How to Improve Your Real Estate ROI

Everyone wants to get the highest real estate return on investment when selling their home, and there are some really easy ways to maximize the value of your home without breaking the bank.

The first way to improve real estate ROI is through making cosmetic home improvements. On the interior, the most important spaces for home renovations are the kitchen and bathrooms. A fresh coat of neutral paint and modern flooring can go a long way in helping potential home buyers decide to make an offer on your home.

It’s important to start with home renovations in the kitchen and bathrooms first because they can be quite expensive when you factor in brand new appliances, granite countertops, porcelain sinks, etc. You might end up spending a lot of money, so get the most important things done first. Otherwise, you might spend your money on other areas of the house and have no home improvement budget left.

On the exterior, home improvement involves things like landscaping, planting flowers, and making sure your decks or patios are in good condition. These are the kind of things that make someone say “wow” when they drive past your home – and first impressions are critical.

Other things like plumbing, electrical installation, and large appliances like a water heater are often the kinds of things that home sellers are really proud of and they spend a lot of money on, but there’s very little real estate return on investment when it comes to selling your home.
 

Real Estate ROI vs. Net Profit

At the end of the day, it is more challenging to calculate real estate ROI than net profit when selling houses. When it comes to ROI you must ask yourself: how much do you value living in the house? How much do you value the time you had in the house? 

Then when it comes to calculating the return on investment for home improvements, you want to ask yourself if you spent $X, how much more does it increase the value of your house? Sometimes home repairs don’t necessarily increase the value of your house – they just make your house sell quicker because it’s more marketable. How much is that worth to you

Finally, when you factor in the time spent there, that’s where you really see the real estate ROI. Maybe you lived there for 4 years and paid a mortgage – that’s time that you A) had somewhere to live and B) you accrued equity instead of paying rent to somebody else. 

Net profit, on the other hand, is more focused on dollars and cents. If you have $320,000 in home equity and you sell it for $400,000, your net profit is $80,000

Conclusion

ROI can be a little bit harder to define and it means something different to everyone. However, if you take care of the basic cosmetic tips we outlined above to make sure you’re doing what you can to get the most money when selling your home, you’ll be able to maximize your ROI.