In an inflated property market, many homeowners may choose to undertake renovations rather than move in order to get more out of their home and limit any potential fall in value in the event the market turns around.
But some improvements may cost more than the value they add to a property, experts say, so it’s important to consider what kind of work to have done. Here are five points to consider when contemplating a home reno:
This might sound obvious, but you will only be able to convert your investment into a return if you are able to sell your home at a good price. This means ensuring the improvements you make have a broad appeal. Designer features, such as standalone baths in the middle of a bedroom, will only ever appeal to a small section of the market, especially if they come at the expense of valuable living space.
The two main factors that determine a property’s price are size and location. The latter isn’t something you can change but adding space can be an effective way to add value. However, spending $100,000 rearranging the layout of your property doesn’t mean you will add $100,000 in value. Why? Because you haven’t added a single extra square foot of floor space. Attic conversions or basement finishing are two of the most cost effective ways to add value to your property, with a rear extension adding slightly less.
It is vital to research your local area and market, because there will be a maximum price that a house in a certain neighbourhood can be valued at, regardless of the improvements you make. Consider the value of the work you are doing in relation to the maximum sale value of similar properties in your area, and keep in mind that going over this figure is risky.
Improve energy efficiency
With fuel costs expected to have nowhere to go but up, having an energy-efficient home is a big selling point for many prospective buyers who are becoming increasingly conscious of a home’s running costs and environmental issues. Getting a professional energy audit and addressing problems, some of which can be very simple to rectify, can boost a home’s energy-efficiency considerably.
It is important when considering the layout of your property to try and avoid losing rooms. If you expand a room’s size at the expense of another’s and in the process go from a three- to a two-bedroom property, it is extremely likely you will be reducing the value of your home. Also, try to keep layouts flexible – if you go to an open-concept ground floor, consider installing dividing doors or make it easy to reinstate stud walls so potential purchasers understand they can change the layout to meet their needs.
Source: Globe and Mail