Home Improvements with Worst Return on Investment

August 29, 2012 | Home Improvement and Renovation

Which are the home improvements with worst return on investment, or ROI? You’ve probably heard the phrase kitchens and bathrooms sell houses. Unless you over improve by spending too much in comparison to your home’s value, you can’t miss when renovating those rooms. In contrast, you can sink money into some renovations and see little or no added value. Generally, niche projects with limited appeal turn into home improvements with one of the worst returns on investment (ROI).

Special spaces like a greenhouse or a sunroom are good examples of limited appeal. Canada’s National Association of the Remodeling Industry gives a greenhouse renovation a 56% ROI. Some buyers might enjoy these renovations, but they could also cause many people to turn away.

If you have a strong desire to add a particular item even, if it’s not a good investment, think about your long-term goals. If you plan to live in the home for more than ten years, a good return on your investment might not be as important as enjoying the renovation. If you plan to sell your home within a couple years, you might want to avoid home improvements with the worst return for your money.

One Toronto real estate agent cites saunas, hot tubs, and pools as poor investments. Adding a sauna or hot tub might seem valuable to family members who use these items, but the return on investment is minimal if it exists at all. Some perspective buyers might be excited to see a hot tub, while others might consider it an unnecessary expense. It lacks universal appeal, often appearing as more of an adult toy than a legitimate expense.

The reaction to a swimming pool is similar. The time and money required for upkeep can be a big problem. Some young families consider a pool as a safety hazard while others do not want to replace a grassy lawn play area with cement. As far as return on the investment is concerned, installing a pool belongs on the negative list. According to the National Association of the Remodeling Industry, the ROI for a swimming pool is only 39%. The Appraisal Institute of Canada agrees, ranking pools with a 10-40% ROI.

Turning three small bedrooms into two large bedrooms tops the list of home improvement mistakes for Kathy Monahan, an agent in Toronto. She notes that the market demand for two bedroom homes is much smaller than the demand for three bedroom homes. That translates into a lower price for your newly remodeled two bedroom home.

The bottom line on home improvements with the worst return is that you need to consider your individual situation. If you’ve dreamed of having a pool all your life, you might not be concerned about the return on your investment. Home owners need to weigh the pros and cons of home improvement projects and make their own decision.  For more information on the ROI on different home improvements, visit Angie’s list or our blog post on home improvements with the best return.  We hope that you have found this post helpful on the home improvements with worst return on investment, as you consider your future projects.

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