Each spring and summer many homeowners eagerly spruce up their homes with any number of projects – from a new kitchen and new bathroom to a new deck or a whole new addition. Not only does it make their living space more enjoyable but also has the added benefit of an increase in property value.
However, not all renovations are created equal. Every home project does not yield a return on your investment. And just about everyone has an opinion on what you should and shouldn’t do.
The Appraisal Institute of Canada has developed a handy online tool called Renova that can help you determine how much of a return you can expect to get out
of your home renovation. Just choose a reno, plug in your expected cost, and it will tell you how much of your investment you can expect to get back. For example, if you spend $25,000 on a kitchen reno you are likely to get 75 to 100 per cent of that investment back when you sell, or $18,800 to $25,000. These are general guidelines, not hard and fast rules, and you should be careful about overdoing your renos.For example, if you spend $70,000 on a new bathroom in a house that’s only worth double $150,000, it’s unlikely you’ll see much of a return. Having said that, and any work you do should also be for your enjoyment. But if you’re deciding between two projects and you’re looking to sell soon, it might be prudent to go for the basement reno over the swimming pool.
Bathroom and kitchen renovations seem to get the biggest bang for your buck and other projects may surprise you. For example, a landscaping project will get only a 25 to 50 per cent return.
Of the 25 most popular home renovations, here is a quick look at the return you can expect:
• Bathroom and kitchen renovations provide a return on investment of about 75 to 100 per cent
• Exterior or interior painting gets approximately 50 to 100 per cent.
Basement renovations, garage construction, window/door replacement, rec room additions and fireplace installation return about 50 to 75 percent,
• Exterior siding and upgrades to flooring or furnace/heating systems yield about 50 to 75 per cent
• Concrete paving, roof shingle replacement, central air or a deck get about 25 to 75%
• Landscaping, asphalt paving, building a fence or interlocking brick walkways, or a home theatre all return about 25 to 50 per cent.
• Skylights, whirlpool tubs and swimming pools return between 0 and 25 percent.
Get more information and use the Renova tool at: http://component.aicanada.ca/e/resourcecenter_renova.cfm
Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta).