How to Maximize Your Home’s ROI

A home remains one of the most expensive and important investments a person will make during their lifetime. Like many other investment types, investing in a home requires knowledge, patience, and an understanding of both the short and long game. In order to maximize your home’s investment power, keep the following five truths in mind. 

As an investment, home ownership has high earning potential with a historically good rate of return.

ROI is an acronym that stands for “return on investment” and according to the S&P 500 Index, the average annual return on investment for residential real estate in the United States is 10.6 percent. ROI is a metric used to identify the profit earned on a real estate investment after deducting all associated costs. To determine your ROI, use a basic equation to calculate the number. Subtract your sale investment cost from your sale price and then divide by the investment cost to get your ROI. 

Real estate agents and other professionals will help you make good long-term decisions about your home’s potential. 

A professional real estate agent will intimately know your local market dynamics. They will be able to help you dial into which home improvements may add greater value to your home or which ones will detract from or not be fruitful. Typically, agents also have connections in various industries and may be able to recommend contractors or other specialty providers to help you complete renovations and repairs. 

The adage, “You have to spend money to make money,” is still true, but spend it in the right places. 

Most of the time, home ownership demands that in order to maintain or upgrade your home, you will need to be prepared to spend money. However, strategically spending money in the right places at the right time in order to keep your home in demand and competitive when you’re ready to sell is where you will see your ROI come into play. Forbes shares a list of its top ten recommendations where your dollars go the farthest, and Fortune Builders shares a list that breaks down specific percentages of specific ROI home improvements. 

Prioritize upgrades that add physical square footage or make the home feel more spacious. 

When possible, keep in mind that to maximize ROI, you want to make sure your home is showing its greatest potential to prospective buyers. Whether you choose to finish out an attic or basement and physically add liveable square footage, or simply want to stage your home to show off its most spacious side, this is a huge factor when considering your return on investment. With an increase in multigenerational living as well as a rise in the work-from-home culture, a home with accentuated space options pays off. 

Outdoor improvements enhance curb appeal and offer improved outdoor living solutions.

Improving your home’s outdoor space can vary in both cost and complexity. From pulling weeds, reseeding your yard, or sprucing up your mulch and flowers, all the way repainting your exterior, or replacing your garage door, these enhancements will likely bring a great return on your investment. Additionally, enhanced outdoor living areas like porches, decks, firepit areas, or even outdoor kitchens and pools are luring today’s buyers with the appeal of bonus living opportunities outside the walls of the house. 

Jessica Parnell

Jessica Parnell

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