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The five home improvement projects with less return

Home improvements with bad ROI

Whether you’re prepping your home to sell or just trying to make some strategic upgrades, it’s important to consider the return on investment before beginning home improvements. Here are the five midrange upgrades with the lowest ROI, as stated in the Remodeling 2015 Cost vs. Value Report for the Minneapolis area. Of course, every upgrade is different, so we’ll also offer advice on keeping costs down, and when to proceed with the more expensive upgrades anyway.

1. Sunroom Addition

Cost: $77,045
Resale value: $32,570
Cost recouped: 42%

In this major project, the homeowner adds a “200-square-foot room, including footings and slab-on-grade foundation.” The addition also includes walls with plenty of windows, roof glazing with 10 large venting skylights, an interior ceiling fan, window treatments and a tile floor.

There’s no getting around it – you can’t really keep costs down when adding a sunroom to your home. If you plan to stay in the residence for many years, and would get plenty of use out of this room in the fall, summer and spring, a sunroom is a great addition. But while buyers would certainly love another social space, they simply aren’t going to pay for the full cost of the room.

2. Home Office Remodel

Cost: $29,644
Resale value: $12,596
Cost recouped: 43%

According to the Cost Vs. Value Report, the average homeowner would spend nearly $30,000 on a home office remodel. The upgrade is based on converting an existing 12-by-12 foot room and includes custom cabinetry, laminate desktop, a work station and wall cabinet storage. Additionally, the room would be rewired for a computer, cable and a fax machine, and includes carpet, drywall interior and painted trim.

It should be possible for some homeowners to decrease the cost of this remodel – particularly if the room has previously been used as a bedroom or a shared space. In that case, you should be able to nix the carpet and drywall and much of the rewiring. Finding custom cabinetry and the right work station can be expensive, but it’s possible to find cheaper options at IKEA or through discount sites like Overstock.com. If you order office cabinetry or furniture online, be sure to measure very carefully! Last, if you don’t mind an office that resembles a more corporate environment, you can call local office parks to see if they have any furniture for sale from previous tenants.

All in all, it may be difficult to justify a home office upgrade, which will recoup less than half its renovation costs. However, if you’re planning to stay in your home for years, and have a deep need for a work space at home, you can find workarounds to keep the cost down. One last word: Some buyers may prefer an additional bedroom instead of a room that’s been repurposed as a home office. So as you remodel, consider a more flexible space and cabinetry/storage that could be removed easily to incorporate a bedroom set.

3. Backup Power Generator

Cost: $12,288
Resale value: $5,432
Cost recouped: 44%

This upgrade installs a “modular electric backup system” that has capacity for 70 amps of power. The generator project would also require a concrete area, switches, grounding rod, cables, a fuel line and a storage battery.

If your home routinely loses power during Minnesota’s fierce winter storms or thunderstorms, then the cost of a backup generator may be worth it to you. But if you are usually unaffected by inclement weather, or plan to sell your home soon, it should be easy to nix this costly purchase and implementation.

4. Bathroom Addition

Cost: $40,445
Resale value: $19,294
Cost recouped: 48%

In this undertaking, a crawlspace is converted into a 6-by-8 foot bathroom with poured concrete walls. The interior of the room includes a marble vanity/sink combo, tub/shower with ceramic tile, standard toilet, mirrored medicine cabinet and a linen closet. Last, the room is lit and wired for electric, fully painted and has a ceramic tile floor.

As with the home office remodel, you can save some money on this upgrade by bargain hunting for pieces like the sink/vanity, shower tile, medicine cabinet and toilet. The difficulty with this may be in finding pieces that are on sale, but still complement one another.

Overall, homebuyers love to see more bathrooms, but a $40,000 upgrade on a $160,000 home likely won’t net you $200,000. When deciding on a bathroom addition in Minnesota or western Wisconsin, pay attention to how the bathroom would help you in addition to a buyer. For example, if you have three full bedrooms and only one bathroom, another bathroom would greatly ease the morning chaos. Adding a bathroom to a finished basement will be extra convenient, especially if your overnight guests stay downstairs. Overall, a bathroom addition is best if you’re outgrowing your home but plan to stay a few more years before selling.

5. Garage addition

Cost: $53,038
Resale value: $28,000
Cost recouped: 53%

In this upgrade, a 26-by-26 foot freestanding two-car garage is added to a property. The addition includes shingled roofing, a breaker and wiring for automatic garage openers and interior and exterior lighting. The walls, floors and ceilings are all unfinished.

If you build a two-car garage addition, you likely need it and plan to stay in the home for a while. Whether you are looking for car or boat storage, or even need a place to park your riding lawnmower and other outdoor “toys,” be sure to think a garage addition through before proceeding. Buyers usually like more garage space and storage, but they are unlikely to pay for the full cost of the upgrade.

The fine print

Many remodels, especially additions, will require a permit from the city where you live. Do not begin construction on a new garage, sunroom or bathroom without going through the proper channels. Residents of Minneapolis can call 311 to see if they need to get a permit. Residents of greater Minnesota or Wisconsin should call their city’s Department of Planning to see if a permit is necessary.

Remember that your home’s space and needs might not be a direct parallel to the projects represented here, and you may be able to find discounts on everything from windows to fixtures and lighting to keep costs lower. Work with a licensed contractor to get a quote in advance and to see if you can make the improvements on a lower budget.

Wondering what the best remodels are for resale value? Check out the Remodeling 2015 Cost Vs. Value Report by selecting the West North Central Region, then Minneapolis, from www.costvsvalue.com.

© 2015 Hanley Wood, LLC. Complete data from the Remodeling 2015 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.

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