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Which Rooms Offer The Best Renovation Return On Investment

room renovation

Which Rooms Offer The Best Renovation ROI

ROI or return on investment with regards to home renovations means when a homeowner puts money into improving/updating a room what will be their potential increase in value.  With many home updates the amount of money put into the update does not necessarily mean an equal return in value.  So for example a homeowner pays $7000 to update a bathroom, that does not mean their home value automatically goes up $7000 all other things being equal.  In this article homeowners can learn about which room updates will give them the best return on investment.

What Does an Update/Renovation Involve?

A renovation basically means making updates, so the room is in good condition again.  That could be as simple as a fresh coat of paint on the walls and cabinets (if present) to a full strip everything out and replace with brand new items after taking the room down to the studs.  If a particular room has been recently updated but the paint is worn/dirty the homeowner can paint the room and call it a day.  On the other hand, if the fixtures are original to the home when built in the 1950s then a full renovation is more likely to be needed to make everything good again.  

Regardless of whether the fixtures work or not part of the reason for renovating a room is to bring it up to current standards.  That means modern light fixtures, modern cabinetry, modern plumbing fixtures and more as the room needs according to its intended purpose.  So for example updating a bathroom can mean tearing out old tub and tiles and adding new tub and tiles in addition to new plumbing fixtures, new cabinets and more.  What type of update exactly is called for depends on the age of the most recent updates for the room in question.

What Rooms are Buyers Most Impressed By?

Homeowners need to put themselves in the buyer’s shoes.  When a buyer comes looking at a home what are the most attention-grabbing rooms?  Rooms like the kitchen, bathrooms, primary bedrooms, recreation rooms, home theater rooms, dens are usually what buyers are checking right off the bat.  Buyers who want a house to entertain in will be looking at the kitchen and constructiondining areas and even the outdoor areas.  Buyers looking to raise a family will be looking at bedrooms and common rooms that can be turned into play rooms, game rooms, studies and more.

Homeowners need to understand what current buyers are looking for in their specific location.  Are there a lot of other families in the neighborhood with young children?  That is a big selling point for buyers with children and can help guide the homeowner to figure out which rooms should get attention for renovating.  Are the schools highly rated in the location where a home is located?  If yes that is another sign that orienting renovations to young families will have a better ROI.

If the neighborhood on the other hand is primarily one for retirees or empty nesters the renovations that work for young families won’t work here.  By getting a pulse of the neighborhood the homeowner can direct their renovation attention accordingly.  Best of all a local real estate agent can help homeowners understand what current buyers are looking for and how their home’s location plays into.

Bill Gassett of Maximum Real Estate Exposure shared some helpful insights on where to make improvements to get the most bang for your buck.
Paul, kitchen, and baths are two of the most vital areas in a home to most potential homebuyers. It makes sense that you would want to put money into these areas before selling a house. The beauty of doing so is that they have excellent ROI and make the property far more saleable. The key is not to go overboard. When selling, you need to be budget-conscious and pay attention to the return on investment.
For example, a complete kitchen remodel isn't usually in your best interest. However, making modifications is beneficial. The full kitchen renovation expense will likely be too much to recoup in your sale price. Instead, you could paint dated stained kitchen cabinetry white. Adding new granite or quartz counters, along with updated hardware, can dramatically change the appearance. It often looks almost as good as new.
Bathrooms are another area where a minor refresh can dramatically change the appearance. You can think about replacing old Lino floors with tile. Updating old Formica counters with granite and changing the lighting and fixtures are also great ROI improvements.

Rooms/Areas to Renovate

According to research published by the National Association of Realtors in 2022 the rooms/areas with the best ROI after a renovation are basements converted to living space, complete kitchen renovations, bathroom renovations and kitchen upgrades.  Basements converted to living space could mean adding a bedroom and entertainment area or making the basement area a rec room, fitness room, game room, hang out area and more.  Turning the basement from a cold uninviting gray space to a bright warm area where people want to hang out in provides a potential 86% cost recovery after completion according to the report.woman with money  Cost recovery meaning that of the amount of money spent on the renovation 86% in this case will be returned to the owner in terms of a price increase in the value of their home.

Kitchens are always a big selling point for buyers.  A complete kitchen renovation usually means taking everything in the current kitchen out and starting over again with new flooring, cabinets, appliances and fixtures.  Complete kitchen renovations can provide a potential 75% cost recovery after completion.  A full renovation is not always needed though if things like the flooring are still good.  Some kitchen updates can mean simply painting the cabinets a different color to brighten up the kitchen.  Or the homeowner can consider putting in new cabinets.  If the appliances are old and outdated and the rest of the kitchen is fine, swapping out all the appliances is a great idea as kitchen updates have a 67% cost recovery. 

Bathroom renovations also draw in the buyers and there can be several bathrooms that need updating/refreshing in a home.  The primary bathroom with the attached primary bedroom could increase appeal for buyers with updates.  Depending on the price point of the neighborhood and where the home is located, adding in features found in other similar homes will help.  For example, if other homes in the neighborhood have upgraded with spa like features in their primary bathroom the homeowner can take advantage of those ideas when updating their bathroom.  

Is Renovating a Home Required Prior to Listing For Sale?

The short answer is no, a home does not require updates prior to listing for sale.  So long as the homeowner is pricing their home accordingly in relation to other homes being listed for sale in their immediate area.  Pricing a home like it has been updated when it in fact is outdated will result in a home sitting on the market with no interest from buyers.  Buyers are ready to make offers when the price makes sense for the condition for the home.  Today’s buyers are fully aware of home values and what updates mean in terms of the price they will offer.

Final Thoughts

Updating rooms to appeal to today’s buyers can help when it comes time to sell.  Buyers today appreciate homes with modern updates and features and many want move in ready homes.  Homes that are not updated can still be sold so long as they are priced accordingly.

Additional Resources

  • Guide to Buying a Fixer Upper Home - Make sure when buying a home in need to repairs that the buyer fully understands what they are getting it.  Doing it right can mean great savings and a home customized to the buyers desires.
  • Avoid These Mistakes When Selling a Home - Some of these mistakes, especially when combined with other mistakes, can lead to a very poor expeirnece when selling a home.  Learn about the mistakes and how to avoid them to have a successful sale.

About the author: The above article “Which Rooms Offer The Best Renovation Return On Investment” was provided by Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!

I service the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde ParkIndian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.

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