How to Get Your Money Out of House Additions & Renovations

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A market on the upswing gives you a better chance of breaking even or realizing a profit from an addition or renovation investment, advises. If the economy has suffered, look for signs of a turnaround, such as an increase in housing prices, housing sales and housing starts; a swell in hiring; and a boost in spending. These are a few indicators government economists use, NASDAQ Stock Market says. If you can wait for the ideal market conditions, moving into the next phases of the investment process can be less stressful and more lucrative.

Research the housing market in your area. Plan to keep your home’s price within the norm or average range of similar houses in the vicinity -- after you’ve completed the modifications. A home that’s priced too high or too low for an area can make potential buyers leery of its value.

Set a realistic budget. Decide how much you can or should spend on updates or additions without pricing yourself out of the housing market. Allot at least 15 percent of the funds for unforeseen complications or setbacks -- faulty wiring, unstable joists, mold or asbestos abatement -- that likely will arise. Allow up to 5 percent or even 10 percent of the home’s value for a good return on a bathroom remodel, the National Kitchen and Bathroom Association suggests. Spend up to 15 percent of the home’s value on your kitchen for a solid return, says the NKBA.

Add on only where needed. Additions, from the ground excavation to the foundation, framing, wiring, plumbing, drywall, trusses and roofing material -- to name a fraction of the necessities -- are time consuming and expensive. Build an entryway, if you can’t carve it from an adjoining living room or large kitchen, for example. Expand the kitchen, if it’s extraordinarily small. Create a third bedroom, if the home is an area that’s popular with young families. Envision the addition from every angle, but especially from the curb; it should appear to blend effortlessly with the home’s exterior.

Paint the walls throughout to get a big bang for your buck. Paint is inexpensive compared to its dramatic visual effect. Choose modern, neutral wall colors, which are acceptable to many people, and can update and brighten a home significantly. Avoid unusual or bold hues that can turn buyers away, or dark shades that make a home appear smaller.

Rework a dated kitchen. A clean, updated, well-flowing kitchen can convince a buyer to buy the home. Paint or replace the cabinetry -- whichever your budget allows. Replace retro-colored appliances -- almond, avocado, gold -- with white appliances to blend in with white cupboards, or stainless steel or black appliances to go with darker cabinets. Add new pulls and knobs.

Replace old light fixtures, switches, outlets, doorknobs and draperies to make the home visually appealing throughout.

Do the work yourself -- if you have the experience -- to save about half of your investment dollars on paid contractors. Contractors’ fees are often equal to or more than the cost of needed materials, such as flooring or windows.

Stage the home. Arrange the furniture to make the most of the home's newest renovations and additions. For example, group furniture near the center of a living room to expose new moldings, windows and a fireplace. Staged homes sell for 17 percent more money, and 2 to 3 times quicker than homes that haven’t been staged, the Real Estate Staging Association reports.

Clean and eliminate clutter so that dirt and an overabundance of belongings don’t detract from the money you’ve spent on improvements.


  • Investing in a home addition or in renovations is a costly risk. Speak to your lender and real estate agent to get a better prospective on timing and worthy improvements for your area.