FIRST PUBLISHED NOVEMBER 2018, UPDATED APRIL 2020

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Consider the ROI on Your Next Renovation

Whether you're planning on selling your home in the next 2-3 years or not for another 10–20 years, you should always consider the return on your investment when doing a renovation. Typically, you don't want to spend $150,000 on a kitchen renovation if your house is only worth $375,000! You will never see an ROI on that kind of renovation.

Now, I should qualify the information you read in this post. ROI should always be a priority. However, if you plan to stay in your home for 10+ years, I always tell clients that the renovation should reflect your needs and wants, and although ROI should be a consideration, make your home the way you want it to be.

The example I gave above with the $150,000 kitchen renovation was a true story! Our clients lived in a house that was worth around $375,000. They wanted to do a massive kitchen renovation that included the removal of two load-bearing walls, new tile flooring throughout the entire main floor, tripling the size of the kitchen by expanding it into their dining room and breakfast area, installing two stoves, two ovens, three sinks, two bar fridges, and a wine cooler.

This was a HUGE renovation with a high price tag! They would never see a good ROI on this project. We politely made them aware of this, but then had a discussion about their long-term plans for the house and why they were considering this kind of renovation. Our clients planned to stay in the home for at least another 15 years or more.

They entertained business clients a lot and needed to create a space that would accommodate this. With their son moving out to attend university, it was the perfect time to turn the main floor into an entertainment haven. They weren't at all concerned about ROI. They just needed a space that would fill their current needs.

About Fads and Trends

The two best areas to invest money in renovation projects are the kitchen and bathrooms. You will get a 75–100% ROI on those projects. Stay away from fads and trends that won't last in order to ensure your renovation won't have to be redone again in 7 years because it's already out of date.

For example, grey kitchen cabinets are trending right now, but they will likely be out of style five years from now. Stay with white cabinets, then decorate your kitchen in whatever colours you prefer.

Upgrading your flooring will also provide about a 70% ROI. Make sure you select flooring that's durable and neutral. Hardwood flooring can provide you with an 80% ROI.

Outdoor Living

Outdoor living renovations can yield a high return on your investment. In almost all areas, exterior renovations have an excellent ROI. An outdoor kitchen can return 100 to 200 percent, while new patio stones or a new deck return about 60 to 75 percent.

Building a deck is a great way to improve the value of your home and provide a fabulous outdoor entertainment getaway. Decks will reap an 80% ROI, and homebuyers are always looking for a place to entertain outdoors.

Small Projects

Surprisingly, a relatively inexpensive renovation plan can yield high results. If you're planning on selling within 6 months to a year, putting a fresh coat of paint throughout your home can yield a 50%–80% return on investment. Speak with the experts at paint stores like Sherwin Williams or Benjamin Moore to determine the best neutral colours for your home. One of our personal favourites is Agreeable Gray by Sherwin Williams. It is a soft, warm grey, a ‘greige’, which is a combination of grey and beige, and goes with absolutely everything!

Surprisingly, some small projects around the house can net you a large ROI. Replacing the garage door will provide an 80–100% ROI with only a $3000-$5000 investment in most cases. Even replacing your front entrance doors can yield you a 90% ROI with an investment of $1500-$3000. First impressions make a big difference in resale value, so a new garage door and entrance door can go a long way.

New windows don’t just look better; they also have unexpected benefits like keeping your energy costs down. Potential buyers want replacement windows and are willing to pay top dollar for them. Replacing your windows will net you a 70–80% ROI.

Getting a new roof is not only a great idea for ROI, but if your roof needs replacing, you will be preventing potential water damage from occurring. When you get a new roof, have an extra couple of roof vents put in to improve ventilation in your attic. You can expect a 60–70% ROI for a new roof.

Want more information on some small projects that will increase the value of your home? Check out the blog posts below:

Small Jobs that Update Your Home and Increase its Value—Part 1

Small Jobs that Update Your Home and Increase its Value—Part 2