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The Best Projects That Will Help Grow Your Home Equity
High mortgage rates, low inventory, and elevated home prices have left many Americans postponing their home buying plans. On the upside, however, most who bought homes over the past few years have seen a sizable boost in their equity. If you’re looking to make home improvements that’ll further boost your home’s value — or help maintain it when prices fall — a home equity loan or line of credit can be a good option. Both allow you to access a large amount of money, and when you use it for qualifying home improvements, the interest may even be tax deductible. Which home improvement projects offer the best return on your investment? Here’s what experts have to say.
Kitchen remodels
Kitchen remodels or upgrades tend to not only have a high rate of cost recovery, but also lead to high satisfaction levels. “I once oversaw a remodel where we incorporated energy-efficient appliances, modernized countertops, revamped cabinets and introduced a more open layout,” says Roman Smolevskiy, owner of A+ Construction & Remodeling, “The project noticeably boosted the home’s market value, reiterating the fact that investing in the kitchen — typically the heart of a home — can recoup between 60% and 80% of the cost.” Data from the National Association of Realtors (NAR) 2022 Remodeling Impact Report aligns with Smolevky’s estimate, reporting a 75% cost recovery estimation on complete kitchen renovations. Additionally, this project type earned a 9.8/10 “Joy Score” from the report, which measures the happiness homeowners experience as a result of the renovation.
Energy-efficient upgrades
Energy-efficient upgrades can not only increase a home’s value but save homeowners on their energy costs each month. “Energy efficiency may not strike as an exciting feature, yet it holds immense potential. Actions like sealing cracks, ensuring proper insulation, and fitting Energy Star-rated windows can lead to considerable savings and attract the growing segment of eco-conscious buyers,” says Eric Bramlett, a realtor and the owner of Bramlett Residential. For example, the 2023 Cost Vs. Value Report by Remodeling found that an HVAC conversion/electrification offered a cost recovery rate of 103.5%.
Bathroom remodel/addition
Bathroom remodels also tend to be value boosters — whether you want to undergo a full renovation or make smaller changes like new fixtures or fresh caulk. “My team and I have found that a tastefully remodeled bathroom or a strategically added one can bring about an attractive ROI. One particular project involved transforming a dated bathroom with energy-efficient fixtures, a walk-in shower, and a double sink vanity. The home’s value skyrocketed, with an estimated cost recoupment of around 70%,” says Smolevskiy.
Add usable living space
If you’re willing to take on a substantial project, incorporating more usable living space in your home can be a good investment. “Be it a basement conversion, an attic transformation, or a deck addition, creating more usable space is a surefire value booster,” says Smolevskiy. The NAR report found that converting a basement into a living area offered 86% cost recovery, while attic conversions offered 75%. If you’re focusing on your outdoor space, Remodeling reported a 50% cost recovery on new wood decks and a 39.8% recoup of costs on composite decks. “Whether you opt for wood or composite, a well-crafted deck offers an irresistible extension of indoor living space to the outdoors. It’s a drawcard for those buyers who love the idea of a relaxed, open-air lifestyle,” Ryan Fitzgerald, a realtor and the owner of Raleigh Realty.
Text by Jessica Walrack | Photo by Unsplash | Read More Here
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