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Building Smarter: ROI-Driven Upgrades and the Rise of ADUs
Real estate success isn’t just about building or upgrading—it’s about making choices that resonate with buyers and stand the test of time. This month, we’re looking at which improvements deliver measurable returns today and how new trends, like ADUs, are shaping tomorrow’s opportunities.
The most important design decisions for Return on Investment (ROI) in real estate focus on features that:
- Appeal broadly
- Enhance functionality
- Add tangible value
By targeting high-impact areas and making smart, cost-effective upgrades, you can significantly boost a property’s marketability and resale potential.
According to the 2025 Remodeling Impact Report by the National Association of Realtors® and the National Association of the Remodeling Industry, certain projects consistently deliver the strongest returns—highlighting the upgrades buyers value most. At the same time, emerging trends like Accessory Dwelling Units (ADUs) show how buyer expectations are evolving and where the next wave of ROI potential lies.
High-Impact Areas
Not every project delivers the same return, but some upgrades consistently rise to the top. Whether it’s kitchens and baths, curb appeal, or added living space, these improvements drive ROI and attract buyers:
Kitchens & Bathrooms
Modernizing these spaces pays off—but not all upgrades are created equal.
- Full kitchen remodel: ~60% cost recovery
- Minor kitchen upgrade: ~60% ROI (fresh countertops, updated appliances, and new fixtures can be just as impactful as a full overhaul)
- Bathroom renovation: ~50% ROI
- Adding a new bathroom: ~56% ROI
Curb Appeal
First impressions matter, and the numbers prove it. These upgrades enhance both aesthetics and efficiency—two qualities buyers prioritize.
- New steel front door: 100% ROI (the highest on the list!)
- Fiberglass front door: ~80% ROI
- New windows: 71–74% ROI
Outdoor Living
Decks, patios, and other outdoor spaces remain highly desirable, especially in year-round climates. While they didn’t make the top ROI list this year, they often increase marketability by expanding usable square footage.
Creating Usable Space
Creating additional living space—inside or out—boosts functionality and potential ROI, whether through interior conversions or a new ADU.
- Basement conversion: ~71% ROI
- Attic conversion: ~67% ROI
- Accessory Dwelling Units (ADUs): Sometimes called a casita or guest house, ADUs are becoming increasingly popular. Many cities—including Phoenix—have relaxed lot coverage restrictions, allowing homeowners to build on a larger percentage of their lot than previously allowed. What used to be limited to 30–40% coverage can now reach 50–60%, especially when including an ADU or attached shade structures. This makes it easier to create flexible, income-generating, or multigenerational spaces while staying within local zoning rules. For more information, see: Steadily.com and Phoenix Municipal Codes.
How ROI Insights Apply to New Builds
While the Remodeling Impact Report tracks renovation returns, the same lessons apply to new construction—just from a different angle. Instead of recouping costs, it’s about maximizing buyer appeal and meeting market expectations. Emerging design choices, like incorporating ADUs into new builds, also show where the market is headed.
- Kitchens & Bathrooms: Still the biggest selling points. Invest in modern layouts, durable finishes, and quality fixtures.
- Curb Appeal: A strong first impression is non-negotiable. Doors, windows, and landscaping set the tone for the entire home.
- Outdoor Living: Buyers increasingly want decks, patios, and usable exterior space—especially in temperate climates.
- Usable Space: Smart floorplans with flexible rooms (office, guest, or bonus space) and finished lower levels can set your build apart.
- ADUs: With expanded lot coverage rules, builders in Phoenix can incorporate ADUs or additional structures without sacrificing yard space or violating zoning. These units add flexible living space, rental income potential, and multigenerational options, making homes more appealing to today’s buyers
The Bottom Line
The same areas that deliver strong ROI in renovations also drive buyer demand in new homes. Kitchens, bathrooms, curb appeal, and usable space remain essentials—but forward-looking strategies like ADUs are becoming the next layer of value creation. Meeting, and even anticipating, these expectations helps your builds sell faster and at stronger price points.