The first thing to consider when deciding if any home improvement project or structure is worth the investment, is the cost of the investment. A prefabricated shed can cost between $300 to $1,000 while a custom built shed will set you back $2,000 to $5,000. Both types of sheds will cost extra if you include a concrete foundation. Without a foundation, appraisers tend to view sheds as movable personal property instead of part of the home and property for sale. In most cases, any small boost in home value won't add up to what you spent on the shed, though most of the time it's unlikely to give you any kind of boost. There are a exceptions and a few ways to ensure you get any possible value increase you can from your new shed addition.

Exceptions When a Shed Can Add Value

There are a couple of exceptions when a shed can possibly add value more than is typical. The first is if the home itself is small, typically under 1200 square feet. If the shed has a foundation, is in excellent condition and has been staged to sell (like the rest of your property should be), it could add 1-2% to the value of the home/property.

A second exception is when the shed provides separate and fully-livable space. A good example is a shed used as an in-laws cottage. There are some caveats, of course. The structure must meet applicable building codes and provide defined livable space, including plumbing, electrical and a heating/cooling system, at minimum. This case is highly dependent on the livability and the appraiser who sets the home value. When done correctly, adding a shed that doubles as an in-laws cottage can add a whopping $15,000 or more to your home value in some markets.

Getting the Most Value Increase for Your Shed

There are ways to increase your chances of adding to your home's value with your shed addition/project.

1. Get all necessary building permits - In some states, an appraiser cannot include your shed, no matter how well done or how livable, if you didn't obtain proper building permits for it.

2. Keep shed in excellent condition - A shed that is in less than ideal condition and has not been well-maintained can actually become a liability that blocks some lenders from approving buyers to purchase your home.

3. Make sure your shed matches or works with the style of your home - The more you can position the shed as an extension of the home in the view of the appraiser, the more likely it can add some value to your home.

4. Build the shed with the highest quality materials - Choose high-quality construction materials for your shed to increase your chances of getting at least a small boost in home value.

5. Custom always beats out prefab - A custom built shed will always give you better bang for your buck in terms of potential home value increase over a prefabricated shed.

Can adding a shed increase your home's value? The answer is both no and yes. In most general cases of a simple shed to store lawn equipment or provide extra storage, no. A custom built shed with a foundation, appropriate permits and truly livable space is a possible yes.