Remodeling projects inside and outside the home can bring a good return on your investment while adding curb appeal for selling your house.

Even though housing prices nationwide have dropped over the last year, homeowners continued to improve their investments. Whether you’re considering remodeling to lend curb appeal or to make your homes more comfortable to live in now, there are projects that bring a solid return on your investment.

The National Association of Realtors (NAR) reported a seven percent overall drop in home prices in the last year. But Remodeling Magazine’s 2008-2009 Cost vs. Value Report shows that moderate upgrades and maintenance-related home improvements continue to pay returns. Recovering your investment often depends on your location, and payoffs are simply slower to recoup than in recent years when the market was booming.

Top Remodeling Projects in 2008
Homeowners want to know how much of the money they invest in remodeling will show up in the total housing price when they sell. In 2008, the greatest paybacks came from outdoor, curb-appeal projects such as new decks, replacement windows, and siding. For inside jobs, kitchen remodels reported the greatest returns nationwide in increased valuation, according to the NAR. Here are the winning projects:

1. Fiber cement siding (upscale) brought an 86.7 percent return on investment (ROI)
2. New wooden decks (using mid-range materials) brought back 81.8 percent
3. New vinyl siding (using mid-range materials) returned 80.7 percent on investment
4. Foam-backed vinyl (using upscale materials) held an 80.4 percent ROI
5. A minor kitchen remodel (using mid-range materials) delivered 79.5 percent returns
6. Vinyl window replacements (using upscale windows) had an ROI of 79.2 percent
7. Wood window replacements (mid-range materials) brought back 77.7 percent
8. Vinyl window replacements (using mid-range windows) had an ROI of 77.2 percent
9. Wood window replacements (upscale materials) had a 76.5 percent return
10. Major kitchen remodeling projects (using mid-range materials) had a 76.0 percent ROI

Keep Up with the Joneses
In deciding on improvements, you should evaluate what your neighbors are doing. If you’re in a subdivision that was built in the 1980s, for example, it pays to see if your neighbors have upgraded their kitchens or baths, have built improvements outside for curb appeal, and so on. That’s what you’ll be up against if you decide to sell.

Much of ROI has to do with your region. For instance, a remodeled basement might bring an ROI of 92.7 in California, while in New England you might be lucky to draw as large a return as 61.9 percent. In the Northeast, improvements that increase energy efficiency do better than they do in the Southwest.

Here are some easy-to-complete improvements which can also increase curb appeal:

• Clean up the yard, front and back, removing trash, clutter, and overgrowth
• Paint the exterior
• Wash windows and skylights and replace burned-out lighting fixtures
• Reface kitchen cabinets and re-paint the kitchen
• Finish floors and shampoo carpeting

You just might accomplish immediate gains by employing elbow grease and a few hours as opposed to spending a fortune.

Depending on the region and the job, some homeowners are paying as much as 20% less for home-remodeling projects than they would have a few years ago. Many contractors are willing to accept smaller jobs and “handyman” projects that they used to snub. And more projects are being delivered on time and on budget—a stark contrast from the boom years.

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The first step is to ask your friends and family members – and even neighbors who’ve completed remodeling projects you like — for advice and contractor recommendations.

Rank the names you receive and start with the top three choices to call, then:

#1 Ask for references and insist on references from recent jobs. Contractors frequently change laborers and subcontractors. You want to be sure you’re getting the same quality of work your friends and family members received.

#2 Among the questions to ask references include: Did the project stay on time and on budget? How were the contractor’s work habits? Were unauthorized changes of materials or work orders ever made? How well did the contractor communicate the progress of the project? Were there any problems? If so, what and how were they resolved?

#3 Get at least three price estimates. Rates can vary wildly and knowing what different contractors charge can give you room to negotiate a better price with the one you really want to hire.

#4 Ask to visit an in-progress project to see first-hand how a contractor works. Are the workers clean and respectful of the home? Are adequate safety precautions being taken?

#5 Don’t hire a contractor just because they’re available to start right away. The busiest contractors tend to be the best ones – and they’re worth waiting for.

Finding the right kitchen remodeling contractor can be tricky, but ending up with the wrong one can be costly, time consuming, and down right aggravating.

If you’ve seen roofs that you like in your neighborhood or town, don’t be shy about asking the homeowner who did the job and perhaps how much the roofing job cost. Asking friends, family, and others for recommendations is a good way to start your search. Professional builder and contractor organizations are another good resource.

Bidding Your Roof Project
Conduct quick telephone interviews with each of the contractors on your list. Check their availability, whether they’re licensed and insured, and willing to provide a client list. Once you’ve narrowed your list to three or four contractors, you can begin asking for written price estimates to determine roofing costs. Be sure that contractors specify what grade of materials they plan to use and what kind of warranty is offered, so you’re able to compare apples to apples.

Bids should include the cost of materials, labor, and all other expenses, as well as profits. Materials generally account for 40 percent of the total bill; profits are typically between 15 and 20 percent.
Check your top contender’s references and make a couple of quick calls to your local Better Business Bureau and your state’s consumer protection organization to ensure the contractor doesn’t have a history of upset customers.

Start your search with recommendations. Ask friends and family. But don’t stop there. Local building inspectors know which contractors meet code requirements and lumberyard workers know which contractors buy quality materials and are reliable bill payers.

What Every Person Needs to Know Before Hiring a Contractor

You can easily narrow your list of prospective room addition contractors by conducting quick telephone interviews. Ask contractors about their availability, whether they take on room additions of your size and scope, could they give you a ballpark idea of what a room addition might cost, are they licensed and insured, and can they provide you with a client list? Once you’ve picked your top three or four candidates, you can begin seeking written estimates to determine how much the room addition will cost.

Show them the home addition project area, your plans, and ask them any questions you might have. You’ll get a sense of the contractor’s personality and how well you might work together.
Bids should include a detailed list of materials and their cost, labor, profits, among other expenses. Materials generally make up 40 percent of the total cost; profits are usually between 15 and 20 percent. 

But before you hire, do your homework. Call your favorite contractor’s references. Ask whether the job was completed without time and budget overruns. Check with your local Better Business Bureau and your state’s consumer protection agency to make sure the contractor doesn’t have a history of problems with clients or subcontractors.

What to Ask Before You Hire a Deck Contractor

The easiest way to find a contractor is to ask your friends, family, and neighbors for recommendations. If you’ve seen a deck you like, don’t be shy about asking the homeowner who built it. They’ll be flattered you like their deck, and you’ll begin your search with a solid list of contenders. Contractor directories, some including ratings and other feedback, offer another good place to get started.

Ask every deck contractor a short set of questions including:

• How long have you been in business?
• Are you licensed and insured?
• Do you have references I can check?
• Can you complete a free estimate?

Some contractors might charge for an estimate, but many are confident enough in their prices and quality of work, they don’t. Be sure to obtain at least three written estimates that include what kinds of materials will be used.

If you don’t already have a deck plan from which to work, ask whether the contractor will complete drawings. The drawings should specify all construction details, including the foundation, railings, benches, and stairs.

When you and your contractor are on the same page, what you want is what you’ll get.