The Best Value When Renovating
It’s one of the most common conversations for home owners. Whether you own one house for 15 years or you’re an investor who flips homes for a living; which renovation projects will bring back the most value for the investment? Once you get that renovation itch, it’s easy to get caught up in the excitement and blow your budget fulfilling personal preferences. But you need to keep in mind the dollars and cents aspect of the ordeal and look at things from an investment standpoint. If your budget is limited, where should you spend your money in hopes of getting the highest return on your dollar? We’ll help break it down for you. In no particular order, here is our opinion on where the best value is to be had:
Washrooms:
Washrooms are one of the main focal points for buyers when looking at a house and can easily make the difference between someone spending $420,000 on your “upgraded” home or $399,000 on the stock option up the street. If you do your homework, hire the right people and shop at the right places then you can turn your builder grade washroom into a thing of beauty without breaking the bank. This should always be in the conversation when thinking about a renovation.
Kitchen:
Although we started this off by stating this list is in no particular order, the kitchen is almost always the number 1 choice among home owners and investors alike. If ever you would be able to double your investment dollars, our bet would be that you could do so on a brand new, beautifully appointed kitchen. Again, if you do your research and work with the right contractors, you can save some costs on certain things and still achieve the same result. For example, are your existing cabinets in good shape but just out dated? Some kitchens have solid wood cabinets in great shape but are just from decades ago. You can easily re-finish these and pop on a new high quality counter top and save thousands of dollars on new cabinets. New appliances are a must in a new kitchen as well. Spending the money on a new kitchen and then completing it with an old yellow fridge from 1986 is counterproductive. If you’re going to do it, then do it right. The kitchen is unequivocally the number 1 focal point for prospective buyers and appraisers.
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Basement
A properly finished basement will easily separate your house from the norm in your area and will almost always give you a solid return on your investment. Especially in cases where there is a separate entrance to the basement and it can be marketed as a rental, but even without that; a family will always prefer a finished basement. Whether it is to entertain guests, family birthdays or give their teenage kids private space; adding a finished basement creates an additional floor of usable space and the options are endless. Extra bedroom, office, bathroom, living space, storage. If you are flipping an investment or planning to live there long term, a finished basement is usually a safe bet to spend your money on and is always a good idea.
Additions
Additions to the house can be big or small. An addition could mean a nice backyard deck or a whole add-on to the house with a new living room or floor. Make sure you check with your local bi-laws and get all necessary permits. Anything being added on to your home will require a permit, even a deck. Adding something like a living room area at the back of your house (if you have the room), will add to the overall living space, open up your house and it will certainly add to the value. You need to be careful here though when planning and budgeting as this can be a large cost to take on. Make sure you do your research on recent sales in the area and consider talking to an appraiser to see what homes with similar set ups are worth versus where yours is without.
Floors and Paint
This is one of the more simple routes you can take. Know going in that you won’t be increasing your property value a ton with new floors and a paint job, but in a good area and a well-kept home; a simple fresh coat of paint and upgraded flooring can bring the home into the modern era and provide it with a well needed face-lift. Something like this is not too expensive and will help more to ensure you get proper market value for your house when compared to other homes in the area. Of course if you are doing a major reno, then floors and paint are a must to be included.
Honorable Mentions
- New windows and doors – This can help with efficiency and give the home a much nicer curb appeal
- Insulation – Properly insulating your home can save you more money than you may be thinking, The amount of heat/cold that escapes your home through poor insulation can dramatically increase your heating/cooling costs. Get a contractor to come with a thermal camera and see for yourself
- Trim – A relatively inexpensive project that can help give your home a nice facelift. When doing paint and floors, these are a must!
Important Tips:
As we mentioned earlier, it is very easy to get caught up in the excitement of the project once you get that itch. Make sure to keep in mind a few key points:
- The Neighbourhood Ceiling – Although spending 50k on a renovation may net you 75k under normal circumstances, make sure you consider the area you are in. If your home is already worth $400,000 for example and your area only supports $400,000 home sales more or less, Spending 50k may not be the best idea as your area may not support that value.
- Timeline – How long are you planning to live in the house for? Is this a long term home for your family or will you be selling in two years after your next child is born? Obviously more time will help you recover renovation costs as values increase, styles also go out of date. Keep this in mind.
- Personal Preference VS Selling Features – This is a very common mistake for home owners; they choose colours and styles they love and don’t consider what appeals to the current trends. If you are planning to live in the house for another 20 years, by all means do what makes you happy. If you are doing this to sell, you need to put aside your personal preferences and add selling features; neutral colours, modern look, etc.
Hopefully this helps you make some decisions as you consider your next project. Do you disagree with anything on this list? Are there other projects that you would consider the best return on your investment? Let us know your thoughts in the Facebook comments, we love hearing from our community!
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