Home Improvement Projects with the Best ROI

June 03, 2021

Whether you've purchased a fixer-upper or are thinking about selling your home in the near future, it's important to determine which renovations or upgrades can add value to your property.

Not all home projects are equal when it comes to earning you a return on investment (ROI), notes Frank Zaccherio, a Broker/Realtor at Keller Williams Realty in Pinehurst, North Carolina. Zaccherio works with his clients to determine cost-effective upgrades that will help the property sell faster and for more money.

"Buyers in our area want nice clean backyards where they can enjoy the afternoon sun," Zaccherio says. "Those kinds of projects will offer sellers the best ROI." His recommendations commonly include outdoor enhancements – such as adding a small patio or deck.

That echoes findings from a recent report by Remodeling magazine, which lists upgrades in terms of their ROI. Four of the top six projects were exterior projects. Only the minor kitchen remodel — a relatively modest indoor project among those covered — rivaled the return of exterior projects on list. "You need to invest in enhancements that will be appreciated by local buyers and avoid pricing your home out of their reach,” Zaccherio says.

Top 6 renovations to increase your home’s value

  1. Stone Veneer: 95.6% ROI
    By adding manufactured stone to the lower third of a home’s front facade and extending it over the front entry for an estimated cost of $9,357, you could recoup $8,943 when you sell your home.
  2. Garage Door: 94.5% ROI
    Replacing a garage door with an upscale model costs an estimated $3,695 and could earn you back $3,491.
  3. Minor Kitchen Remodel: 77.6% ROI
    Installing new cabinet fronts and energy efficient appliances costs around $23,452 but adds $18,206 in value.
  4. Siding – 74.7% ROI
    It will cost about $14,359 to replace siding, but you may recoup $10,731 by doing so.
  5. Windows -- 72.3% ROI
    By spending an estimated $17,641 on new windows, you may recoup $12,761.
  6. Wood Deck -- 72.1% ROI
    Adding a 16’ x 20’ wood deck costs about $14,360 and adds $10,355 in value.

While a typical home improvement project might return .60 -.75 on the dollar, some upgrades like putting in an in-ground swimming pool could return .50 or less – and might even turn off some buyers. "I have to make sellers understand that upgrades don't pay back dollar-for-dollar, especially if they're not on the buyer's wish list," says Zaccherio.  

To understand which upgrades are most likely to provide a higher-than-normal ROI in your area, talk to a local real estate agent, contractor or home builder. These pros will know what buyers are looking for and which upgrades will help your house sell more quickly and for top dollar.

Financing your renovation

The Freddie Mac CHOICERenovation® mortgage offers more cost-effective options for financing or refinancing home renovations, repairs or improvements. CHOICERenovation is unique in that it allows borrowers to use proceeds to renovate or repair a property that has been damaged in a natural disaster or finance improvements to help prevent damage from a future disaster, such as building storm surge barriers, foundation retrofitting or retaining walls. As always, it’s important to speak with your lender about the options available to you.

To learn more about maintaining, repairing and renovating, visit MyHome by Freddie Mac®.