting, etc) and deduct the costs from your rental income the year you spend the money. There is no limit to the number of $2500 projects you can do in a year. And yes, you can get higher rents for remodeled units. I increased rents from $1000 to $1250 in one jump by doing cometic remodels. Flooring is a big saver, if you replace carpets (which you have to replace due to “wear and tear” periodically, at your expense) with tile or with luxury vinyl plank, both of which you can make tenants pay for damaging out of their security deposit. Remodeling in a way that reduces future maintenance costs is a big win. Yes, the maintenance costs are deductible, but all you save is the percentage of your tax rate of the maintenance cost (e.g. 25%) So, instead of steam cleaning that worn carpet between tenants, then having to replace it every few years, install tile floors that just have to be mopped. This reduced turnover time (not replacing carpet) and not paying for periodic carpet replacement, will recoup the cost of the tile install in a few years. AND you can deduct the cost of the tile in the year you do it. Tile will last 30 years: carpet usually less than five years. If you are worried tenants will not like tile in the living room, show the place with an area rug in place. tenants can buy their own area rug if they want one, to match their taste. Or install luxury vinyl plank: not as durable as tile but much better than carpet. Existing tenants are often accommodating about you upgrading the place they live in to look nicer. Offer to do an upgrade as appreciation for them being a good tenant. If they are not willing, when the place becomes vacant, if you first list the unit for rent and then immediately start a small remodeling project, then the remodeling project costs are tax deductible and can be done during the vacancy period. Prospective tenants are generally very pleased to be getting a brand new feature with the unit. The nicer the place is, the higher the rents you can charge, and the tenants paying higher rents tend to damage your unit less. I aim my rentals for the top 60% to 80% of rents in the area, so remodeling is with good quality attractive and durable materials often found on sale, not expensive materials. And I do most of my own remodeling. When I hire a contractor, I still buy the materials myself. Each project is < $2500. Cindy
    Daryl Luc
    Replied 7 months ago
    The article you cite as your basis for all comments applies to pre-2016. In addition, you have conflated two separate lines of expenses, those that are made to operate your business (tools, supplies, etc), and those that are the basis for improvements to real property. They are not one and the same. Now would be a good time for you to revisit your approach by having a heart to heart with a tax attorney or other business/individual that is authorized to represent in tax court. Not every attorney, not every CPA has that license. Get the best advice you can find.
    Dan White Investor from Fox Island, Washington
    Replied 6 months ago
    Well said Cindy. I have rentals in Tacoma & Lakewood and follow much of the same philosophy. Started removing carpets a long time ago and using laminate, when the laminate shows wear or damage I buy nice area rugs. Saves a lot of time on turnovers, not to mention painting goes much faster when you do not have to protect as much.
    Joseph Vegas from Las Vegas, NV
    Replied 8 months ago
    Great input Cindy. Thanks for all that info. Just bought my home and now furnishing it and prepping it for Room Rents. Renting 3 of the 5 bedrooms will cover my entire mortgage and most of the utilities. My first Land Lording experience. So far, so good. I will also be doing upgrades and will make sure to keep each under 2500 bucks. Thanks again. Joseph :)
    Terry Lowe
    Replied 8 months ago
    Is a composite deck a Trex deck? Why do you recommend real wood over Trex? We have a beautiful Trex deck that has not needed any maintenance in 13 years.
    Terry Lowe
    Replied 8 months ago
    We do upgrades like new vinyl plank flooring, painting, sometimes new switches and sockets, new lighting, and new appliances when necessary. It gives the unit an updated, clean, cared for appearance and always increases rent. We do as much work ourselves as possible, and that keeps our costs down. It’s a good time to notice other issues like a running toilet, or leaking gutters. Small issues can turn into big issues if you aren’t diligent.
    Memo Hernandez Homeowner from Las Vegas, NV
    Replied 8 months ago
    Well I laid porcelin tile down,repaired,re-textured & painted interior walls.Up next is the front landscaping for a good first impression.Then I have to put in a brick wall to replace the old wood fence deciding the properties,including a new wood privacy fence so my 1bd 1bth casita in the back yard has it's own space.Good Things
    Daryl Luc
    Replied 7 months ago
    I would guess that those subsequent comments to mine are from people who have never been audited or had a conversation with a tax attorney. A rental property is not a qualified home for the purposes of improvements etc. as described within IRS guidelines for deduction and depreciation. IRS pub 936 would be a good starting point to understand the differences as viewed by the IRS. A capital improvement is not based on each receipt, but the total cost incurred. The IRS defines a capital improvement as a home improvement that adds market value to the home, prolongs its useful life or adapts it to new uses. Minor repairs and maintenance jobs like changing door locks, repairing a leak or fixing a broken window do not qualify as capital improvements. These limits of 2500.00 etc. expressed in these comments should be checked against your advisors counsel, someone who has experience with the details of an audit process so you can be aware of the penalties that are charged for avoidance or ignorance of the tax laws.
    Jordan Meyer Rental Property Investor from Lehi, UT
    Replied 7 months ago
    I believe the National Association of Realtors does a quantitative study on what gets the best ROI.