In This Article
Homeowners spend billions on renovations each year, but not every dollar adds equal value. Some projects return 80 cents or more on every dollar spent. Others return 50 cents or less. If resale value factors into your decision, knowing which projects deliver and which ones disappoint changes how you prioritize your renovation budget.
Here is what the data says about renovation ROI.
Which Home Renovations Have the Highest ROI?
Exterior improvements and minor remodels consistently outperform major interior renovations. Garage door replacement leads the list at roughly 100% return, followed by manufactured stone veneer, minor kitchen remodels, and entry door replacement. The pattern is clear: projects that improve curb appeal and update functional essentials without over-improving for the neighborhood deliver the strongest returns.
Top ROI Projects
| Project | Average Cost | Average ROI | Why It Works | |---------|-------------|-------------|--------------| | Garage door replacement | $4,000-$5,500 | 95-103% | Instant curb appeal | | Manufactured stone veneer | $10,000-$12,000 | 90-96% | High visual impact | | Minor kitchen remodel | $25,000-$35,000 | 75-85% | Updates without gutting | | Siding replacement (fiber cement) | $18,000-$22,000 | 70-80% | Curb appeal + protection | | Entry door replacement (steel) | $2,000-$3,000 | 75-90% | First impression upgrade | | Deck addition (wood) | $16,000-$22,000 | 65-75% | Adds usable outdoor space | | Window replacement (vinyl) | $18,000-$25,000 | 65-75% | Energy savings + appearance |
Why Exterior Projects Win
Buyers form their first impression before they walk through the door. A home with fresh siding, a new garage door, and updated entry door signals "well-maintained" in seconds. Interior improvements matter, but they compete against buyer preferences for layout, color, and style. Exterior improvements are universally appealing.
Does a Kitchen Remodel Pay for Itself?
A minor kitchen remodel recovers 75-85% of its cost at resale, making it one of the strongest interior investments. A major kitchen remodel recovers only 50-60%. The difference is scope. Minor remodels update cabinet faces, countertops, appliances, and fixtures without changing the layout. Major remodels gut the space and reconfigure everything, costing significantly more without proportionally increasing home value.
Minor vs. Major Kitchen Remodel
Minor remodel ($25,000-$35,000):- Reface or repaint existing cabinets
- New countertops
- Updated appliances
- New fixtures and hardware
- Fresh backsplash
- Typical ROI: 75-85%
- New custom cabinetry
- Layout changes
- New plumbing and electrical
- Premium countertops and appliances
- Structural modifications
- Typical ROI: 50-60%
The Kitchen Sweet Spot
Spend enough to modernize without over-improving for your neighborhood. In a neighborhood where homes sell for $350,000, a $100,000 kitchen remodel will not return its cost. But a $30,000 update that brings the kitchen into the current decade pays strong dividends.
Is a Bathroom Remodel Worth the Investment?
A midrange bathroom remodel returns 60-70% of its cost, which places it in the middle of the ROI spectrum. Bathroom updates are rarely a bad investment because outdated bathrooms actively hurt resale value. The key is matching your investment level to your home's value and neighborhood. A $15,000 bathroom refresh in a $250,000 home hits the sweet spot. A $50,000 spa bathroom in the same home does not.
Bathroom Projects by ROI
Higher ROI bathroom updates:- Replacing old vanity and fixtures
- Updating tile in shower or tub surround
- New toilet and faucets
- Improved lighting and ventilation
- Fresh grout and caulk
- Heated floors
- Freestanding soaking tubs
- High-end rain shower systems
- Custom tile mosaics
- Smart toilets and bidets
The Bathroom Rule of Thumb
Spend no more than 5-10% of your home's value on a single bathroom remodel. For a $300,000 Indianapolis home, that means $15,000-$30,000.
Which Renovations Have the Worst ROI?
Swimming pools, high-end office additions, and major bathroom overhauls in modest homes consistently deliver the lowest returns. Swimming pools typically recover only 25-50% of their cost and can actually make a home harder to sell because many buyers view them as maintenance liabilities. Highly personalized projects like custom wine cellars, home theaters, and luxury master suites appeal to narrow buyer pools.
Projects That Rarely Pay Back
| Project | Average Cost | Average ROI | Why It Underperforms | |---------|-------------|-------------|---------------------| | In-ground pool | $50,000-$100,000 | 25-50% | Maintenance liability, safety concern | | Luxury master suite | $100,000-$200,000 | 40-55% | Over-improvement for most markets | | Home office addition | $30,000-$60,000 | 40-55% | Buyers may not need one | | Sunroom addition | $20,000-$50,000 | 45-55% | Seasonal use in Indiana | | Backyard kitchen | $15,000-$40,000 | 40-60% | Climate-limited in Midwest |
When Low-ROI Projects Still Make Sense
ROI should not be the only factor. If you plan to live in your home for 10+ years, a pool or home theater might deliver tremendous personal value. The question is whether you are renovating for resale or for your own enjoyment. Both are valid, but they lead to different decisions.
How Does Location Affect Renovation ROI?
Location is the single biggest variable in renovation ROI. The same project returns different percentages in different neighborhoods because ROI depends on comparable home values in your area. In Indianapolis, renovations in neighborhoods like Carmel, Fishers, and Noblesville where home values are higher tend to support more investment. In more modest neighborhoods, over-improving relative to comparables risks poor returns.
The Neighborhood Ceiling Rule
Never renovate beyond what the market will support. Research what similar homes in your neighborhood sell for after renovation. If the nicest homes sell for $400,000, spending $150,000 renovating a $300,000 home puts you past the ceiling.How to Research Your Ceiling
- Check recent comparable sales within half a mile
- Look at listing prices for renovated homes in your neighborhood
- Talk to a local real estate agent about value expectations
- Consider the price range buyers are shopping in for your area
How Do I Maximize ROI on My Renovation?
Focus on projects that fix functional problems, improve curb appeal, and bring outdated spaces to current standards without exceeding your neighborhood's price ceiling. Use quality materials at the midrange level rather than builder-grade or luxury-grade. Hire reputable contractors because poor workmanship destroys ROI faster than anything else. Buyers and inspectors spot shoddy work immediately.
The ROI Maximizer Checklist
- Fix before you upgrade. Address roof leaks, foundation issues, and mechanical problems before cosmetic improvements.
- Prioritize curb appeal. Exterior paint, landscaping, garage door, and entry door deliver outsized returns for modest investment.
- Update kitchens and bathrooms conservatively. Refresh rather than gut. Modern finishes and functional improvements over luxury features.
- Maintain energy efficiency. Insulation, windows, and HVAC upgrades reduce utility costs and attract energy-conscious buyers.
- Avoid hyper-personalized choices. Bold paint colors, unusual tile, and niche design choices narrow your buyer pool.
FAQ
Do renovations increase my property tax?They can. Major renovations that increase your home's assessed value may trigger higher property taxes. Permits create a paper trail that assessors can use. Factor potential tax increases into your ROI calculations.
Should I renovate before selling or lower the asking price?It depends on the project. High-ROI projects like minor kitchen updates and curb appeal improvements typically make sense pre-sale. Low-ROI projects are better left undone with a price adjustment instead.
How long do I need to stay in my home to recoup renovation costs?For high-ROI projects, 3-5 years is typically sufficient. For lower-ROI projects, 7-10 years or more. The longer you stay, the more personal enjoyment offsets financial return.
Does quality of contractor affect ROI?Significantly. Poor workmanship that is visible to buyers or flagged by inspectors reduces your home's value rather than increasing it. A botched kitchen remodel is worse than an outdated one.
Are energy-efficient upgrades worth the investment?Yes, increasingly so. Energy-efficient windows, insulation, and HVAC systems reduce monthly costs and attract buyers. Federal tax credits and utility rebates further improve the financial picture.
Make Smart Renovation Investments
The highest-ROI renovations share common traits: they solve real problems, improve first impressions, and match the investment level to the neighborhood. Choosing the right contractor is equally important because quality workmanship is the difference between a renovation that adds value and one that subtracts it.
Vetted Crews matches Indianapolis homeowners with contractors who deliver quality work that holds its value. Every contractor in our network has been verified for licensing, insurance, references, and craftsmanship.
Call (317) 850-8396 to find a contractor who will protect your renovation investment.