How to Maximize Your Renovation ROI
According to Altus Group’s 2018 House Report, Canadians spent $77.4 billion on renovating their homes in 2017! The report also notes that one in 16 homes need some sort of major work. And in the Greater Toronto Area alone, there are roughly 40,000 renovations and custom homes completed every year.
With the money spent on home improvements, how exactly can you maximize your return on investment (ROI)? Here are three important things to consider:
- Establish your priorities:Ask yourself, “Am I planning on selling my home? Am I renovating because my house needs too many repairs?” Planning and understanding why you are renovating will help ensure a successful project from the onset.
- Set a responsible budget and stick to it:Don’t overspend on items that are above the standards of the other homes in your neighbourhood. For example, don’t install high-end appliances, expensive marble flooring or tiles, and expensive chandeliers in your kitchen if no one else in your neighbourhood has. If you overspend, you will lose money. But if you set and stick to a responsible design and budget, you can maximize your profits.
- Work with a professional renovation contractor:If you try to save money on your contractors’ services, your renovation is more likely to go wrong and you will eventually pay more. This might seem counter-intuitive, but a good contractorwill save you time and money by working more efficiently with fellow professional tradespeople.
The most valuable rooms to renovate
Remodelling Magazine’s 2019 Cost Versus Value Report identifies what home renovations will hold value into the future. The report finds that, in 2019, replacing your garage door has the best return on investment at 97.5 per cent. Other interesting figures include:
- A minor kitchen renovation at 80.5 per cent ROI
- A major kitchen renovation at 62 per cent ROI
- A bathroom renovation at 67 per cent ROI; and,
- Adding an entirely new bathroom offers an ROI of 61 per cent.
Despite the data, you’re not always guaranteed to make profit off any home renovation, but making responsible decisions and working with professionals can increase the likelihood of that happening. Homes that are in more need of a renovation will have a higher return on investment versus a renovation meant to simply change the aesthetics. Other renovation benefits such as livability or preparing your home for sale need to be considered when planning your renovation.
Should we create an income suite in our basement?
Julie from Mississauga asks: “We’re planning to turn our basement into a rental property. Can we use the side entrance and stairs to go down to the basement and close it off to the main level of the house?”
Answer: This is a great question and it’s something many people are considering having done in their homes today. Secondary side entrances were commonly added to homes built between the ’60s and ’80s as a convenient way to get inside from the driveway over the more formal front entrance.
This type of renovation typically isn’t very difficult, but first contact your municipal bylaw office to ensure that having a basement apartment is legal in your area.
Second, ensure the space complies with the building and safety codes. This means that you may need to get an architect and/or a contractor involved to identify if there is any work that needs to be done to bring the space up to code. This may include a building permit and city inspections.
Third, to separate your main floor from the new apartment, I suggest installing a fire and security door. This means that if you want to use the basement again it will be easy to convert it back into your own living space.
Peter Glaw, president and owner of Premier Quality Renovations Inc, is a professional builder/renovator with more than 41 years of construction experience in the residential and commercial renovation sectors. Premier Quality Renovations Inc. has been a member of RenoMark and the Building Industry and Land Development Association (BILD) since 2015. Follow their work on Facebook and Instagram: @premierqualityrenovations.