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Home Remodeling Tips
Pick Renovations and Improvements that pay off

If your remote control is stuck on Home and Garden Television, if you recognize Bob Vila's voice sight unseen, and you're on a first-name basis with the clerks at Home Depot, chances are you've caught the home improvement bug.

You're not alone. Today, Americans are sprucing up everything from Arizona tract homes and New England saltboxes to Florida condos and Denver Squares. About half of you prefer the challenge and savings of doing it yourselves, while others prefer to watch as contractors give new life to old rooms.

But when it comes time to sell, will you recoup the cost of that new master suite, state-of-the-art kitchen or dormered attic loft? The time to find out is before you pull out the power saw or contract for a home makeover.

Should you stay or should you go?

Both remodeling and relocating can be expensive. The difference, of course, is that the money spent on remodeling is reinvested into your house, and if you finance correctly, the interest on your payments can be tax deductible.

The American Homeowners Association estimates the total cost of moving to be at least 10 percent of your home's current value. In other words, if you can make things right with your home for less than 10 percent of what you could sell it for, it makes sense to stay put and fix it up.

If you have little choice but to move (a new job, for example), rule of thumb suggests you put the money just as carefully into your new house as you would your old home.

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Equity options

If you have the equity to match your total project cost, a traditional home equity loan might be your best bet. If you are unsure of how these loans work, visit the Federal Reserve's website for more information & review home equity basics.

If your improvements include energy-efficient upgrades (insulation, thermal windows, new HVAC system), you might also qualify for energy-saving loans through local utilities or related businesses.

Remodeling tips that pay off

According to a 2004 survey by Remodeling magazine that compares the cost of construction to likely return on investment (ROI) at resale, minor kitchen remodels rule over other remodeling projects: they return 92.9 percent of your investment. Minor kitchen remodels are followed closely by new siding at 92.8 percent. Here's what's hot in remodels, room by room:

Kitchen Remodels (View Kitchen Remodeling Videos)

Kitchens typically suffer the most wear and tear. And because kitchens tend to follow style and color trends, they often seem dated sooner than other rooms in the home. The most popular minor improvements include adding functionality with dual sinks and cooking stations, and cosmetic improvements such as under-cabinet lighting, marble or granite countertops and ceramic tile backsplashes. To add space, consider a walk-in pantry or breakfast alcove.

"Both younger buyers and baby boomers want a modern kitchen with the cooktop stove and nice cabinets, not to mention wine coolers and subzero refrigerators," says Mary Johnson, residential specialist with Premier Properties of Naples, Fla. "I think it does make a difference. Even if it's just a cooktop stove, they walk in and say, 'Oh, it's a remodeled kitchen!'"

Bathroom Remodels (View Bathroom Remodeling Videos)

Bathrooms have changed the most during the past century. Your grandparents may remember when they were outside. Your parents probably made do with just one. Today, homes that have more than one bathroom sell faster and fetch a higher price. A low to mid-range bath remodel (less than $10,000) placed third in the 2004 survey with a ROI of 90.1 percent. Popular renovations include skylights, couples walk-in showers, glass block windows and vaulted ceilings. Raised Jacuzzi tubs, ceramic tile floors and ceiling fans have become standard features in affordably priced new homes.

Bathroom additions ranked high in the survey as well. A low to mid-range bathroom addition (approximately $20,000) returned 86.4 percent; a high-end addition ($40,000-plus) fetched an 80.1-percent return. But finding space to add a bathroom can prove tricky; for best results, discuss your ideas with a contractor.

"You can't lose by adding a bath," says Johnson. "If you're remodeling, his-and-her dressing rooms, even his-and-her bathrooms, are big. Then the husband can shave and the wife can fix her hair without the shower steam. If money's tight, just replacing the water fixtures helps."

Family Rooms

Family rooms came into vogue after many American homes were built; you may face sacrificing other spaces (rooms, closets) to create one. To enlarge the space, try lowering the floor, opening the ceiling or expanding out with box-bay windows. According to the survey, adding a family room can be a wise (80.6 percent ROI) but costly ($50,000-plus) investment.

Bedroom Remodels (View Bedroom Remodeling Videos)

Bedrooms are always listed first in real estate descriptions for good reason: We spend nearly half our lives there. If you can put one in your attic, you're likely to recoup 82.7 percent of the estimated $35,000 cost of installation. Consider stacking your bathrooms to cut costs. Properly placed dormers and roof windows can help offset the add-on appearance.

Master suites have become more the rule than the exception in most hot real estate markets. If you are converting a bedroom into a master suite, try to locate the closet as a buffer between bedroom and bath, and enhance the suite effect with recessed lighting, sconces and built-in adjustable reading lights. A mid-range master suite ($70,000-plus) will return 80.1 percent; an upscale master ($135,000-plus) a bit less, at 77.6 percent.

Decks

Outdoor spaces expand your living area and you rarely lose by making your home larger, be it exterior or interior renovations. A $7,000 deck addition placed fourth in ROI at 86.7 percent.

Basements and Sunrooms

Unused or renewed spaces might not top the list of money-smart remodeling projects, but a basement makeover ($47,000-plus) can still command a 76.1-percent return. A sunroom addition ($30,000-plus), which made the survey for the first time, might fetch a 70.8-percent return.

Windows

Windows quickly and inexpensively add to a home's volume, and volume is the buzzword in real estate these days. So it's no surprise that your return on new glass is excellent, whether you're contemplating a mid-range window replacement (less than $10,000) at 84.5 percent or an upscale replacement ($15,000-plus) at 83.7 percent.

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