If your home has become outdated, uncomfortable or too expensive to maintain, you may be thinking of renovating to get all the lifestyle enhancements you’re looking for. But, where do you start?
Of course, getting the right advice is an important step in making the best decision - you can always count on your financial planner, mortgage specialist or Realtor to help. Deciding what to do is equally important to ensure your return on investment is as large as possible. While your specific needs play the greatest role in this decision, it’s important to keep in mind what future buyers may want. Here are a few things to consider:
Make sure you understand why you’re renovating.
Before you go too far, consider why you’re renovating. Is it to make your home more comfortable for you and your family? Or is it to make your home more marketable so it will sell at a higher price? Your approach will be different for either of these though it is possible to achieve both with careful planning.
Choose renovations that deliver the highest possible return.
While most improvements increase the resale value of your home, the extent to which they retain value differs. Fortunately, the renovations with the biggest payback are usually the ones you’re likely to want too. The top three renovations for return on investment include:
RENOVATION RETURN ON INVESTMENT
Kitchen 75% - 100%
Bathroom 75% - 100%
Interior/Exterior painting 50% - 100%
Renovations offering AVERAGE payback potential include:
Roof shingle replacement 50% - 80%
Furnace/heating system 50% - 80%
Basement renovation 50% - 75%
Recreation room addition 50% - 75%
Installing a fireplace 50% - 75%
Flooring 50% - 75%
Window/door replacement 50% - 75%
Building a deck 50% - 75%
Central air conditioning 25% - 75%
(Source: Appraisal Institute of Canada, Renova)
Keep future marketability in mind.
Taking a strategic approach to renovations means thinking about future salability every step of the way. Here are some important considerations:
- The more recent the improvement, the higher the return on investment.
- Even if your renovations don’t recoup their entire cost, they usually help your home sell faster.
- If your home's market value is above the average for your neighborhood, expect a relatively low return on renovations. But if your home is below the average, your return may be much higher.
- Renovations offer a better payback if you live in an appreciating neighborhood.
- If the homes in your neighborhood all have family rooms or third bedrooms, it pays to bring your house in line.
Making decisions about your biggest financial investment can be scary so it makes sense to discuss your plans with members of your Home Team, including your Realtor.
Thom Gallagher is a Realtor with extensive home buying and selling experience. For more information on this article or to discuss your home buying or selling plans, call Thom at (416)524-6530 or visit www.CallThom.com.