As a real estate investor, you're no doubt aware that it's important to choose home renovations carefully. Any money you spend on one upgrade means funds you won't have available for another, so it's essential to focus on the projects that will deliver the highest return on your investment. This applies whether you're in the business of flipping houses or you want to spruce up an existing income property to sell.
To give you a sense of where your renovation dollars should go, here are 10 home projects with the highest return on investment, according to Remodeling Magazine's 2021 Cost vs. Value report.
1. Garage door replacement
New garage doors can make a home look and function better. The average cost to replace garage doors is $3,907. Of that, you can expect to add $3,663 of value when you go to sell your property. All told, you'll recover 94% of your investment.
2. Manufactured stone veneer
Ask any real estate agent, and you'll hear that curb appeal could be your ticket to commanding top dollar for your home. And that's why investing in manufactured stone veneer (fake stone that's engineered to look like natural stone) makes sense. The average cost to install manufactured stone veneer is $10,386, of which you'll add $9,571 of resale value. That means you'll recoup 92% of your cost.
3. Minor kitchen remodel
A kitchen can be a home's main selling point. But rather than go all-out on an upgrade, consider a minor remodel. At an average cost of $26,214, you're likely to add $18,927 of resale value to your property -- 72% of your cost.
4. Fiber cement siding replacement
Fiber cement mimics the look of wood, only without the extensive maintenance. And because it's not actually wood, it won't rot or warp over time. The average cost to put in fiber cement siding is $19,626. Of that, you can expect to add $13,618 of resale value to your home, which means you'll recoup 69% of your outlay.
5. Vinyl window replacement
Updating your home's windows won't lend just aesthetic appeal. It can also lead to better insulation, which could be a key selling point. The average cost to replace a home's windows with vinyl is $19,385, and that should add $13,297 of resale value. That represents 69% of your investment.
6. Vinyl siding replacement
Vinyl siding is durable and easy to maintain, so it's a popular choice for homes in areas with extreme climates. The average cost of replacing vinyl siding is $16,576. Of that, you can expect to add $11,315 of resale value, which allows you to recoup 68% of your cost.
7. Wood window replacement
Wood windows offer a classic look that can enhance any home. And while they are a bit expensive, coming in at an average of $23,219 for a whole house, this investment will add $15,644 of resale value and recover 67% of your cost.
8. Wood deck addition
For many potential homebuyers, outdoor living is key. Installing a deck can help property owners maximize their outdoor space, and wood is a relatively low-cost material when compared to composite. The average cost to put in a wood deck is $16,766. Of that, you can expect to add $11,038 in resale value to your home. All told, you'll recoup 66% of that expense.
9. Steel entry door replacement
A steel door isn't just a solid security feature. It can also offer great insulation, making it a smart investment for homes that tend to experience extreme weather. The average cost to put in a steel door is $2,082, and that should add $1,353 of resale value to your home, which translates to recovering 65% of your cost.
10. Composite deck addition
Many homebuyers prefer composite decking to wood because it requires less ongoing maintenance. The average cost to install a composite deck is $22,426, and that could add $14,169 of resale value when you list your home. That means you'll recoup 63% of what you spend.
Make your investments count
If you're going to sink money into improving a home, it pays to focus on the projects that are most likely to pump up your resale value. Of course, all of these figures are just averages, and in some real estate markets, certain upgrades may be more worthwhile than others. It pays to consult with a local real estate agent to see which renovations are likely to be the most financially rewarding for you.