“What renovations will add the most value to my home?” It’s a question I get all the time. People often simplify and provide a vague-at-best answer to this important question, as most homeowners think that money in equals money out. This isn’t always the case. I will post more about this at a later date, as it’s an important conversation to have with homeowners, but also requires a proper post of its own.
For now, lets talk about five of the top home renovations that will add value to your home, ranked based on percentage return on investment (figures provided by the annual Appraisal Institute of Canada report).
#5. Replace your roof or furnace
Big ticket items anyone? A home can show beautifully during a showing, but finding out that the roof needs to be replaced or that the furnace is nearing the end of its 20-year life expectancy can throw a buyer a curve ball. It goes to show just how important these items are to someone contemplating a purchase and why tackling them before selling can be a critical way to not only add value, but get your house sold for its potential (buyers will discount their perceived fixes, but that’s another post topic). These particular items can be costly at first, but an energy efficient furnace, for example, can not only add value but will start saving you money on your hydro bills in the mean time. Appraisal Institute of Canada report: 50-80% return on your investment.
#4. Upgrade your flooring
By far one of the best methods for improving the esthetic appeal, and therefore perceived value, of a significant proportion of your home is adding in hardwood floors. They’re sleek, look great and create an essence of charm, even in older homes that may be showing their age. Real and engineered hardwoods are extremely durable and often elicit the biggest wow factor, but they can be expensive and force you to renovate one room at a time. Cheaper alternatives, like laminate flooring, provide you with a more affordable option that can still deliver that sense of renewal. Many laminate products are now available on the market and I often find myself lifting duct registers from the floor just to tell the difference. Upgrading your home’s flooring can be a great and affordable way to make a quick and lasting impression on both prospective tenants and buyers. Appraisal Institute of Canada report: 50-75% return on your investment.
#3. Add a fresh coat of paint, replace fixtures and wall plates
You might be surprised that these approaches cracked the top 5 list of renos that pack a bang for buck punch, but these small and relatively inexpensive changes can make a huge difference, for little investment. Much like flooring, freshly painted walls or newly replaced doorknobs and fixtures throughout your home can change the appearance of a room and deliver a sense of renewal, all for minimal investment. The local hardware store sells new wall plates for outlets at $0.50 a piece. These are great ways to add value without breaking the bank. They also require a fraction of the time relative to some of the other items on this list, making them a viable and smart option. Appraisal Institute of Canada report: 50-100% return on your investment.
#2. Upgrade your bathroom
Did you know (according to random reports and their authors who potentially have too much time on their hands) that individuals will spend up to 3 cumulative years of their lives in the bathroom? Now that’s not to say that the first spot you size up in a prospective home is the bathroom, but it does begin to explain why these parts of our homes are so important to us, sometimes surprisingly so. And like the other items on this list, if done properly you can certainly bet that putting your renovation dollars into your bathroom will be a good way to add both appeal and value to your home. Modern designs and soft palatable colors often take the cake now a days, but keep in mind that the average bathroom area is a small percentage of your home and will require less materials to renovate when compared to a kitchen. Bottom line, people will see value in a more modern, upscale bathroom. Appraisal Institute of Canada report: 75-100% return on your investment.
#1. Upgrade your kitchen
There’s an old saying that the “kitchen is king”. And while it comes in at number two on our list, kitchens can provide the biggest return on investment, far beyond any other room in your home. It’s important to keep costs in check, as kitchen renovations can add up quickly, to the point where recoup of money goes down the drain (…bad joke). Luckily, there are tricks to help complete that beautiful kitchen project without breaking the bank. Custom cabinetry, although appealing, can add up quick and often isn’t necessary. Most standard cabinetry can be worked to accommodate almost any layout and can funnel substantial amounts of money towards other aspects of the kitchen, resulting in an overall reduction of total costs. Counters (looking at you granite) can also be thought of in a similar way. There are many alternatives to stone countertops that give off an expensive character that will cost a fraction of the price. And although people often look for those expensive finishes, don’t forget that there is definitely something to be said for functionality and layout. I hear it from buyers all the time. Appraisal Institute of Canada report: 75-100% return on your investment.
Notable mention: Add in an income suite (if possible)
This might surprise some people, but nothing will add value to your home like a properly completed income suite (if you’re neighbourhood supports the proper demand for such a commodity, of course). I say properly completed because this is a much “bigger picture” project that will likely involve mechanical systems in addition to the other renovations we’ve discussed and will require expert input. The catch is that you’re likely going to limit the pool of potential buyers who might be interested in buying your home. This option has become extremely popular with younger, first-time homebuyers who are often looking for opportunities to minimize their intimidating mortgage payments, while middle-aged professionals or empty nesters likely have little to no interest in sharing a part of their home with renters. But make no mistake, when completed properly an income suite will immediately add value to your home. Better still, an income suite will actually help you make money as you build equity in your home.