Some renovations pay off way better than others

Canadian homeowners now spend approximately $2 billion per month on home repairs and renovations, yet some see much better pay off from the work than others.

The difference is where and how the money is spent. The bottom line is that as much of the renovation costs as possible should be recovered at the time the house is sold.

Sure, you can do renovations for yourself and by yourself for purely personal aesthetics, but in the real world of real estate a poor quality job can actually reduce the value of the home.

If you are planning a renovation there are two professionals you should talk to first: your local realtor; and a professional renovator.

Your realtor will be able to tell you how much you should spend, based on your neighbourhood, for the maximum return on investment. A professional renovator can provide realistic budgets and advice on how to do the job right.

Recently, I discussed renovation cost recovery with a Vancouver realtor and a renovator who quickly ticked off examples of houses that would have sold faster, and for more, if the vendor had taken more care with the renovation. In one case a homeowner had transformed the basement into a casual family room, but used low-cost floor covering and failed to properly insulate the walls before drywall. The result: a potentially costly repair that turned off would-be buyers.

Another homeowner had spent close to $100,000 to gut and renovate an older house -- but because of the home’s location in a modest-price neighbourhood, it is doubtful the spending can ever be recovered.

The following insight, from an annual survey of members of the Appraisal Institute of Canada, may help you get a handle on which home renovation projects represent the best pay back for your dollars.

Several hundred members of the Institute were surveyed. As well, the appraisers gave details on what home renovation trends were becoming popular in their own market areas.

The best bang for the buck, it turns out, is simple interior painting, which returned nearly 75 cents on every dollar spent. Kitchens and bathrooms also provided a solid payback, but some energy upgrades were worth less than half on sale day.

Upcoming trends in renovation projects Canada-wide include adding or creating a main-floor laundry room, a ground-floor home office, built-in kitchen appliances and hardwood flooring, the Appraisers say. A trend to watch, however, is smart wiring upgrades which realtors and renovators contend is starting to top demand when home improvements are being considered.

The top 10 paybacks:

The real estate appraisers’ top 10 Reno projects, (with potential payback in brackets) are:

-- Painting and decorating, interior (73 per cent)

-- Kitchen renovation (72 per cent)

-- Bathroom renovation (68 per cent) -- Painting, exterior (65 per cent)

-- Flooring upgrades (62 per cent)

-- Window/door replacement (57 per cent)

-- Main floor family room addition (51 per cent)

-- Fireplace addition (50 per cent)

-- Basement renovation (49 per cent)

-- Furnace/heating system replacement (48 per cent)

The top 10 trends:

The top 10 renovation trends, Canadian appraisers say, are:

-- Adding a main-floor laundry room

-- Ground-floor home office

-- Hardwood flooring upgrade in kitchen

-- Whirlpool bath separate from shower

-- Built-in kitchen appliances

-- Addition of kitchen cooking island

-- Non-neutral interior paint colours

-- "Smart" house wiring

-- Home theatre room

-- Skylights

The monetary pay back may not be the driving force in your renovation decision. But, when you’re dealing with perhaps the biggest investment in your life, it is wise to calculate what it will cost in the long run.

By: Frank O'Brien
June 10, 2001

Copyright 2001 Inman News Features
Distributed by Inman News Features