You’re thinking of renovating your home. The question that HGTV host Mike Holmes, a contractor, would ask is, “Why? Is it to improve your home so you can enjoy living in it, to save money by adding energy efficient windows or insulation, or is it to make money?” Holmes asks in his column, Holmes Inspection.
Once you’re clear about your reasons for considering renovations, you can assess the wisdom of various changes and upgrades. The average home renovation costs about $15,000, so you want to be comfortable about how you’re spending your money.
The renovation that will provide you with the biggest payday is the separate suite. Whether you finish your basement and turn it into an apartment or create one on another floor of the house, a secondary suite will provide regular income to offset your mortgage payments or pay for that winter getaway to a tropical beach.
An income-producing suite isn’t a renovation that you can personally enjoy, however. The usable renovation that offers the most monetary return when you sell your home is the kitchen. Homebuyers assess kitchens and bathrooms first when they are considering a purchase, and kitchens today have become gathering places. Open plan layouts place the kitchen at the center of activity. Therefore, a modern kitchen adds to the value of your home.
When it comes to kitchen remodeling, less is more. Remodeling your kitchen can indeed increase the value of your home, but it’s unlikely to give you an overall positive return on investment. Remodeling Magazine’s 2018 Cost vs. Value Report found that major kitchens only saw their value recouped by an average of 59%, whereas minor remodeling jobs recouped 81.1% of their value.
By Remodeling Magazine’s standards, a “major kitchen remodel” means new semi-custom cabinets, a high-end sink and faucets, all-new appliances, plus new floors, walls, trim, and ceiling. This type of renovation carried a hefty price tag of USD 63,829 on average.
A minor remodel, meanwhile, was largely cosmetic: new cabinet fronts, laminate countertops, and a fresh coat of paint on the walls and trim. This also includes replacing outdated large appliances. This type of remodel had a more modest average price of USD 17,193. It’s worth noting that this “minor remodel” is actually still rather substantial; you can make a meaningful change to your kitchen for a whole lot less than $17,000.
If you want to increase your home’s value to sell it in the near future, a big kitchen remodel might not be your best move; you’re unlikely to see a positive return on that investment. Minor cosmetic updates are much more effective in this case. A fresh coat of paint and a new floor go a long way. If you plan on continuing to live in your home for some time after the renovation, you might want to give a kitchen remodel more thought. After all, you should be able to recoup 50-80% of the renovation cost when you sell, and you’ll get to enjoy the updates yourself for a few years.
One big caveat is that returns on investment for renovations can vary a lot geographically. Realtors in some cities report that major kitchen renovations actually provide significant positive returns on investment. If you’re unsure, you might want to have a chat with some local realtors to get their take on the subject.
If adding resale value to your property is uppermost in your mind as you consider renovations, there are a number of upgrades and changes you should cross off your list. A swimming pool tops the list of sinkholes for your money. Unless you are installing it because you wish to enjoy it, a swimming pool, which costs anywhere between $10,000 and $100,000 to install, is an impractical addition to your property, one whose value you usually won’t recoup. In fact, it may turn potential buyers away.
Swimming pools can be expensive to maintain and buyers may view them as dangerous. If there are children in the family, supervision, and safety are always issues, and lawsuits loom large in some people’s minds. Sometimes, buyers offer for homes on the condition that an above-ground pool be removed or an in-ground pool be filled in.
Extensive landscaping may also warn off potential buyers. As lovely as your property may look with all the horticultural niceties, not everyone wants to devote their free time to the upkeep of groomed walkways or myriad beds of flowers. They may view it as a burden or an expense, if a gardener is required to keep it looking fresh.
Once upon a time, people dreamed of having wall-to-wall carpeting in their homes, but today, it’s an investment that generally won’t pay for itself. People are much more conscious now of the chemicals used in processing carpeting and the allergens that it may trap. Conversely, installing hardwood floors in your home is a desirable upgrade; these floors can add to the value of your home, especially if they are original, rather than a new material.
Mike Holmes, the contractor, cautions anyone doing renovations to consider practical upgrades along with the income-producing changes. Anyone buying a home will expect the furnace, air-conditioning, plumbing, and electrical systems to be in good working order, so it’s important to ensure that any problems are addressed. Consider these investments as part of the home’s regular maintenance.
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Bathrooms are second on the list of renovations that provide a return upon resale. Although you shouldn’t compromise bedroom space to add a bathroom, you may be able to find some dead space that will accommodate a three-piece bathroom. Perhaps there is enough room under the stairs, or maybe there is a closet that isn’t necessary.
If you can add a bathroom with a toilet, sink, and shower to your home, it should increase your sale price. A tip to remember: using glass walls for your shower gives the illusion of more space.
How much are you able to spend on the project? Do your research, itemize what needs to be done, cost it out, and remember to build in a contingency fund for unexpected surprises. Often renovations uncover structural issues that need to be addressed before the aesthetic components can be installed.
What are your must-haves and what are your nice-to-haves? Cutting back on the frills can help keep your budget on track.
Will you need to hire a professional or tradesperson? Research their fees and factor them into your budget.
The more planning you do up front, the easier and cheaper your project will be in the long run. Write it all down:
Why are you renovating? For practical reasons, or purely cosmetic ones? Are you planning to stay in the home or are you renovating to increase your property value for an impending sale? How long will it take to get the job done? (Be realistic! Renovations generally take longer than you think!) Can or should you do it all in stages, or is it best to do it all at once? Do you need building permits or permission from your condo board?
Your lifestyle is an important factor in all your renovation decision-making. You may be dreaming of an all-marble bathroom with a gigantic soaker tub, surround sound and a crystal chandelier, but if you’re a busy family, this may not be your ideal bathroom!
Who will be using the bathroom? If the answer is two adults, three kids and a dog (Fido needs to take baths too, whether he likes it or not!), you will need to opt for durable finishes that are easy to clean, a double vanity if space permits and lots of storage for all those rubber duckies, lotions and potions, and jumbo packs of bathroom tissue.
A bit of creativity and elbow grease can help you create a beautiful, unique bathroom on a shoestring budget. Consider re-finishing or re-painting existing cabinetry. A fresh coat of paint and new hardware can impart Cinderella results to your tired old vanity.
Save your money and the environment! Choosing fixtures that save on water and electricity will keep your hard-earned money from going down the drain. They will pay for themselves in the long run on utility bill savings.
Ask for it! There’s no need for the eager but unsure DIY-er to feel overwhelmed. Do you have family or friends who have undergone a renovation project and who can offer some insight and advice? Don’t be afraid to ask! Do you know someone who is great at painting or carpentry? Call in some favors or barter something you can offer.
Do you need more professional advice? The big box home improvement stores are a great resource, with helpful, knowledgeable staff who can answer your questions and offer advice. They often hold home improvement clinics where you can learn valuable skills and tips.
Tip #1: Keeping fixtures where they are will save you big bucks. If you can live with the existing layout, do it!
Tip #2: Don’t forget about insurance for your renovation. Are you sufficiently covered for unforeseen damages? Call your insurance agent before you wield that sledgehammer!
Tip #3: A hard-working bathroom can still be beautiful. An endless variety of tiles, fixtures and lighting options is available at your local home renovations store.
Tip #4: Scour your home, basement, attic, building salvage stores or garage sales for items that you can re-purpose. An old dresser or sideboard can be transformed into a beautiful vanity that matches your style. A fresh coat of gold or silver paint on a hall mirror frame can add panache to your bathroom for next to nothing. Bookshelves or simple storage units can be painted to match your décor and provide storage for towels, toiletries and bath toys.
Tip #5: Water-efficient showerheads and dual flush and-high efficiency toilets are now readily available. Ditto for energy-efficient bathroom light fixtures. Opt for LED.
For more information, or to get a home insurance quote, contact Square One at 1.855.331.6933.
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