by Shelly Mcrae

Created on: February 04, 2009   Last Updated: September 05, 2009

Investing a few thousand dollars into your home adds value to your home. Don't make the mistake, however, of thinking the return is dollar to dollar. If the market value of a home in your neighborhood is $100,000, and you add $20,000 in renovations to your home, your home is not worth $120,000. It most likely is worth $110,000. Expect, on average, a 50 percent return on your remodel. That doesn't mean you shouldn't invest in your home; it means the more wisely you invest, the better your market value.

Two rooms that usually benefit from a remodel are the kitchen and bathroom.

The cost of remodeling a bathroom can be as high as $20,000, a kitchen remodel as much as $60,000 or more. Those costs include labor. Before you decide to do it yourself to save money, consider if your handiwork will add or detract from the value of the remodel.

Installing cabinetry and countertops, laying floors and working with plumbing, electrical and other infrastructure may be best left to remodeling professionals. You won't see a return on your investment in materials, appliances and fixtures if the workmanship isn't of the highest quality.

To gain the most return on these large remodeling projects, use upgrades and materials that are still in keeping with the overall market value of the neighborhood. For example, turning a bathroom into a large spa by knocking out closet space may have a lower return because large, expansive spa bathrooms are not the norm, and closet space is at a premium.

Another remodeling project that may add value to your home is increasing the square footage of living space.

The addition of a family room or extra bedroom can almost guarantee an increase in value. Such projects can be expensive. But adding to the square footage of your home, particularly if your home is smaller than most others in your neighborhood, increases the market value. Your return, per square foot, could be higher than your investment.

Adding a second floor to your home in a neighborhood in which single story ranches are the norm will have a lower return than adding an additional room off the back of the house. The trick is to add square footage without disrupting the natural flow of the neighborhood.

Additions are big remodeling projects, and hiring a contractor will make the job easier on you. One of the ways to find a reliable contractor is by word of mouth. Personal recommendations from friends and family are worth more than advertisements.

Not every home improvement project needs to be a major renovation. Simple projects may also add value to your home, and are suitable for do-it-yourselfers.

Removing old carpet and replacing it with snap-together laminate flooring doesn't necessarily require a professional installer. Repainting or staining interior trim such as baseboards, upgrading interior and exterior doors, and improving the landscape are all smaller projects that can add to your investment. These smaller projects have a positive effect on market value, sometimes returning dollar for dollar on the cost of the materials.

If you're still learning about some of the basics of home improvement, and don't want to hire a professional for the smaller projects, visit home improvement social networks on the Internet. You'll have a chance to chat with other weekend warriors, as well as pick up tips and tricks from both do-it-yourselfers and professionals.

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