In the last Q&A, we talked about how to find balance between the investment of a home renovation and the return in both monetary value and in the value to the quality of life. If we are only evaluating Return On Investment (ROI) in a monetary sense, what are some high ROI items to consider?
One source you can look at is the annual Cost vs. Value report done by Remodeling Magazine. It shows the selected major cities in the Hampton area, regional, and national data. The ROI varies in different locations and also keeps changing through time, but one can summarize basic trends.
Usually the highest ROI types are those involving curb appeal, and the smaller the renovation, the higher the return. In the 2020’s report on Virginia Beach, the highest two types, which are also the only ones exceeding 100% return, are Entry Door Replacement (111.4%) and Manufactured Stone Veneer (102.1%). Other curb-appeal-related items include Vinyl Siding Replacement (83.8%), Fiber-Cement Siding Replacement (79.7%), Window Replacement (79.1%) and Fiberglass Grand Entrance (64.3%).
Another recognizable pattern in the report is that the more upscale your renovation is, the less return you receive. For example: a Midrange Master Suite Addition can recoup 60.5% of the cost from its resale value, while an upscale one can only recoup 47.2%. For Window Replacement: Vinyl vs Wood is 79.1% vs 53.1%. A Minor Kitchen Remodel can recoup 52.2%, while Major Kitchen Remodel (Midrange and Upscale) only 45.2% and 44.3%. With these examples from the report, it is easy to understand that with a smaller investment the return will be more obvious.
Additionally, there are two other local trends worth highlighting. First, for a Bath Remodel, one with an Universal Design ranks highest compared to Midrange and Upscale remodel, which are 51.8%, 45.5%, and 40.9% respectively. Secondly, replacing a roof with Metal(45.8%) has more value than Asphalt Shingles (37.3%). Both of the above trends are unique to the Virginia Beach area, different from regional and national data. Overall the ROI in Virginia Beach seems lower than regional and national averages this year.
Regardless of your location, one thing for sure is that overall your ROI will be less than 100%. The magical renovation shows on popular TV stations have unfortunately given false hope in regard to many aspects of home renovations. In reality, your new property value most likely will not be the current value plus your investment on renovation. In short, renovating your home for your family is different from renovating it for resale. All the ROI data vary for different years. For a longer term return, one can only gauge the overall trends. Start by planning with your family’s needs first, followed by short term and long term goals, and then balance the costs and returns.