Top 10 Most Profitable Home Renovations

Top 10 most profitable home renovations. A recent remodeling impact report shows which home improvement projects are most profitable for resale.

If you’re thinking about making some home renovations but aren’t sure which renovations are most profitable for resale, we’ve got some insights that will help you make a smart decision.

A new report by the National Association of REALTORS® (NAR) Research Group and the National Association of the Remodeling Industry (NARI) ranks home renovation projects by their appeal to buyers and their likelihood to add value to the home for resale to determine which home improvement projects are most profitable.

“Realtors® and homeowners alike recognize the value of taking on a major home remodeling project,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota, and broker at Edina Realty. “While these tasks can be time-consuming and costly, the report’s findings show that these projects are well worth the temporary inconveniences and they ultimately reward us, whether the reward be a feeling of accomplishment and satisfaction, or simply greater home value.”

Of course, it isn’t just the feel-good aspect that makes a home renovation a smart move. According to Ilyce Glink, CEO of Best Money Moves, some homes literally won’t sell without at least some updating.

“In most communities, today’s home buyers are paying top dollar for their homes. They don’t have the time or extra cash to do a home renovation project after they close, so they are looking for homes to be modern, updated and neutral,” she explains. “If your bathrooms and kitchen are dated, buyers will pay a lot less for your home than you’d want.”

Sometimes, the ‘profit’ comes from being able to sell your home faster and for more money than you otherwise would if you didn’t complete those home renovations.

Here are some of the findings from the National Association of REALTORS® (NAR) Research Group and the National Association of the Remodeling Industry (NARI) survey.

The Most Profitable Home Renovations for the Interior of Your Home

NAR ranked interior projects in terms of their appeal to buyers and expected value at resale, without regard to price and the same four projects topped the list:

1. Complete Kitchen Renovation

Estimated Project Cost: $68,000
Estimated Cost Recovered: $40,000
Percent of Value Recovered from the Project: 59%

2. Kitchen Upgrade

Estimated Project Cost: $38,300
Estimated Cost Recovered: $20,000
Percent of Value Recovered from the Project: 52%

3. HVAC Replacement

Estimated Project Cost: $8,200
Estimated Cost Recovered: $7,000
Percent of Value Recovered from the Project: 85%

4. New Wood Flooring

Estimated Project Cost: $4,700
Estimated Cost Recovered: $5,000
Percent of Value Recovered from the Project: 106%

The Most Profitable Home Renovations for the Exterior of Your Home

When asked to rank exterior projects in terms of their appeal to buyers and expected value at resale, NAR ranked these four renovation projects highest:

1. New Roofing

Estimated Project Cost: $7,500
Estimated Cost Recovered: $8,000
Percent of Value Recovered from the Project: 107%

2. New Vinyl Windows

Estimated Project Cost: $22,500
Estimated Cost Recovered: $16,000
Percent of Value Recovered from the Project: 71%

3. New Vinyl Siding

Estimated Project Cost: $15,800
Estimated Cost Recovered: $10,000
Percent of Value Recovered from the Project: 63%

4. New Fiber-Cement Siding

Estimated Project Cost: $19,700
Estimated Cost Recovered: $15,000
Percent of Value Recovered from the Project: 76%

5. New Wood Windows

Estimated Project Cost: $35,000
Estimated Cost Recovered: $20,000
Percent of Value Recovered from the Project: 57%

6. New Garage Door

Estimated Project Cost: $2,100
Estimated Cost Recovered: $2,000
Percent of Value Recovered from the Project: 95%

How Do Homeowners Feel About Home Renovations?

Remodeling isn’t just about resale, it’s also about being comfortable in your own home. Over 70 percent of homeowners who renovated said they have a greater desire to be in their newly-renovated home. More than 60 percent of homeowners reported increased their enjoyment of their homes after completing a renovation project. And, nearly 80 percent feel a major sense of accomplishment when they think about their completed project.

NAR calculated a “Joy Score” for each project based on the happiness homeowners reported with their renovations, with 10 being the happiest. Interior home renovations that scored a 10 from homeowners were complete kitchen renovations, closet renovations, full interior and individual room paints, kitchen upgrades and basement conversions to living areas. The exterior home projects that had the highest Joy Scores were new fiberglass or steel front door, new vinyl and wood windows, and new roofing.