Home Upgrades with the Lowest Return on Investment

Life is a balancing act, and upgrading your home is no different. Some upgrades, like a kitchen remodel or an additional bathroom, typically adds value to your home. Others, like putting in a pool, provide little dollar return on your investment.

Home ownership isn’t just about building wealth; it’s also about living well and being comfortable. But it’s also necessary to know what home improvements cost in the long run. Go in with your eyes wide open. Here’s why:

Outdoor Kitchen

Imagine being outside grilling steaks, blending margaritas, and washing dishes without ever leaving your patio kitchen.
The reality: For what it costs–on average $12,000-$15,000–are you really gonna use it? Despite our penchant for eating outdoors, families spend most leisure time in front of some screen and almost no leisure time outside. And according to the National Association of Home Builders’ 2013 What Home Buyers Really Want report, 35% of mid-range buyers don’t want an outdoor kitchen.

The bottom-line: Instead, buy a great gas grill, which will do just fine when you need to char something. If you’re dying for an outdoor upgrade, install exterior lighting–only 1% of buyers don’t want that.

In-Ground Swimming Pool

Floating aimlessly, sipping umbrella drinks, staying cool in the dog days of summer.
The reality: Pools are money pits that you’ll spend $17,000-$45,000-plus to install (concrete), and thousands more to insure, secure, and maintain. Plus, living in Ohio, you won’t use them as much as you think, and when you’re ready to sell, buyers will call your pool a maintenance pain.

The bottom-line: If your idea of making it includes a backyard swimming pool, go for it. But, get real about:

  1. How many days per year you’ll actually swim.
  2. How much your energy bills will climb to heat the water ($760-$1,845 depending on the temperature).
  3. What you’ll pay to clean and chemically treat the pool ($20-$100/month in-season if you do it yourself; $75-$165/month for a pool service).
  4. The fact that you’ll likely need to invest in a pool fence. In fact, some insurance carriers require it.

Backup Power Generator

The power in your area goes out, but not for you. You were smart enough to install a backup power generator. While the neighbors eat cold food by a flashlight beam, you’re eating pot roast from your oven and pumping out Rolling Stones tunes.

The reality: Power outages may seem to go on forever, but they don’t. Fifty dollars worth of batteries can power portable lights, radios, and TVs; a car adaptor will charge your cell phones and iPods; and some dry ice will keep freezer food cold for at least a couple of days.

The bottom-line: If you live in areas where power shortages are the rule, not the exception, spend the money for reliable backup power: Your still-frozen steaks, home office fax, and refrigerated food will thank you. But if the power goes out rarely, then installing a standby generator is overkill.

Nationwide, homeowners recouped 67.5% on their average $11,742 investment in a backup generator–one of the lowest ROIs on the annual Cost vs. Value Report. If you need occasional emergency power, a gasoline-powered portable generator ($200-$650) probably will suffice.

New Windows

Wouldn’t it be wonderful to have brand new windows that don’t stick, and slash your energy bills.

The reality: A $10,000 vinyl window replacement project will recoup about 70% of your investment at resale, and if they’re Energy Star-qualified, they can save you around $300 in energy bills per year.  So, plan to live in your house about another 10 years to recoup the cost of new windows.

The bottom-line: New windows are sturdy, pretty energy savers. But unless old window frames are thoroughly rotted, most windows can be repaired for a fraction of replacement costs. And if you spend about $1,000 to update insulation, caulking, and weather-stripping, you’ll save 10%-20% on your energy bill.

And remember, when you’re ready to buy or sell a home, contact a REALTOR, a member of the _____________________ Association of REALTORS.