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  • Writer's pictureDebbie DeMarais

What’s the best home remodel project to increase your home’s value? Here’s my take.

Not every home improvement project adds actual market value to your home. In many cases that’s just fine — you undertake a remodel because you know you’ll enjoy the results. But if you’re looking to get a return on the financial investment of your remodeled home, there’s one project that seems to outperform all others: adding a bedroom.

That’s not just my opinion, it’s backed up by some solid data. Here in New Mexico, according to Zillow’s most recent data, a two-bedroom house sells for $241,202 on average. The average for a three-bedroom home? $302,588. And when you compare that to a four-bedroom house, the average jumps to $401,526.

That means adding a bedroom to a two bedroom home will likely boost its value by $60K. Convert a three-bedroom to a four-bedroom and you’ll gain nearly $100K in average value.

Of course, how much return on investment you see will depend on a few factors, with the largest factor being how much you spend on the renovation in the first place.

How much does a home remodel for a bedroom addition cost?

Angie's list estimates a room addition running anywhere from $21K to $77K. HomeAdvisor puts the range between $22K and $81K. Houzz suggests a cost between $20K and $60K. And all three reports point out that some room additions easily hit the $100K mark. That’s especially true if you plan to include elements like plumbing when creating not just an additional bedroom, but an en-suite bath.

Yet if you look back at those average home value increases, the $60K bump in value on a two-bedroom house covers most room-addition estimates, and the $100K bump in value on three-bedroom homes easily pays for even higher-end remodels.

The cost range depends on the extensiveness of the addition, with lower-cost projects simply converting an existing space into a bedroom (such as adding a closet to a bonus room). Mid-range projects tend to involve converting attics, lofts, and/or basements. Pricier additions are usually those that require adding foundation, walls, and a roof to create the new space.

The experts tend to agree

I recently participated in a roundup article that asked realtors, interior designers, and other professionals in the real estate industry for their recommendations on which home extensions add the most value.

Infographic titled, Remodel projects experts think most likely to increase home value, with first result being add a bedroom, second being kitchen upgrade, and third being utility space conversion

In a recent survey of 40 real estate professionals by Materials Market there was clear consensus around the three remodel projects most likely to offer the best return-on-investment (ROI). But every home is different, just as every real estate market is different, so it’s important to do your own homework if maximizing property value is a significant factor in your remodel plans.

From the 40 experts who weighed in, by far the top recommendation (from 45% of the respondents) was a bedroom addition. Many of those recommended using existing basement, attic, or even garage space as the starting point for the addition — a great way to cut down on the overall cost of the remodel.

I also suggested that homeowners consider designing that extra bedroom with an en suite bath to create a desirable (and valuable) primary suite. And if another bedroom won’t fit within your home’s existing footprint, you can also consider building separate living quarters on your property. Not only does an additional dwelling unit (ADU) increase the overall value of your home, it can generate income as a rental unit, while creating much needed housing.

Paying for your home remodel

If you don’t have the money up front for a remodel, you have a few options. Some people go for a personal loan, others opt for a HELOC (home equity line of credit) or a home equity loan. If the remodel adds to the energy efficiency of your home, you may qualify for certain tax credits. Keeping track of the capital improvements to your home can also help reduce the amount of taxes you’ll pay on the amount of profit you make when you sell. Remember to always consult with a professional financial or tax advisor to understand how your home improvements might impact your specific tax situation.

Ready for an extra bedroom?

As you can imagine, a remodel, especially one that includes a bedroom addition, can be a big undertaking. There’s a lot of design decisions to consider and a laundry list of professionals to call on to get everything done. As an interior designer, I’ve overseen massive, whole-house renovations and simple room updates. It’s my job to help you decide what you want, and then oversee what needs to be done to make it happen.

I’m currently booking home improvement projects for 2023 and into 2024. If you’d like to talk about the value (and enjoyment) a bedroom addition, or any other type of remodel, can make for your home, call me today.


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