11 Ways To Increase the Value of Your Home or Investment Property in 2024

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Property investors are all too familiar with these questions: Should you renovate a property to rent or sell it? And whichever route you choose, how do you increase home value without breaking the bank?

When you decide to increase home value, you must also choose how much work you will put into the property.

Increasing home value isn’t a one-size-fits-all solution. Each property is different. From kitchen renovations to energy-efficient lighting, the remodeling industry offers many other ideas to help increase home value.

Here are a few ways that might work for you.

Related: The 6 Fundamental Stages of Any Major Rehab Project

What Increases Property Value?

It’s true that doing more minor renovations to your kitchen could get you one of the biggest bangs for your buck. A little kitchen remodel can cost homeowners an average of $26,763.

According to Remodeling magazine, in 2023 the top projects that offer a significant return on investment of over 100% include:

• HVAC conversion/electrification.
• Replacing garage doors and front doors.
• Adding a manufactured stone veneer to a home exterior.

On the other hand, potential buyers also see the importance of a siding or window replacement, such as vinyl siding or vinyl replacement windows.

Ways to Increase Home Value

Although homeowners believe a minor kitchen or bathroom remodel will give sellers an edge, those renovations may not equate to the best return on investment. Here are some renovations to consider.

1. Add square footage

If your property already has four-plus bedrooms, you won’t get much return on investment (ROI) for adding one more. But turning a one-bedroom into a two-bedroom—or two into three—can bump your listing into the next price tier.

So why is it so important to have at least three bedrooms? Most families with kids want at least three bedrooms, even if they only have one child. And if they don’t, the extra square feet could be used as an office. If you have a house with two decent-sized bedrooms and can only make a small third bedroom, it’s probably adding it to gain a square foot or two.

The best scenario is when your house has a bonus room. You need to add a door, a closet, and maybe a wall, and you’ve got a bedroom.

Also, be on the lookout for extra-large living rooms. Some houses—particularly older ones—are poorly laid out. Taking a slice out of ample space to add a bedroom can make sense.

Ensure you apply for the proper permits, and work with the local building inspector to ensure your room is up to code.

2. Remodel the bathrooms

Some half bathrooms are tiny, and there’s just nothing you can do to make them bigger or better. But if there is extra space, finishing it is a good idea. That expense will almost always pay for itself. A full bathroom can increase your home’s value by as much as 20%, and a half bath can increase your home value by 10%. That’s a significant home improvement return on investment!

After all, people spend a lot of time in the bathroom. So adding an extra bathroom proportionate to the number of bedrooms in the home can make your listing much more appealing to potential renters or buyers.

And if you’ve got the room, it’s worth adding a shower, even if you’d have to move the toilet and replace the flooring. (No need to install a tub—but we recommend having at least one in the house so parents can bathe their young children.)

As for adding a full bathroom, skip this expense unless there’s only one bathroom. Like all things real estate, though, this varies by location. In lower-end neighborhoods, bathroom upgrades do not make sense. But in higher-end communities, it very well might—especially if there’s a large primary bedroom without a bath.

When adding a full bathroom, use double sinks. These attract buyers and renters. Consider choosing a light, trendy color palette, too. As we all know, the gray-and-white theme is still an excellent go-to for flipping or renting.

Related: 5 Bathroom Remodel Tips Every House Flipper Should Know

3. Convert the garage into usable space

Garage conversions usually look awkward, even if you replace all the siding in front. A garage can increase your property value from anywhere between $12,750 and $33,150, depending on the type of garage and amenities you put in the garage.

Typically, you’ll get about 75% to 85% of your investment back when you sell the investment property, making it an attractive upgrade for potential buyers. That being said, there are times when garage conversions make sense, especially for real estate investors.

For example, there is a large subdivision called Ruskin Heights in Kansas City, where virtually every property is a three-bed, one-bath ranch. Many of the tenants in this area are on Section 8. Since Section 8 bases payment on the number of bedrooms, many investors converted the garage into an additional one.

Some homes have two bedrooms, an attached and detached garage, or a two-car garage. In these cases, it makes sense to convert the garage.

4. Finish the basement

Don’t you love home improvements? This one is fun as long as you have a good template. For example, a poured concrete basement is much easier to finish than a block foundation. With a block foundation, you have to worry more about moisture, loss of mortar, and more.

Many appraisers won’t count bedrooms, bathrooms, or square footage in finished basements—even walkout basements. There are a ton of stipulations when it comes to counting or not counting a cellar in a home’s square footage.

Home value also relies on the buyer, despite being a designated number. It’s like you have a statistical home value, but then you have a buyer’s mental home value. Whether it’s someone purchasing your flip or tenants renting it out, people do consider finished basements. However, this is one of those things where you must put yourself in your prospective homebuyers’ or renters’ shoes.

Will it increase sales value or impact the rent you can charge in your area? The National Association of Realtors’ 2022 Remodeling Impact Report lists a finished basement as one of the top four interior remodels regarding return on investment (ROI), with an estimated 86% of the project cost recovered when it’s time to sell.

Just make sure any bedroom you put in a basement has an egress window in case there’s a fire. It’s a requirement in many areas.

5. Renovate the kitchen

Nothing sells a house like the kitchen—and a confined, closed-off kitchen won’t do. Sometimes, there’s no easy way to add space to a kitchen. But you can still make it feel open by removing a wall to the living or dining room. This project could be as simple as cutting a rectangular pass-through.

Much of the time, you’ll find a kitchen that opens up into the living room or a dining area. An outdated kitchen can affect a sale. An industry standard for kitchen remodeling home projects is 10% of your home’s value. But such a renovation will increase home value immensely.

If you can only partially renovate the kitchen, a minor remodel can go a long way too—for example, upgrading the hardware on your cabinets, or if the cabinets are painted, a fresh coat of paint can go a long way. Oh, and remember the energy-efficient appliances! Stainless steel or black are usually the go-to colors.

In 2023, future buyers and renters are leaning more toward lighter colors, so brighten up a kitchen with new white or pale, neutral quartz, or porcelain countertops. The older trends called for granite countertops, but that has since changed in the industry.

Keep in mind your location. If your neighbors don’t have a fancy kitchen, don’t go all out on yours! Ultimately, it’s likely a waste of money because property values may not be as high.

6. Maintain curb appeal

Keep up the house, and pay attention to curb appeal. Whether you expect to flip the property or rent it out to tenants, you never know when people will drive by.

Outdoor maintenance is so essential, not just to prospective buyers, but to renters too. For a rental, curb appeal can be simple things like cutting the grass, pulling weeds, and making sure the outside of the house, whether it’s siding or paint, are well maintained. For a flip, a well-maintained exterior can boost a home’s value between 1% and 5%.

An unkempt house is a red flag to renters that you may not be as responsive for a necessary repair, and to buyers, it’s a warning sign that the home wasn’t well taken care of during ownership.

From cleaning up your driveway to hosing off the windows, improving curb appeal can make a big difference in your home’s value.

7. Install new flooring

Buyers love seamless floors. Have you ever been in a house with tile in the kitchen, then it transitions to hardwood floors in the dining room, vinyl in the bathroom, and carpet in the living room? It’s a common pet peeve for people to have so many different floors in a home.

When there is a standard flooring type throughout the whole house, it makes the space feel more spacious because everything flows. It feels bigger and brighter—and that’s what you want when trying to sell a property or find a tenant.

In most scenarios, the best option is hardwood floors. Not only do these kinds of floors look more modern than carpeting, but they’re also easier to clean, and—if you’re renting the property—they relieve tenants from the risk of losing their security deposit on accidental spills.

Flooring outlet stores often carry basic hardwood options at reasonable prices. If this is still out of range relative to the neighborhood and price point of the home, either look at luxury vinyl planks or bamboo flooring, or buy heavyweight dark carpeting, which doesn’t show stains or wear as quickly.

8. Create an open floor plan

Open layouts are in, but less so than they were before. In fact, in today’s world, it’s a near split between an open floor plan and a traditional layout. However, open concepts still win in the long run.

Many buyers or renters enjoy the more spacious property look when they walk in and can see the kitchen, dining room area, and living room all in one. An open floor plan also allows natural light to illuminate the home, making it look bigger than it is.

According to Rocket Homes, 51.2% prefer open layouts, and 48.8% prefer traditional arrangements. However, before swinging the hammer and creating an open layout, consider structural support. There have been one too many times when someone has knocked out a structural beam that caused more damage than they could imagine.

9. Replace exterior doors

Replacing an existing entry door with steel is one of the best home improvements a real estate investor can make. Homebuyers appreciate any energy-efficient upgrades that come with low maintenance.

A new front door is one of the best improvements you can make, as it offers a potential return on investment of around 75%. Of course, this all depends on how much the door costs, the color, and how much it improves the appearance of your home.

I said color earlier, and yes, color is something that you should pay attention to. Zillow research shows houses with specific door colors sold for up to $6,000 more than the expected selling price, so resale value goes a long way with this minor improvement. However, while a bright front door could add a pleasant pop of color to your home’s facade, it’s a riskier choice regarding potential ROI.

Garage doors also increase home value. According to Remodeling magazine, there’s a more than 102% return on investment; you’ll get back more than you spend.

If your garage door looks outdated or, let’s be honest, is a door stuck in the 1960s, it’s time to upgrade. The energy efficiency of a new entry door is also attractive to buyers and renters. With such high ROI, a new garage door will likely be worth the investment.

10. Revamp the exterior paint

This is one of those home renovations where a little paint goes a long way. Let’s say you have wood siding that has paint chipping. Give it a little sand, touch it up, and make it look new again.

You won’t believe how far that new, freshened-up look goes with buyers. Plus, a little paint helps save money compared to replacing the whole house’s siding.

Painting the whole exterior costs an average of $3,048, according to HomeAdvisor, depending on where you live and the home’s condition. You’ll likely add over $7,500 in resale value with a new coat of exterior paint, so if your home needs it, don’t hesitate to invest in this project.

11. Add a deck or patio

A little extra square feet goes a long way. A deck or patio adds to the overall vibe of a backyard. A deck or patio is an important part of a home’s backyard living area. It’s a place to chill with the family, soak up the sun, or work outside.

Outdoor home improvements are attractive to those who enjoy their time outdoors. However, an outdoor fireplace may not be as important to someone as it is to the family chef. This type of renovation is more dependent on the buyer or renter regarding personal preferences.

Calculate Home Value ROI

Return on investment (ROI) is a metric that helps real estate investors evaluate whether they should buy an investment property. ROI allows real estate investors to predict, based on comparables, the profit margin they should realize whether they are flipping or renting out property.

Every real estate investor should calculate ROI to see how much it will increase home value before buying, regardless of intent and goals. 

So, how do you calculate ROI? Believe it or not, it’s a simple formula:

ROI = (investment gain – investment cost) / investment cost

For example, let’s say you purchase an investment property for $120,000 and hope to sell it for $150,000.

Following the formula, ($150,000 – $120,000 = $30,000) / $120,000 comes to 0.2 or 20%. You’re in solid shape if you can get a 20% profit from a house.

For ROI, keep these things in mind:

• As-is price before updates
• Sold price after updates
• Project costs of home upgrades

Calculating ROI is so important, regardless of an investor’s experience level, as it provides an in-depth look at the value of your home.

How to Pay for Home Renovations

How do you go about paying for home renovations? A personal loan may be a better way to help you finish a project. You can pay it back in monthly installments, and a lot of the time, it will have a better interest rate and flexible repayment options than credit cards.

Many real estate professionals consider a cash-out refinance, which takes a portion of equity and replaces your mortgage with a larger one worth more than the value of your home. Your lender then gives you a check for the difference.

If you have a $200,000 mortgage on your home and you’ve paid off half of the principal, then you have at least $100,000 available in equity. Opting for a cash-out refinance to cover $20,000 worth of repairs would net you $20,000 in cash and adjust your outstanding mortgage balance to $120,000.

One more option is a home equity loan. This type of loan is separate from your mortgage and allows you to borrow against the equity in your home. Unlike a cash-out refinance, this type of loan does not replace your current mortgage—it’s a separate payment. Home equity loans tend to have higher interest rates than first mortgages.

Personal loan vs. cash out refinance vs. home equity

Interest rates are typically lower on a cash-out refinance than on a personal or home equity loan. However, personal loans make sense if you don’t want to change your mortgage; the same goes for home equity.

Will You Flip or Rent Out?

If you’re thinking of purchasing a property in the near future, whether to flip or rent out, keep these tips in mind to increase home value.

Even the most minor interior updates go a long way if you need more time for a significant renovation—for example, innovative home features or smart home technology like a smart thermostat, updated lighting, and even new door locks.

The major takeaway: Some upgrades improve your return on investment more than others. Consider your options carefully, and when in doubt, speak with a trusted real estate agent, mentor, or mastermind group about your next steps.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.