The financial value of a home addition is much different than the functional value we may place on it. We may value the addition for its ability to improve our lives, but that doesn’t mean it actually adds value to the price of your home.
So, if you want to add emotional, practical and financial value to your home, you need to make smart home addition decisions. The goal of home additions is not only to increase your square footage and liveable space but to also increase your home’s resale value.
If you plan on staying in your home forever, then whichever addition you choose will be a no-brainer. If you think you will sell your home eventually, however, then you need to make a smart home addition decision. A smart home addition takes into account the cost of the addition, the potential added value, and the marketability of the addition.
The goal is to make the addition appealing to the average buyer. The more appealing to the average buyer the more valuable the addition. Increased marketability to the average buyer could also mean selling your home faster.
But, we also want to make sure that we can recoup the cost of the addition when selling.
So, what are the smartest home addition projects?
Read on to find out!
Smartest Home Addition Projects to Increase Value
Upscale renovations and home additions don’t always translate to a smart investment. We may love our home addition and renovation ideas, but that doesn’t mean future buyers will be willing to pay the price. Explore the following smart home addition ideas to ensure you get the most value out of your home.
1. Wood Deck
In 2018, sellers recouped a whopping 82.8% of their wood deck addition costs. The project on average cost nearly $11,000 and added resale value of over $9,000.
Even though a wood deck is less expensive than composite decking, it still held its value more. Composite decks cost on average over $17,000 but only retained a resale value of just over $11,000. Adding a composite deck is still a smart investment, but adding on a wood deck is the better choice in terms of cost versus resale value.
For garage additions, you have three options: attached, detached, or a carport.
An attached garage will cost less but could limit its functionality based on available space and the need to connect to an existing structure. Detached offers more functionality such as additional storage or usable space, will cost more since you’re building four walls instead of three. If the detached garage has enough amenities, however, you could rent it out which will increase its value.
A carport is the cheapest option, but it may be the perfect addition for your home and real estate market. It can cost anywhere from $5,000 to $10,000 to build a carport, but you can expect a 100% return on your investment if it’s marketable in your area.
Homes with more than one bathroom are much more marketable than homes with just one. When a buyer considers buying a home with only one bathroom, they know their daily routines will be affected. These factors make a bathroom addition a smart investment when done in a cost-effective manner.
To get the best return on your investment, you’ll want to keep costs as low as possible for your bathroom design. If you purchase expensive materials or add in upscale features such as a sauna, it’s likely you won’t recoup the total cost of the addition.
On a project that costs around $45,000, people on average recouped around 60% of their investment on a medium-sized bathroom.
A lack of storage space can easily turn buyers away. Especially, indoor storage space that will be needed on a daily basis.
Building a closet is a great investment because it’s a low-cost addition with a 100% return on investment. If you stick to a lower budget, then you can easily add in the cost of the closet to your total home value.
Barns aren’t great home additions for everyone, but if you live in a real estate market that values barns, then you’re in luck! Barns can cost anywhere from $4,000 to $55,000 depending on the size, uses, and features. So, if you’re planning on staying in your home for 40 years or more expect a 100% return on investment.
If you plan to sell your home, you can expect a 75% return on investment if you find the right buyer.
Patios are great home additions because they don’t require traditional walls, but they do add square footage to your home. Instead of walls like a sunroom would have, you can simply install mesh screens.
Expect to pay anywhere from $9,000 to $25,000 on your patio addition with an 80% return on investment when selling.
7. In-Law Apartment
An in-law apartment is a 600 to 750 square foot detached living space for guests to stay in. They essentially get separate living quarters which allows them to easily move about without disturbing the main household routines.
In-law apartments also have great renting potential which increases their value. Adding in luxury budget-friendly materials such as vinyl planks can also increase your home and the apartment’s value.
Expect to pay upwards of $90,000 to build an in-law apartment with a return of investment of 100% if you find the right buyer.
Adding on a bedroom is a more expensive project. But, bedrooms also don’t require an abundance of expensive components such as a bathroom in order to be liveable.
Buyers do take into consideration the number of bedrooms a home has, but they will likely not want to pay for the cost of the addition fully. Instead, you can expect to recoup 50% of the total cost of your bedroom addition if you decide to sell.
When adding on a room such as a bedroom or a family room make sure to speak with an architect first. You’ll also want to obtain the proper permits and ensure that addition is legal in terms of property lines and regulations. It’s also a good idea to speak with a realtor or home appraiser beforehand to see how much of the cost you can recoup if you decide to sell later on.
Check out the following link to discover more home addition planning tips.
Ready to Build a Home Addition?
The key to making the smartest home addition decisions is to research and understand your area’s real estate market. Knowing what the average buyer in your area is looking for and the price they’re willing to pay will help you to decide which additions are the best bang for your buck.
Always aim to stick to your budget and keep in mind your potential return on investment. These two factors determine whether or not a home addition is a smart decision or a costly one.
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