Where to spend your money
You can find many articles on the internet about the most cost-effective improvements to make to your home. I believe that while there are certain inexpensive improvements that are always a good idea, with respect to more expensive improvements the generic judgments you find on the internet are wrong. The cost-effectiveness of various improvements depends on your neighborhood, your house, and the comparable sales (comps).
Is your house smallish, say 1,200 square feet? It might make sense to finish the basement and create a man-cave and a playroom. You could almost double the square footage of the home. See what the comps say.
I recently flipped a house in Lebanon that was a good-size house, around 2400 square feet on the first and second floors. The basement was unfinished, and the house lacked a deck. Usually, I wouldn’t finish the basement or add a deck to such a house. However, studying the comps, there was a huge difference between the sale price of similar homes with finished basements and decks vs. those without—on average more than a $30,000 difference. The ones without were selling for around $220,000 and the ones with were selling for around $250,000. That’s unusual and I don’t know why this neighborhood is like that, but when you have enough good comps, they don’t lie. It runs around $15 per square foot to finish a typical basement, including carpet and recessed lights. So I finished the basement and added a deck at a cost of around $15,000 and got $255,000 for the house. I probably came out ahead by around $20,000.
Kitchens and Bathrooms
Does your house have only one full bathroom, or one full and one half bathroom? If you can find a way to get two full baths, and don’t go crazy on the cost, you will make money on resale, because it’s a lifestyle difference having 2 full bathrooms. There are often ways to figure out how to accomplish this by sacrificing a coat or linen closet or something like that.
You will get more money on resale for a remodeled kitchen. But will you get your money back? Will you get more than you spent? Maybe not. But will you sell your house faster, because most of the competition has remodeled kitchens, and the ones without seem to be the ones that sit? That may very well be the case. Study the comps. Understand your personal priorities. Then make your decision based on information about your neighborhood, not nationwide statistics.
Certain things almost always have a positive return. Those are the maintenance items. Fresh paint is almost always a good choice if the house has some wear. A nice front door, to create curb appeal and a good feeling coming in, is important. New light fixtures, if yours are dated, is an inexpensive improvement that would generally be worthwhile. Decent landscaping is important for curb appeal as well.
They say “all politics is local.” So is bang-for-your-buck home improvement.