Be Smart about Home Improvement
If you're planning on making a foray into the market this year, now could be the time to undertake improvements, which if carefully planned, can increase the value of your home considerably. Most of us know that kitchens, bathrooms and a fresh coat of paint inside and out, offer the best return on investment. According to the Appraisal Institute of Canada, you can expect to get back 75 to 100 per cent of what you put into kitchens and bathrooms. Painting can return 50 to 100 per cent of your investment.
While these are typically lowrisk investments, a number of factors can influence the gains you achieve with other types of renovations.
Location is one such consideration. The completion of a basement recreation room for example, can generally return 50 to 75 per cent of expenses, depending on the preferences of future buyers in your area. In a predominantly seniors community its value could be considerably limited.
It's also important to consider your home's most crucial needs. Window and door replacement may offer a return of 50 to 75 per cent, but if your existing units are broken, this home improvement should take priority on your project list. Where glaring needs are concerned, the value associated with your home's overall impression outweighs specific project returns.
When deciding whether to proceed with functional renovations though, it's also important to consider that significant government rebates are available for many energy efficiency improvements. Energy efficient upgrades are at the top of the list of home improvements that add value to the resale price of a home. There are some improvements that we undertake simply for our own enjoyment, like a swimming pool, from which you can get back up to 40 per cent of your investment or landscaping, which is likely to offer a 25 to 50 per cent return. Despite the limited gains they may offer individually, these types of improvements can also make an important contribution to your property's overall image.
Homeowners thinking about making improvements to their home should consider the following tips:
. Renovations that add features to a home that other homes in the neighbourhood already have such as a second bathroom for example, have a higher recovery rate than features not shared by neighbouring properties.
. Renovations done on a home with a lower market value than the others in the neighbourhood provide a higher recovery rate than renovations done on a home which is worth more than neighbouring properties.
. Poorly done renovations may have no positive impact or worse, actually reduce the value of a home.
. Ensuring that a home is in good repair and well maintained is essential. However, renovations done on a home which has maintenance problems will have a much lower impact on its resale price.
. While most renovations will not increase the market value of a home by more than the amount spent, it is hard to put a price on the enjoyment owners get from home improvement.
Consider as well that not all of your renovations need to be sizable.
Even minor improvements like new light fixtures, cabinet hardware or faucets can give your home a modern look.