If you plan to update your home with a significant renovation, be sure you are investing in the right upgrades. There is an assumption that the money you invest in a renovation will be fully returned to you if you sell the property. That is not always the case. Here are 4 tips that can help make your home renovation a success.
#1 - Understand the reasons why you are renovating
Do you want to increase the value of your home or enjoy the renovations for years to come? Or both?
#2 - Think about your personal needs and wants
How much do you want to spend? How long do you plan to own the home after your renovation project? Will you be doing work yourself? Will you work with a general contractor or hire your own tradespeople?
How much you spend on improvements should depend, in part, on how long you plan to live in your home. If you are thinking shorter-term, smaller and less-expensive improvements may be your best bet to recover your investment. THINK: fresh coat of paint, updating lighting, improving the curb appeal, decluttering, etc. These items can give your home an updated feel with a limited budget. For the highest return on your investment, ensure the workmanship is of good quality and the materials are consistent with other homes in the area.
It’s important to keep in mind the present condition of the item you are renovating. For example, if you are replacing the builder quality maple cabinets in your 10 year old home with custom designed cabinets with an antique finish (because that is your personal style), the changes may not increase the value of your home at all. To appeal to a wider number of prospective purchasers, ensure the renovation blends in with the overall style and design of your home.
#3 - Hire trusted professionals with references
An interior designer, architect and/or contractor should be consulted before you start your renovation project. They can draw up a plan and assist with renovation advice or construction. Don’t forget to build these costs into your project budget! This investment can go a long way to prevent cost over-runs and change-fees later on.
#4 - Engage a real estate professional to increase your awareness of over- improvement and unique features
Consider your neighbourhood and the expectations of buyers in the area when planning your renovation project. Depending on the particular market and/ or neighbourhood in which you reside, expensive projects that over-improve your home may only be partially recognized by prospective purchasers. For example, in a particular market, renovating the basement of your home at a cost of $65,000 in an area where homes generally do not exceed $200,000, may not provide the best financial return on your investment.
Unique designs or improvements that are uncommon for a particular market may impact the re-saleability of a home. For example, a custom designed climate controlled wine room can cost many thousands of dollars. If you are a wine collector extraordinaire and cost is not a concern, then creating a wine room can be personally gratifying. However, if you wish to recover even a portion of your investment, a potential purchaser would need to share your passion.
Before renovating, consider the value the improvement may add to the overall value of your property. This is where the expert advice of a real estate professional can provide an objective perspective.
Renovations take time, patience and planning, but can be appreciated for many years. Work with an expert!
Source: Appraisal Institute of Canada