Buying a home is one of the largest investments we will make and we often ponder whether to sell our home and upgrade or if we should renovate instead.
Buying a home is primarily to provide shelter for ourselves and family, but it is also a huge investment, which will appreciate over time.
Our homes’ values are not only impacted by their locations, but also the market and the health of the economy. The last few years most areas in Canada have seen significant housing increases especially Vancouver and Toronto. It is usually expected that over 20 years, a home will appreciate significantly.
As the Baby Boomers age, it is anticipated that many will sell their large homes and downsize into smaller homes or strata units and invest the remaining proceeds into retirement investments.
Some of those who will retire in the next few years, plan on renovating to their homes before putting them up for sale. While renovations should increase the value of a home, it is advisable to be cautious in what kind of improvements will see the best increase in value.
Here are a few insights for you to keep in mind if you plan to renovate.
Bathrooms and Kitchens
Bathrooms and kitchens are often renovated and usually the money invested is recouped in the increased value. Upgrading lighting and fixtures can have a significant impact with relatively modest expenses. Anything more than that require a greater out lay of money.
If the bathroom upgrades include whirl pool baths or soaker tubs then costs will increase. Similar increases can be seen in the kitchen when the upgrades include new appliances, upgrading counter tops and cabinets. Costs can be prohibitive.
Another common renovation project is the basement, which will increase the living area. This is a strong selling feature; converting an unfinished basement into a usable space will usually fetch extra money in a sale.
Basements are useful for families with teenagers to provide a separate space or they can be converted into a suite with a separate entrance to accommodate tenants for added income. Suites are also useful for in-laws who choose to move in with their children later in life. Either use provides good value for the money spent.
Poor Renovation choices
Some renovations projects will provide good resale value while other renovations could lessen the value received or hinder a sale. At the top of the list is the addition of a pool.
While many people love the idea of having their own pool, this is a feature that families with young children will avoid. Not only are pools dangerous to young children, they also require a lot of maintenance and cleaning, which makes them unpopular with some buyers.
Another poor choice is converting a garage into living space. While it may increase the square footage of a home, many people like the idea of having a place to park their vehicle out of the weather. Garages also provide a lot of storage and so potential buyers may see this as a loss.
Finally, while these major investments may not increase the visual appeal of your home to a potential buyer, they may still increase the value. It is important to keep the major items in good repair.These include the roof as well as heating and cooling systems.
These are items that stand out in a home inspection, which most potential buyers will obtain. These big ticket items if in disrepair can cause the buyer to lose money in a sale or the sale itself.