Page 18 - Real Estate Now Sept-Oct 2022

But what’s really worth doing?
Knowing what’s likely to give the biggest lift to your selling price is good. But knowing which renovation project
delivers the most bang for your buck is better. A kitchen that adds another $50,000 in value to a $600,000 house
sounds great — unless you spent $80,000 on it. When you look at the home renovations that are most likely to pay
for themselves, kitchens and bathrooms are tied, according to a widely-quoted assessment by the Appraisal Institute
of Canada (AIC). Both will likely boost your home value by between 75 per cent and 100 per cent of what you spent.

The rule of thumb is that “a good investment in a renovation should increase the value of your home by at least 50
per cent of what you spent,” according to the personal finance website of the Ontario Securities Commission. Small
touch-ups like painting and new rugs, eco upgrades and new fixtures and basement renovations will all do that,
according to the AIC. Fancy landscaping jobs and swimming pools, on the other hand, are on the do-not-do list, at
least if you’re counting on recouping a large chunk of your money. WATCH: What you should know before signing a
contract for home renovations.
Watch: What you should know before signing a contract for home renovations.

Home renovations aren’t investments

To know that you can make your renovation money back is comforting. But that doesn’t mean home improvements
are money makers. Sure, it ‘s easier to justify shelling out $1,000 on a kitchen backsplash installation if you can tell
yourself it’s an “investment.”But according to the AIC numbers, home renovations make for pretty poor investments. If
you’re lucky, you’ll make your money back, which is an investment return of exactly zero. That’s why many real estate
agents advise against embarking on major upgrades right before selling.
A state of the art kitchen may bedazzle new buyers, but simply spraying your cabinets and buying new handles will
likely give you considerably more bang for your buck. And when you’re budgeting for a renovation, don’t forget to
include taxes and a top-up of 15 to 20 per cent to cover the (nearly inevitable) cost overruns. ■

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