Home improvement is the construction, repair, replacement, remodeling, alteration, conversion, or improvement of a residential structure or its appurtenances, including but not limited to basements, garages, attics, porches, fences, or walkways. It also includes the installation of heating and air conditioning systems, water heaters, roofs, windows, doors, paint, or other cosmetic treatments. In general, homeowners take on home improvement projects in order to make their homes more comfortable, functional and/or appealing. The most common types of home improvements are kitchen renovations, bathroom remodels, and additions. Other popular projects include installing a new driveway, swimming pool, patios and landscaping, or replacing siding.
Americans’ love of renovating their homes has provided a major boost to retailers like Home Depot, which reported a huge surge in sales during the pandemic lockdown. But deciding what to upgrade and how much it will cost can be overwhelming. And as with any investment, it’s important to consider the return on your project, or ROI.
A high ROI on a home improvement project can make a positive impact on your home’s value, as well as your quality of life while living there. However, it’s important to remember that ROI percentages can vary from one project to the next, and that the actual value of your home will depend on what people want in the neighborhood where you live.
To keep costs down, start by making a comprehensive list of what you want done. This will help you negotiate with contractors, lock in firm prices and avoid surprises that can blow your budget. Be sure to factor in any needed permits and inspections that may be required, too.
When it comes to choosing materials for a project, opt for midrange options rather than luxury items. This will give your home a fresh look without breaking the bank. Likewise, be sure to factor in a 10% to 20% contingency fund. You never know when unforeseen issues will crop up, such as discovering a rotten subfloor or shoddy work done during a previous remodel.
It’s also a good idea to talk with your real estate agent about what improvements are in demand in your area before starting the work. They can provide valuable feedback about which projects will make your home more attractive to buyers and improve its resale value.
When it comes to financing your home improvement project, personal loans and credit cards are usually the cheapest options. If that isn’t enough, you might consider a cash-out refinance, home equity loan or line of credit (HELOC), or contractor arranged financing.