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Which Home Improvements Add The Most Value?


Throwing money at a property does not guarantee success. The reality is that finding the right updates, upgrades and improvements is not about money, but rather doing the right work for the market. Simply throwing money at a property and expecting a return will leave you frustrated and disappointed. Savvy investors know that not all updates are created equally. A large infinity edge swimming pool sounds great on the surface, but if it takes up most of the backyard it will be viewed as a negative rather than a positive. On projects with a limited budget just a few mistakes will leave you in the red scrambling for ways to recoup your investment. Without many options you will quickly turn a positive property into one where you are forced to take what you can get and move on. Here are five property improvements that look good on the surface but are usually more trouble than they are worth.

  • Swimming pool. As we mentioned, a swimming pool does not work for every property. For starters, the average in-ground pool can quickly add tens of thousands of dollars to your budget. More importantly, a pool is a niche property item that not every homeowner wants. Not only can they be a pain to maintain, but they can eat up most of the useable yard space. Like most everything else with a property you need to evaluate the market. If your property is in a warm weather location like Florida or California a pool makes more sense than in Connecticut or Minnesota. From there you need to consider the yard space and layout. Does a pool fit the neighborhood more than simply using the space as a play area? If so, you need to accept that your expense on the pool might not provide an equal return. You may need to spend a little more and even than there are no guarantees.
  • Yard improvements. There are certain property upgrades that are taken for granted. Buying a property with an overgrown garden or large bushes everywhere may seem like a fairly easy fix. Anyone that has ever had to have extensive landscaping knows that this can quickly become a mess. Cutting down trees, removing bushes and replacing the grass does not come cheap. However, you understand just how much first impressions matter and that this is a necessity rather than a luxury. Prospective buyers only look at the finished product and don’t care how much work you had to do. They will not pay a premium for something that is considered a basic item, such as yard maintenance. Whatever you do to the yard should be done to get a buyer in the door and not add value to the property. This doesn’t mean you are throwing money away, but any upgrades you make to the yard will not do much to move the needle on the value.
  • Overbuilding. Every buyer wants to live in the nicest home possible. They would all love to have the most modern amenities, a large walk in closet and a wrap around deck to watch the sunset. However, they are not all willing to pay a premium for it. When rehabbing one of the worst things you can do is to over-improve for the market. Having the biggest, most expensive house on a street with below market homes is not appealing to buyers. Not only will this eventually hurt the value, but practically speaking you will have a tough time finding a buyer. You can make the home nice and modern, but you should have an idea of the market and where the high point is. Blasting past the highest comparable sale in the neighborhood sounds good, but is often a giant waste of time and money.
  • Specific upgrades. When considering any home improvement you need to take personal feeling and emotion out of it. Something that you may think is appealing, the market may have a different opinion. This is especially the case if you are rehabbing and flipping the property. You may get bored with the same countertops and cabinets, but if you try to get too personal you lose a large chunk of your buyer pool. Not every buyer wants specific countertops, fixtures and flooring. You are better off going boring and getting something neutral rather than putting your personal flair on the property. The only time you should consider a property specific item is when you are pushing the envelope in a market with intense competition. In these areas, you need to stand out any way you can. For most other markets, you are better off playing it safe even if that is not your style.
  • Carpeting. There has been a shift on flooring demands in recent years. It wasn’t that long away when wall to wall carpeting was seen as a luxury, rather than a burden. Today, buyers are leaning toward hard wood flooring over carpeting. As a rehabber, carpeting can be expensive to purchase and install. You also need to worry about finding the right carpet and color for the property. If you pick the wrong color the room will not look nearly as nice as you anticipate. You also need to consider that buyers would rather hard wood and even though carpeting sounds nice is really a giant negative.

Don’t throw money at a property until you know what you are getting in return. There is a big difference on an update you would do for your personal residence and one you would do for a rehab property.

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