Top home improvement projects with the best return of investment (ROI)

If you’re considering investing in your home, you’re not alone. With housing prices and mortgage rates at historic highs, many homeowners are choosing to remodel rather than move. Strategic renovations not only make your home more enjoyable for your family but can also significantly boost its value when it comes time to sell. In this comprehensive guide, we’ll explore the home improvement projects that deliver the highest return on investment (ROI), how to prioritize your upgrades, and tips to maximize every dollar spent.

Why ROI Matters in Home Improvement

Return on investment (ROI) is a crucial metric for homeowners who want to ensure their renovation dollars are well spent. ROI measures how much of your renovation costs you’ll recoup through increased property value. For example, if you spend $10,000 on a project and your home’s value increases by $8,000, your ROI is 80%. Not all projects are created equal—some upgrades pay for themselves (or more), while others are better suited for personal enjoyment than financial gain.

Start with Essential Repairs and Maintenance

Before diving into cosmetic upgrades, address any critical repairs that could affect your home’s safety, functionality, or ability to sell. These foundational projects often offer the highest ROI because they prevent further damage and reassure buyers that the home is well maintained.

For example, roof replacement is a smart investment. A leaking or aging roof is a red flag for buyers, and replacing it can recoup up to 71% of its cost. It’s often necessary to pass inspection and can be a deciding factor for potential buyers. Similarly, upgrading your HVAC system can be a game changer. An outdated or failing heating and cooling system can be a dealbreaker. Modern, energy-efficient systems not only make your home more comfortable but also attract buyers who want to avoid future expenses.

Garage door replacement is consistently ranked as the top ROI project, with returns often exceeding 100%. A new garage door enhances curb appeal and security, making a strong first impression. Window and siding replacement are also high on the list. New windows and siding improve energy efficiency, reduce maintenance, and dramatically boost curb appeal. Fiber-cement siding and vinyl windows, in particular, offer returns close to or above 90%.

Tip: Prioritize repairs that address safety, weatherproofing, and structural integrity before moving on to aesthetic upgrades.

Exterior Improvements: Curb Appeal Pays Off

First impressions matter. Exterior upgrades are among the most cost-effective ways to increase home value and attract buyers. Projects like garage door replacement, entry door replacement, manufactured stone veneer, siding replacement, window replacement, and deck or patio additions all offer impressive ROI.

Garage door replacement, for instance, averages a 100% or higher ROI. This upgrade is a no-brainer for most homeowners because it’s relatively affordable and delivers instant curb appeal. Entry door replacement, especially with a steel door, can nearly double your investment, offering both security and a fresh look. Manufactured stone veneer gives your home’s exterior a high-end appearance and can return over 150% of your investment. Siding replacement not only makes your home look newer but also protects it from the elements. Fiber-cement siding, in particular, is durable and offers an ROI above 80%. Deck or patio additions are increasingly popular as outdoor living spaces. Adding a deck or patio can yield returns between 70% and 90%, depending on materials and design.

Kitchen Remodels: Focus on Minor Upgrades for Maximum ROI

The kitchen is the heart of the home and a major selling point for buyers. However, the scope of your remodel matters—a minor kitchen renovation can offer nearly double the ROI of a major overhaul.

Minor kitchen remodels focus on cosmetic updates—refacing cabinets, replacing countertops, updating appliances, and adding a fresh coat of paint. These projects can recoup up to 96% of their cost, making them one of the smartest investments you can make. In contrast, major kitchen remodels, while appealing, often see ROI drop significantly, often below 50%. Unless you plan to stay in your home long-term, keep your upgrades moderate.

Smart kitchen upgrades include refacing or repainting cabinets instead of replacing them, updating hardware and fixtures, installing energy-efficient appliances, replacing countertops with quartz or granite (but avoiding overspending), adding a stylish backsplash, and improving lighting with LED fixtures or under-cabinet lights.

Tip: Set a clear budget and avoid over-customizing. Choose neutral styles and finishes that appeal to a broad range of buyers.

Bathroom Remodels: Small Changes, Big Impact

Bathrooms are another high-traffic area where strategic updates can pay off. Like kitchens, modest improvements generally offer the best ROI. A midrange bathroom remodel can recoup 60-80% of its cost, depending on your region and the materials used. Upscale remodels, however, see ROI drop to around 42-49%, so it’s wise to avoid luxury upgrades unless they’re for your personal enjoyment.

High-ROI bathroom upgrades include replacing outdated fixtures like faucets, showerheads, and lighting; installing a new vanity or refinishing the existing one; regrouting tile or installing new tile flooring; adding energy-efficient, water-saving features; and improving ventilation with a new exhaust fan.

Tip: Stick to classic, clean designs and avoid overly trendy features. Consider breaking the project into phases if budget is a concern.

Backyard and Outdoor Living: Extend Your Space

Outdoor spaces have become more valuable than ever, serving as extensions of the home for relaxation and entertainment. Well-maintained landscaping can double your investment, making it one of the highest-ROI projects. Focus on healthy lawns, trimmed shrubs, and colorful plants to create a welcoming atmosphere.

Adding a deck or patio adds functional living space and is highly desirable in most markets. Choose quality materials and a design that complements your home’s architecture. Outdoor kitchens and fire pits are increasingly popular, though they offer slightly lower ROI. These features are best for homes in regions where outdoor living is possible most of the year.

Tip: Start with basic landscaping before adding luxury features. A clean, inviting backyard is universally appealing.

Energy Efficiency and Smart Home Upgrades

Modern buyers are looking for homes that are both comfortable and cost-effective to run. Energy-efficient upgrades can attract buyers and save you money in the meantime. High-ROI energy upgrades include installing energy-efficient windows and doors, adding insulation to attics and walls, upgrading to a smart thermostat, replacing old appliances with ENERGY STAR-rated models, and installing LED lighting throughout the home.

Smart home technology—such as smart thermostats, smart lighting, and security systems—is increasingly in demand and can help your home stand out in a competitive market.

Painting and Cosmetic Updates: Low Cost, High Impact

A fresh coat of paint is one of the most affordable ways to transform your home’s appearance and increase its value. Neutral, modern colors appeal to the widest audience and make spaces feel clean and updated. Other quick cosmetic upgrades include updating light fixtures and hardware, replacing worn carpeting or refinishing hardwood floors, and adding new house numbers or a stylish mailbox for instant curb appeal.

Projects with Lower ROI: Proceed with Caution

Not all upgrades will pay off. Some projects are best done for personal enjoyment rather than financial gain. Luxury upgrades, such as high-end kitchens, bathrooms, and primary suite additions, rarely recoup more than 50% of their cost. Swimming pools, while desirable in warm climates, can limit your buyer pool and have high maintenance costs. Extensive additions, like adding significant square footage, can have diminishing returns, especially if it makes your home the largest in the neighborhood.

Tips to Maximize Your ROI

• Plan Ahead: Set a clear budget and stick to it. Over-improving for your neighborhood can limit your returns.

• DIY Where Possible: Sweat equity—doing some work yourself—can boost ROI, especially for painting, landscaping, or minor repairs.

• Consult Local Experts: Real estate agents and contractors can advise on which projects are most valued in your area.

• Obtain Necessary Permits: Ensure all work is up to code to avoid costly issues during resale.

• Keep It Classic: Choose timeless designs and neutral finishes that appeal to the broadest range of buyers.

Frequently Asked Questions (FAQ)

1. What home improvement project has the highest ROI?

Garage door replacement consistently offers the highest ROI, often returning 100% or more of the investment. It’s a relatively low-cost project that dramatically improves curb appeal and security.

2. Is it better to do a minor or major kitchen remodel for resale?

Minor kitchen remodels offer a much higher ROI—up to 96%—compared to major overhauls, which may only recoup 38-50% of their cost. Focus on cosmetic updates and energy-efficient appliances for the best return.

3. How can I boost my home’s curb appeal quickly?

Simple projects like painting the front door, updating house numbers, replacing exterior lighting, and maintaining landscaping can make a big difference in curb appeal with minimal investment.

4. Do energy-efficient upgrades really add value?

Yes, energy-efficient upgrades like new windows, insulation, and smart thermostats are attractive to buyers and can increase your home’s value while saving you money on utilities.

5. Should I get permits for my renovation projects?

For most major renovations, especially those involving structural changes, electrical, or plumbing work, permits are required. Always check local regulations and obtain necessary permits to protect your investment and ensure a smooth sale in the future.