One challenge with home improvement projects is how easily you can tell yourself it’s worth the price because it will improve the value of your home.
Though this is true for many home improvement projects, it rarely increases the value by as much as the project cost. Some add no value, and a few might reduce the value compared to your home before you did the work.
Below are 10 of the worst examples of this problem, including both net loss projects and home upgrades that could add value if you carefully keep costs under control.
Important note: For most of 2021, COVID-related supply chain issues have increased the costs of lumber by 70% or more. The prices below do not reflect that cost concern. We highly recommend waiting until after price fluctuations cease before embarking on any major home improvement project.
Factors That Affect Your Returns on Home Renovations
Although home values trend upward over time, the neighborhood you live in provides something of a cap to how much your home might conceivably be worth.
If you have a relatively modest home in a neighborhood with high home values, you have a lot of potential for increasing value by improving the property. Conversely, if you have the nicest home on your block, the neighborhood’s overall value will limit how much more the value of your home can grow.
There is no simple, reliable formula for calculating how much this affects the resale impact of home improvements, but you should keep it in mind. This concept almost never makes one of the projects below a net moneymaker, but it can mean an otherwise value-adding project ends up losing money.
While you’re at it, consider your personal skill set for DIY projects. If you’re skilled enough, doing the work yourself can cut the costs of many of these home renovations in half, making a solid return on investment more realistic.
10 Home Improvement Projects That Lose Money on Resale
1. Adding a Pool or Hot Tub
One of the most iconic luxury items you could add to your home, a pool provides relief in summer months and a more fun alternative to treadmills or stationary bikes. There’s also something about owning one that says you’ve made it financially.
Trouble is, they’re big, expensive projects. Even a simple above-ground pool means testing the ground strength, leveling the footprint, and installing some kind of water source.
An in-ground pool costs anywhere from $30,000 to $50,000, according to HomeAdvisor, not including the costs of maintenance and water treatment or necessary safety devices like a gated fence and water alarm. Pools with water features or other fancy extras can exceed $100,000.
Research at HouseLogic indicates that in the best climates for pools, it will add a maximum of 7% to your home’s value. That means your home would need a value of over $400,000 for a simple pool to pay itself off with a very motivated buyer.
Often, a neighborhood with property values that might support a simple pool is fancy enough that a simple pool won’t be enough to bump the price, and a better pool will be too costly to pay for itself.
To make matters worse, not everybody wants a pool. When it comes time to sell, you’ll be excluding a whole class of buyers who don’t want the maintenance expense, want more usable yard, or simply don’t want to swim.
Due to the drowning risks for family members, and the lawsuit risks from guests or trespassers getting injured, a home with a pool is usually far more expensive to insure. Your costs go beyond just the installation.
In a few regions, especially high-end neighborhoods in hot climates where a pool is useful all year long, having a pool is a prerequisite for interest. These are rare, even in states like Florida, Texas, and southern California, but if almost all of your neighbors have a pool it might be worth running the numbers.
2. Going Big in the Bathroom
According to a National Association of Realtors Research Group study, a bathroom remodel is one of the most popular home improvement projects in the United States. It’s also one of the few home improvement projects with the potential for increasing value close to how much you spent on it. But only if you do it right.
Doing it right, in this case, means keeping the project simple: fresh paint, updated lighting, and repairs to any damage you did to the bathroom over the years. If you can keep the remodel under $5,000 start to finish, you can potentially turn a profit.
But it’s harder than you might think to keep it under $5,000. Once you’ve decided to redo the 1970s-era linoleum floor, it’s so tempting to go with beautiful high-end flooring. New tub taps suddenly become a new tub, complete with jets. And while you’re at it, why not upgrade to a dual-action, environmentally responsible toilet, plus that adorable spout for the sink? All those beautiful ideas in the remodeling magazines can push you to exceed your budget multiple times over.
Mission creep is real in the bathroom upgrade industry. Avoid the temptation if you want your remodel to cover its own costs.
Adding in-suite bathrooms to second or third bathrooms, essentially converting them into master suites of their own, is another costly project that isn’t likely to pay for itself. In most markets, this won’t increase the home value substantially and could reduce buyer interest when it comes time to sell.
If you already need to redo your bathroom — for example replacing broken plumbing or tearing out a carpet to replace with vinyl or tile — including a general update might cost only a little bit more than the major work.
You won’t make a profit on the project as a whole, but you might reduce the net cost with some simple spruce-ups like new light fixtures or an attractive backsplash.
3. Installing a Sunroom Addition
What’s better than a porch or patio? A full, enclosed room with lots of windows that gives you all the sunlight of being outdoors with none of that pesky wind, rain, or other unpleasantness.
There are two kinds of sunroom, called four-season rooms and solariums. They both fill the same role, with a solarium consisting of all-glass walls whereas a sunroom feels like a new room with regular walls and more than the average number of windows.
According to Home Advisor, you can expect to pay $25,000 to $80,000 for a four-season room, and between $30,000 and $75,000 for a solarium, with neither figure including the cost of hooking it up to your home’s existing climate control.
The same article estimates you will recoup about half the cost by adding value to your home. That means a net loss of up to $40,000.
The same can be expected for enclosed porches, mudrooms, bay windows, and almost any other project that increases the square footage of your house. These can increase the sale value, but almost never by as much as the additions cost.
If you really want a sunroom, consider a “three-season room.” This is basically a four-season room with uninsulated walls. These cost about half the price of a four-season room installation. It will still lose money overall, but it will lose less money than a fully functional sunroom.
4. Building Spaces for Your Hobbies
This category includes a broad array of home improvement projects, including but not limited to:
- Home theaters
- Home offices
- Sewing rooms
- Man caves
- Libraries and studies
- She sheds
- Built-in aquariums
- Home gyms
- Themed kids’ bedrooms
What they have in common is taking a generic room and changing its structure so it becomes a space devoted to a single interest or hobby. Though these might make great quality of life upgrades for your living space, they hurt your home’s value in two important ways.
First comes the upfront cost. There’s no real average cost for a category this wide, but you will spend four or five figures getting everything just right without adding anything to the home’s general value. You will foot the entire bill.
Second is that your dedicated hobby room can turn away potential homebuyers. When they look at a home theater, they don’t see a room that can be anything they want. They see a home theater, which makes your home less attractive if they don’t want one.
This leaves you two choices: have fewer interested buyers, which drives down your selling price, or pay to remove the work you added to the room.
Renovations for the accessibility needs of somebody living in your home, such as handrails in the bathroom, an accessible tub, or wheelchair ramps will similarly decrease the sale value of your home, though if you need to do them, you need to do them.
This isn’t to say you should never add a hobby room or similar space to your home. Just don’t add permanent fixtures.
Stick to the decor, furniture, and easily removable trappings of what you want the space to be for, so you can return it to its natural, neutral state when you need to sell.
5. Designing the Perfect Kitchen
Remodeling a kitchen can be a money trap of the same kind you’ll experience redoing the bathroom.
It can add 5% to 15% to your home’s value, according to HomeAdvisor, but it’s super-easy to spend far more than that. This is especially true if you focus on making a perfect space with all the trappings you want to make it a convenient, beautiful center for your home.
Let’s run some numbers:
A basic remodel that upgrades the sink, installs basic stock cabinets, and beautifies the space with inexpensive backsplashes and a simple paint job will run $10,000 to $15,000 if you do much of the work yourself.
Using HomeAdvisor’s estimate, that means the simplest DIY kitchen remodel could make a profit in a $200,000 home, which is very feasible.
Mid-range remodels add stone, wood, or metal countertops with high-end appliances and cabinets, a new floor, and potentially rewiring for new electrics. It will run you up to $30,000, meaning you’ll need a home worth a minimum of $600,000 to recoup the expense.
Major kitchen remodels with luxury additions can cost $50,000 or more and require an even more expensive home to justify.
These calculations also run into the same problem described for swimming pools: As homes get fancy enough to be worth a serious kitchen remodel, the level of remodel required tends to demand a home of higher value yet.
Think twice before adding a second kitchen, such as to complete a downstairs apartment. This can mean added revenue if you rent out that space while you live in the house, but won’t significantly increase the sale value.
You can get a significant return by simply upgrading the appliances while keeping them in the same positions nestled among the same cabinets and floor. This is especially effective if you buy eco-friendly appliances and cash in for all applicable tax rebates.
6. Replacing the Carpeting
If you’ve ever replaced the carpets in your home or moved into a place with brand new flooring, it’s easy to understand why people might think replacing a carpet will greatly improve value.
It looks so clean and fresh and somehow makes the room feel larger. New carpets feel good, so it’s natural to assume they’ll make a prospective buyer feel equally good about your home.
You’d be right in that feeling if everybody had the same taste in carpeting. If buyers love the same kind of carpet you just installed, it does make them like the home better. This could make them more eager to buy, and even bump up their offer.
But that’s a big if. If they don’t love your brand-new carpet, they will immediately decide what kind of carpet to replace it with. Once they’ve made that decision, they start to calculate how much that replacement will cost them.
More than likely, that math will either make them less enthusiastic about your home or likely to include that cost when they calculate an offer or counteroffer.
Bottom line: replacing carpeting is a bigger risk than you might think at first. You’re usually better off hiring a professional steam cleaner to make your existing carpets look like they’re new.
Replacing any kind of paneling or even a paint job might create the same problem. What you find attractive might be something a new buyer thinks they need to remove and replace, reducing how much they’re willing to pay.
Damaged, old, or stained carpets need replacing. Otherwise, you risk losing buyers when they see the unattractive flooring. Alternatively, you can explicitly reduce the home’s price to reflect the need for replacing carpeting, and let the buyer choose a floor when they move in.
7. Expanding or Adding to a Garage
There are lots of reasons to expand your garage or build one from scratch if you don’t have one. They offer lots of storage, a secure location to keep your car, and space for recreation activities from exercise to woodworking. But increasing the value of your home is rarely on that list.
Analysis by Homelight.com found the average garage expansion ran from $16,000 to $39,000 depending on region, construction materials, siding, and floor type. Research by Pocketsense finds an average return of about 80% of the project’s price. This won’t make more money than you spend, but it comes closer than most other items on the list.
That said, you can get a better return on investment on garage-related spending with smaller projects like new garage doors, installing quality storage, or resurfacing the floor. Each of these costs under $5,000 and can increase curb appeal beyond the money you put in.
Be cautious of projects that involve converting your garage to some other use, like a home gym or a rec room. You will almost certainly have to pull it all out before putting your home up for sale.
“Accessory dwelling unit” (ADU) is what the professionals call it when you convert a garage into a separate apartment or build a separate living space as a second story above your garage.
These are far more expensive than a standard garage addition, but can end profitable once you factor in both the increased home value and a few years’ worth of rent you might charge for the space.
Also, if your home is the only one on the block with no garage at all, it can benefit your home value to add one. This is also possible if your house has a one-car garage while all the others have two-car garages or larger.
8. Installing High-End Landscaping
Perhaps you’ve read and heard how boosting your landscaping can make a better first impression on appraisers and potential buyers, thus increasing your home’s perceived value. It’s one of the first things real estate agents will tell you about prepping your home for sale.
That’s true, but really this advice applies to mowing and edging the lawn, trimming the bushes, replacing dead plants, throwing down a new layer of mulch, and maybe adding some of those $20 walkway lights from Home Depot.
It doesn’t apply to fancy topiary, irrigation, elaborate water features, or other high-end items you might be tempted to add under a more-is-better philosophy. According to Fixr.com research, a professional upgrade to one-quarter acre of lawn runs between $8,000 and $15,000, trending up to $20,000 if you include new soil, sod, and decking.
If you run those numbers against the American Society of Landscape Architects recommendation of spending approximately 10% of your home’s value on landscaping, that means it could pay for itself if your house is worth even as little as $80,000. But with landscaping, those aren’t the only numbers you need to run.
Once you install new grass and shrubs, you then have to maintain that new landscaping, which Fixr says can cost up to $4,000 per year on top of what you spent to install it. If you’re renovating to sell immediately, that might not be too bad, but it adds up quickly if you plan to stay in your house.
Even when you are renovating to sell, keep in mind that buyers will also be thinking about the cost to maintain the yard. If it looks expensive to keep up, it can turn off otherwise interested parties.
Similarly, there’s not much value in adding container gardens and raised gardening beds. As useful as these are, they aren’t the most attractive features, and most people will want to make their own decisions about how to use that part of the property.
If your home has the worst landscaping on your block — bad enough to stand out — upgrading to the level of your neighbors can increase your curb appeal enough to be worth the effort.
9. Master Suite Shenanigans
If your home is your castle, the master suite is the gorgeous inner sanctum. It’s tempting to make it as nice as you possibly can, with a room big enough for a master bed, fantastic closet, and the bathroom addition you’ve always dreamed of.
That temptation can be especially strong when thinking of resale value: why wouldn’t the next people to live in your home also want a sumptuous place to lay their heads at night?
All of the above checks out, until you look at the costs associated with these major home renovations. Master suite projects come in many shapes and sizes, with different average costs (courtesy of HomeAdvisor.com):
- Adding a New Master Suite: $140 per square foot, times 200 to 400 square feet
- Adding a Master Bathroom: $42,500
- Upgrading a Master Bedroom: $4,000 to $10,000
- Closet Remodel: $5,000 to $10,000
That means you’ll most likely spend at least $10,000 for a simple upgrade, and could quickly get above $100,000 if you’re adding a new master suite from scratch.
Broadly speaking, HomeAdvisor estimates about a 63% return on the work, whatever level of upgrade you have in mind. That means you’ve lost almost 40% of your investment.
Also beware of major renovations to create man caves and she sheds. It’s better to leave these spaces either structurally neutral or built in with features you can remove when it’s time to sell. They reduce general appeal, and thus your likely final sale value.
Much like with swimming pools and garage expansions, there has been a decades-long trend toward increasingly expansive and luxurious master suites. If your home’s master bedroom suffers by comparison to otherwise similar properties in your area, it can be worth a minor upgrade to make your home more competitive.
10. Preparing for the Apocalypse
Once you get far enough into the countryside, or deep enough into the most expensive homes in a metro area, you start to see some interesting things. These include features like backup generators, water purification systems, large expanses for subsistence gardening, large food storage facilities, and even bunkers.
That’s not to say none of these make any sense. Especially after what 2020 has taught us about emergency preparedness, having some food and supplies on hand, along with contingency plans for water and power, is sensible enough. But it’s easy to go overboard, both psychologically and financially, in this department.
There’s no real “average” to how much these measures cost. A second pantry in the laundry room runs just a few hundred dollars, while a robust generator system can cost tens of thousands. Besides, the cost isn’t the important thing to remember here.
The important thing is, no matter how much you spend on these kinds of projects, you won’t increase your home’s sale value. These upgrades are highly specialized. They attract one kind of person but will turn off most potential homebuyers.
Excessive security systems have the same issue. There’s nothing wrong with a simple camera system and burglar alarm, but anything more costs money you won’t recoup from the home sale and could potentially turn away buyers because of the added effort and hassle those systems require.
Off-the-grid homes or high-value homes with security or other vital facilities on site are an exception to this rule. People interested in that kind of property often have more of a survivalist mindset, and will expect or at least appreciate a backup generator or emergency water supply.
When you’re planning an improvement or remodeling project, you first have to ask yourself a simple question:
“Are you remodeling for quality of life while you live there, or to increase the home’s value or resale price?”
If it’s the latter, these projects — and really most projects except for a very small list — offer too little return on investment to view as a resale value booster. They will result in a net loss from a purely financial perspective.
On the other hand, if you don’t plan to sell for a long time and a project will help you enjoy your home more during those years, there’s nothing wrong with that. Just pencil in the cost to redo that project and make your house more saleable into the budget for the work.