Do the Right Renovations to Your Home
If your home has become outdated, uncomfortable or too expensive to maintain, you may be thinking of renovating to get all the lifestyle enhancements you're looking for.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.
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.
Top three renovations by ROI
| Renovation | Return on Investment |
|---|---|
| Kitchen | 75% – 100% |
| Bathroom | 75% – 100% |
| Interior / Exterior painting | 50% – 100% |
Average payback potential
| Renovation | Return on Investment |
|---|---|
| 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 means thinking about future salability every step of the way:
- 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 neighbourhood, expect a relatively low return on renovations. But if your home is below average, your return may be much higher.
- Renovations offer a better payback if you live in an appreciating neighbourhood.
- If the homes in your neighbourhood 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.
Get matched with a realtor at realtorreferral.ca to talk through your renovation plans and how they fit your local market.