3 Home Additions for Building Equity

Once you’ve outgrown your first home, it’s time to move onto bigger and better things!

Maybe you started a family or maybe you’re making better money and you want to indulge a little. Regardless of why you’re looking to upgrade, you’re going to need a generous return on your current home for your next down payment!

This is why it’s helpful to understand which home additions will add value to your home. Keep reading to learn more!

Home Additions that Build Equity

While you may think that any improvement or project is going to build equity, that’s not necessarily the case.

Certain additions will add more value than others. These are:

1. Bathroom

If your home only has one bathroom, consider adding another.

While bathroom additions are pricey upfront, the return will be worth the cost. In fact, you should expect to recoup around 60% of what you paid for the addition!

Not only does adding a bathroom increase your home equity, but it makes your day-to-day life more convenient. When guests visit and stay overnight, it’s nice to have more than one bathroom.

Many potential buyers are looking for a home with more than one bathroom, so if you’re planning on adding to your house anyway, consider adding another bathroom!

2. Energy-Efficient Windows

Many buyers these days are looking for energy-efficient features in a home.

The days of shelling out hundreds upon hundreds of dollars for an energy bill because windows are old and drafty are coming to an end. Not only do you end up spending more money each month when you have to crank the heat or AC, but it’s uncomfortable to have inefficient windows in extreme temperatures.

Adding energy-efficient windows can save you around $500 per year on your monthly bill. Plus, the windows will better insulate the house, making it more comfortable on hot summer days and bitter cold winter nights.

For a mid-sized home, it typically costs around $7,000-10,000 to replace all the windows with energy-efficient ones. Compared to other additions, this home addition is much more affordable!

3. Deck

Who doesn’t like to kick back on a deck in the summer and grill up some yummy food?

When summer and spring roll back around, many buyers are on the hunt for a backyard with plenty of space for entertaining. If you don’t already have one, consider adding on a deck to your house!

You can get up to 90% of your investment back when you build a deck. Of course, your return will depend on the materials you use, but all in all, a deck is a great way to go about building equity on your property.

Home Additions to Avoid

As we mentioned before, some additions will increase your equity enough to make the cost worth it while others won’t.

Some additions can actually take value away from your home, depending on where you live! Here are some additions that may make your house lose value…

1. In-Ground Pool

This one may have you scratching your head and wondering, “why not?”

You may be thinking, “On a hot summer’s day, what’s better than lounging around your in-ground pool as you sip on one of your favorite drinks?”

While many of us couldn’t picture summer without an in-ground pool, others are much wearier of this feature.

Parents with young children typically avoid a house with an in-ground pool. Since the design of the in-ground pool makes it much easier for a child to fall in, most parents of younger children prefer an above-ground pool or a kiddie pool if anything.

Also, the pool itself is pricey to install and it will make your homeowner’s insurance rates go up. Unless you have your heart set on an inground pool, it may be best to wait until you move into a more permanent residence to install one.

2. Extravagant Kitchens

As we watch HGTV or Food Network, many of us dream of having a kitchen fit for a professional chef.

While the idea of an extravagant kitchen is appealing, in action, many buyers really aren’t interested. This is because the majority of buyers don’t need a $10,000 oven or three islands’ worth of prep space.

Most buyers just want something that’s practical and aesthetically pleasing. If you spend over $50,000 renovating your kitchen only to find that buyers don’t care about a kitchen of that caliber, your investment won’t be worth it.

If you’re a passionate chef who wants a luxurious kitchen, it may be best to wait until you get into a house that you plan on staying in for at least 10 years. When it comes to a temporary home, an over-the-top kitchen isn’t a hot selling point.

3. A Sunroom

While it’s hard to think of a better place to watch the sunrise as you enjoy your cup of coffee in the morning, adding a sunroom isn’t going to add much more value to your home.

Not only does a sunroom typically return less than half of your investment, but it can also get expensive to heat and cool. Since the windows are more likely to bring in a draft and sun beating through the windows will quickly heat up the room, it’s tricky to keep your sunroom at a comfortable temperature.

If you live on the water or in the mountains, you may notice a higher return since your sunroom is offering a great view. However, if you just have an average backyard, it may be best to skip this addition if you plan on selling after a couple of years.

Which Additions Will You Invest In?

If you’re planning on remodeling or adding to your home in an attempt to increase the value, it’s important to be strategic.

Putting your own personal preferences aside and adding rooms or features that will increase the value of your home will help you get a bigger return, AKA, a bigger down payment for a more permanent home!

Once you’re happy with your home additions, we’d be more than happy to help you sell with our real estate marketing tools. Reach out today to learn more about how we can help!