The 10 Best ROI Home Improvements: High-Impact Renovations For Your Investment Property

After eagerly binge-watching renovation shows, are you ready to flip that run-down property you bought for cash? Awesome! But before you jump in, here’s a heads-up: Those fancy renovations from TV will cost you a lot of money. They're glossy and luxurious, but they can seriously eat your profits.

Thankfully, straightforward renovations can also improve the quality of that flip while adding to its fair market value. Even better, you don't have to scratch your head over them since we have already picked out renovations that increase home value and even curated tips on paying for them in our guide to the best ROI home improvements. Below, you'll find everything there is to know about today's best ROI home improvements, starting with the following:

• Not All Home Renovations Add Value
• The 10 Best ROI Home Improvements To Maximize Profits
• How To Pay For The Best ROI Home Improvements
• Final Thoughts On The Best ROI Home Improvements

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*Before we begin our guide on the best ROI home improvements, we invite you to view our video on How To Get Into Real Estate With No Money! Host and CEO of Real Estate Skills, Alex Martinez, provides the perfect guide for beginners to invest in real estate using no capital of their own!

Not All Home Renovations Add Value

Although all home remodeling projects can spruce up a property, not every renovation adds to its market value.

For instance, adding custom features such as built-in seating and decorative railing design will undoubtedly give a deck a luxurious appearance. However, these custom elements come at a higher price tag. Plus, they may not even align with the preferences of the broader market.

Such a project either reduces your profit margin or forces you to increase the listing price to achieve profitability, potentially limiting the property’s appeal among potential buyers.

Similarly, renovating a bathroom into a spa-like space may be one of your favorite home improvement ideas, but it may also significantly dent your renovation budget. Additionally, it’ll require specialized maintenance, which may be a turnoff for some buyers.

Simply put, some home improvement projects enhance a property's aesthetic and qualitative value, but their impact on its appraised value may be minimal because appraisers usually focus on functional upgrades rather than decorative ones. If your goal is to achieve the highest ROI, we’ll recommend a handful of home renovations that add value in 2024.

The 10 Best ROI Home Improvements To Maximize Profits

According to Remodeling by The Journal of Light Construction, here are the best home remodeling projects you should take on if you want to maximize the profits you earn from selling your property or a house-flipping project:

1. Wood Window Replacement
2. Midrange Bathroom Remodel
3. Vinyl Window Replacement
4. Minor Kitchen Remodel With Midrange Appliances
5. Fiber-Cement Siding Replacement
6. Vinyl Siding Replacement
7. Steel Entry Door Replacement
8. Manufactured Stone Veneer Siding Replacement
9. Garage Door Replacement
10. Electrical HVAC Conversion

Check out the detailed explanations of how these home improvement projects maximize your returns on investment:

1. Wood Window Replacement

• Average Job Cost: $24,376
• Average Resale Value: $14,912
• Average Cost Recouped: 2%

Of all the home renovations that add value, a wood window replacement may be the most overlooked. With a job cost of $24,376 and a resale value of $14,912, wood windows may recoup less money than desired upfront. However, they can get you a high-ticket buyer, consequently enhancing your returns on investment. How? Wood windows possess a classic, timeless aesthetic that significantly enhances a home's curb appeal; this makes it more attractive to prospects, making them more inclined to pay the listing price.

Wood windows also offer superior insulation, leading to long-term energy savings in heating and cooling costs; this appeals to regular homebuyers and attracts eco-conscious buyers who prioritize energy efficiency, broadening your target market.

Furthermore, wooden windows are endlessly customizable, allowing prospects to tailor them to fit their preferences. This versatility broadens your target housing market by attracting buyers with varying aesthetic preferences.

The result? The property has heightened interest, allowing you to set a higher asking price. Therefore, despite only recouping 61% of the remodeling cost, wooden windows are one of the best ROI home improvements in 2024 because they make homes more attractive in a highly competitive housing market.

2. Midrange Bathroom Remodel

• Average Job Cost: $24,606
• Average Resale Value: $16,413
• Average Cost Recouped: 7%

We all love a spa-like bathroom, but if you want the highest ROI home improvements, a simple remodel over a major bathroom remodel is the way to go. Why? Bath remodels are generally among the priciest house projects around.

A midrange bathroom remodel involves enhancing the bathroom's appearance, functionality, and amenities without completely gutting the living space or using top-of-the-line fixtures. This approach balances cost and quality, ensuring optimal returns while enhancing the property's appeal to buyers. That said, here are some midrange bathroom remodel ideas that make a big difference:

• Opt for a porcelain-on-steel tub as it is relatively affordable compared to cast iron or acrylic materials.
• Replace the standard shower head with a rain shower fixture.
• Install a new single-lever temperature and pressure-balanced shower control.
• Replace the vanity with a new one.

3. Vinyl Window Replacement

• Average Job Cost: $20,091
• Average Resale Value: $13,766
• Average Cost Recouped: 5%

Windows significantly influences a property's curb appeal, and opting for vinyl during your home improvements offers numerous benefits. Vinyl is the most cost-effective window material for both purchase and installation. Therefore, using it immediately reduces renovation costs, allowing you to increase your profit margin.

Vinyl is also exceptionally durable and resistant to rust and corrosion. It requires minimal maintenance, is energy-efficient, and is highly customizable. Updating the windows with this material will enhance the property's appeal to prospective buyers.

In essence, renovating a property with vinyl windows enhances its appeal, increasing demand among buyers and eventually enabling you to sell at a price that yields a healthy return on investment.

4. Minor Kitchen Remodel With Midrange Appliances

• Average Job Cost: $20,091
• Average Resale Value: $13,766
• Average Cost Recouped: 5%

One room stands the test of time on today’s best ROI home improvements: the kitchen. This room plays a central role in any living space. As a result, it often tops the list of priorities for potential buyers, making a kitchen remodel crucial when selling a property. Sadly, kitchen remodels are costly yet yield little ROI. In fact, a major kitchen remodel can cost up to $150,000 but yield returns of only about $50K. Fortunately, as with the bathroom, a minor kitchen remodel can offer significant improvements without breaking the bank.

A minor kitchen remodel focuses on simple updates that enhance the functionality and aesthetics of the kitchen space. For example, a minor kitchen renovation would involve refacing cabinets with new drawer fronts and wood panels rather than completely replacing them. It'll refresh their appearance and functionality at a fraction of the cost. Similarly, swapping out old appliances for modern, energy-efficient models can significantly enhance the value of your home.

Even seemingly minor changes, like applying a fresh coat of paint, can substantially spruce up the kitchen space, making it appealing to buyers. A well-executed minor kitchen remodel can increase the property's resale value.

5. Fiber-Cement Siding Replacement

• Average Job Cost: $19,361
• Average Resale Value: $17,129
• Average Cost Recouped: 5%

If vinyl siding doesn't tickle your fancy or doesn't complement the property's architecture well, consider fiber cement. It mimics wood grain and is cheaper than most siding materials, thus reducing its overall costs and allowing you to put some money back into your pocket. Plus, it offers better resale value than vinyl siding, further increasing the property’s profitability. Fiber-cement siding is also eco-friendly, relatively durable, low maintenance, and energy efficient.

All these factors make it appealing to potential buyers, making it one of the best home renovations that add value.

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6. Vinyl Siding Replacement

• Average Job Cost: $16,348
• Average Resale Value: $15,485
• Average Cost Recouped: 7%

Vinyl siding is a plastic-like material that resembles wood siding; it’s also one of the best ROI home improvements you can make. If you want to renovate the siding, it’s among the materials you should consider for the best return on investment in home improvements.

Its ease of installation makes it affordable due to lower purchase costs and minimal installation fees. Opting for vinyl siding over materials like brick could save a lot of money in terms of siding purchase and installation costs. Moreover, you can install it yourself, further slashing renovation costs to boost your returns.

Beyond its affordability, vinyl siding is easily repairable and never requires repainting or refinishing. These qualities make it a low-maintenance siding option that appeals to most buyers. Its durability and energy efficiency further enhance its appeal.

Simply put, using vinyl siding increases your returns by reducing the cost of home remodels and increasing the property's attractiveness to buyers. Consequently, it's one of the best home renovations that add value.

7. Steel Entry Door Replacement

• Average Job Cost: $2,214
• Average Resale Value: $2,235
• Average Cost Recouped: 9%

When potential buyers approach a property, the front door is usually the first feature they see. Therefore, renovating your property with a quality door can significantly impact their first impression. While there are plenty of material options, a steel entry door will result in a high ROI.

Steel doors boast superior strength and resist forced entry and even fire. They also often have multi-point locking systems and reinforced frames. Consequently, they instantly provide buyers with peace of mind regarding their security and the safety of their belongings.

Steel is also resistant to wear and tear, meaning the buyer won't have to worry about maintenance or replacing the door every few years. Moreover, steel doors come in a wide range of designs, allowing you to select one that best complements and enhances the property’s architecture.

So, while the initial cost of a steel entry might be slightly higher than that of other door materials, it enhances the property's appeal in the real estate market. The heightened interest justifies a higher listing price, allowing you to achieve the best returns. All things considered, a steel entry door is one of the best return on investment for home improvement projects you can take on.

8. Manufactured Stone Veneer Siding Replacement

• Average Job Cost: $10,925
• Average Resale Value: $11,177
• Average Cost Recouped: 3%

Homebuyers are drawn to organic materials like stone and rock in a property’s architecture for their aesthetic appeal and association with sophistication and luxury. However, these materials often spot a hefty price tag. Fortunately, there’s a cost-effective alternative: stone veneer. Consequently, stone veneer has made the list of the best ROI home improvements.

Stone veneer, as the name suggests, looks like natural stone but is much cheaper. Popularized in the 1950s, it’s incredibly versatile and can be installed on various surfaces, from siding to entryways to statement walls. It provides the timeless elegance of natural stone yet costs nearly a fraction of it.

If you’d like to add a unique and classic touch to your property’s curb but don’t want to blow the renovation budget, consider using stone veneer as the siding. Not only is it affordable, but it's so easy to install that you can DIY it to further save on renovation costs, ultimately maximizing your sale proceeds. As a result, it's one of today's best home renovations that add value to a project.

9. Garage Door Replacement

• Average Job Cost: $4,302
• Average Resale Value: $4,418
• Average Cost Recouped: 7%

The garage door is another project to add to your list to achieve the best ROI for home improvements.

As a prominent feature of a home’s exterior, updating it with a modern, aesthetically appealing option can leave a strong first impression on buyers.

Beyond appealing to buyers and increasing their interest in the property, a garage door consistently ranks among home improvements with the highest ROI.

To maximize your ROI from a garage door remodel, set a budget, compare the pros and cons of the available types and materials, and ensure you pick one that matches the property's architectural style.

10. Electrical HVAC Conversion

• Average Job Cost: $17,747
• Average Resale Value: $18,366
• Average Cost Recouped: 5%

As consumers shift towards eco-consciousness, the demand for energy-efficient homes is rising. Enhancing your property’s energy efficiency is thus among the highest ROI home improvements.

Investing in energy-efficient appliances during a minor kitchen renovation is one way to do it. But if you want to appeal to eco-focused buyers, swap the fossil-fuel-burning furnace with an electric heat pump. Even more impressive is that this renovation won’t cost as much since installation of an electric pump is easy and cheap, allowing for a wider profit margin.

Prospective homeowners can reduce their carbon footprint, electrical bills, and number of household appliances by ditching energy-guzzling air conditioners. Moreover, electric HVAC operates more quietly and safely than fuel-dependent models since they aren’t connected to fuel lines.

Converting from a fuel HVAC to an electric one enhances the property’s attractiveness among potential buyers. Plus, such an upgrade justifies a higher listing price, making it one of the best ROI home improvements.

Read Also: How To Find Buyers For Real Estate

How To Pay For The Best ROI Home Improvements

Now that you know what adds value to a home, check out some of the financing options for your home remodeling projects:

• Private Loans: Private lenders such as real estate investors often issue these loans. As a result, they usually have a quicker approval process than traditional loans. Additionally, because they're private, these lenders are often accommodative of individuals with less-than-perfect credit and are often more willing to finance remodeling for properties with significant repairs; this makes private loans a suitable option for home renovation projects requiring immediate funding, such as house flipping projects. However, in exchange for leniency in lending terms, private loan lenders typically charge high interest rates, require collateral, and offer short repayment terms.
• Hard money loans: Also known as bridge loans, hard money loans are short-term loans typically used in the real estate industry. Private investors and non-bank entities such as credit unions often issue them. Hard money loans are short-term and have higher interest rates than traditional loans. On the bright side, loan lenders are often more flexible regarding credit history, income and employment, or property condition. As a result, hard money loans are easy for borrowers who need quick financing for property renovations.
• Home Equity Line of Credit (HELOC): If you intend to hold onto the property for a while before you sell, its home equity line of credit (HELOC) could be a suitable source of financing. This form of financing lets you borrow from the equity you have in the property by using it as collateral. It also features quite impressive terms—a fixed rate with terms ranging from five to 30 years. Plus, it’s usually issued as a lump sum, and you can borrow up to 100% of the property’s equity, making it possible to cover your entire remodeling budget. The downside is that it comes with 2% to 5% closing and separate origination fees. Plus, with the money issued as a lump sum, you've got to carefully budget for the renovations to ensure every penny is put to good use. Otherwise, you may end up with debt and unfinished renovations.
• FHA203(K) Rehab Loan: If you have a credit score over 600, an FHA 203(K) is undoubtedly one of the best types of financing you can leverage for home remodeling. This loan, in full, is the Federal Housing Administration rehab loan and is specifically designed for real estate rehabbing projects, particularly older properties. Even better, applicants are usually approved not just for renovation funds but also for property purchase costs. The loan requires a down payment of only 3.5% and has lower-than-average interest rates. Nonetheless, FHA loans have upfront and ongoing mortgage insurance premiums. The minimum loan amount is $5k, making it less suitable for small remodeling projects. Plus, some home improvements may not be eligible, and you may not qualify if the property is relatively new.

Read Also: 9 Best Hard Money Lenders For Beginners & First-Time Investors

Final Thoughts on The Best ROI Home Improvements

Home improvement projects don't have to be costly to be functional, and you don't have to overhaul everything. As you've seen from our list of home improvements with the best ROI, you can do the least yet enhance a property's functionality and aesthetic appeal, consequently getting the most value from its sale.

As you embark on your house improvement projects, consider the options above to maximize what you make from your house-flipping hustle or from selling your personal property.

Ready to Take the Next Step in Real Estate Investing? Join our FREE live webinar and discover the proven strategies to build lasting wealth through real estate.

Whether you're just getting started or ready to scale, we'll show you how to take action today. Don't miss this opportunity to learn the insider tips and tools that have helped thousands of investors succeed! Seats are limited—Reserve Your Spot Now!

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.