I have a cool post for you this week, my buddy (and author) Sean Cooper is sharing his tips to increase the resale value of your home. Sean’s book Burn Your Mortgage is a great book and has a lot of great insights to helping you get out of debt faster. Sean paid off his mortgage even fast than we did and he did it through side hustles and being smart with his finances. Enjoy!
A home isn’t just a place for your family to live, it’s a major financial investment. In fact, for most families, a home will be the largest investment of their life. When deciding on renovations, unless you’ve recently won the lottery, you’ll have a limited budget. While it would be nice to install a new kitchen, bathroom and fireplace all at the same time, maybe only one is in the budget right now.
So, how do you choose which project to get started on first? An important consideration is the projects that provide the highest average recovery rate (the percentage of your renovation costs that you may recover when you eventually go to sell your home). Although your family may enjoy a renovation like a swimming pool, it’s one of the worst investments you can make.
Let’s take a look at five renovations that are likely to increase the resale value of your home.
Kitchen
Although kitchens are most often the most costly room in the house to renovate, they also have the potential to provide the greatest opportunity to add value. A new or improved kitchen can provide an average recovery rate of 75-100%, according to the Appraisal Institute of Canada.
Just like with any home renovation, it’s important to spend your money wisely. Unless your kitchen is in desperate need of a gut job, you don’t need to spend a fortune to get a decent return. Instead of installing brand-new kitchen cabinets, if your existing cabinets are in decent shape, why not get them refaced? If the linoleum floor in your kitchen is worn out, why not pick up some new flooring and replace it yourself? A new backsplash and new countertops are some other smart renovations to consider. These are the perfect do-it-yourself (DIY) projects to tackle on your own.
Bathroom
Just like the kitchen, the bathroom is another costly room you can blow your household renovation budget on if you’re not careful. A new or improved bathroom can provide an average recovery rate of 75-100%. It’s all about carefully spending your renovations dollars to ensure they provide the greatest return. While you can go out and spend upwards of $50,000 on a brand-new bathroom, you’re not likely to see the same increase in the selling price of your home when you go to list it.
Take a good, hard look at your bathroom for priority renovations. Although you may have grown accustomed to your turquoise blue toilette, sink and vanity, all potential buyers will see is dollar signs, as they’ll probably want to tear them out right away. Replacing fixtures is a relatively inexpensive way to freshen up the look of your bathroom. Again, if you’re skilled enough it’s another DIY project you can tackle yourself to help improve your return on investment on home renovations.
Painting
Slapping on a fresh coat of paint is a no-brainer if you’re putting your property on the market. You can easily pick up a few cans of paint and some painting supplies and in a couple weekends have a freshly painted home.
If you’re painting your home by yourself for the first time, it’s a good idea to get the assistance of an experienced painter. A sloppy paint job can actually hurt the resale value of your home – it’s better to hire professionally painters if you’re not confident you can do a good job yourself. Or you can do what I did and paint the walls yourself and hire a professional to paint the ceilings.
Lastly, although you may enjoy bright pink, chances are the new homeowners won’t, so stick with neutral colours like eggshell white.
Basement apartment
Are you using your basement to store your belongings? Then you might want to put it to better use and install an in-law suite. It’s a great way to bring in some extra cash flow from rental income and help offset the high cost of homeownership in pricey cities like Toronto and Vancouver. (Rental income is often referred to as a “mortgage helper.”)
Renovating and finishing an unfinished basement can be a costly home renovation. Before proceeding, it’s important to consider some factors. Are the ceilings in your basement high enough? If they aren’t, you’ll need to pay someone to dig down deeper underground to make sure they comply with the minimum ceiling heights in municipal bylaws. Does your basement apartment have a separate entrance? If it doesn’t, it can cost some serious cash to install one.
If you’re lucky and your basement is already finished for the most part and all you need to do is put in a bathroom or kitchen and you’re ok with sharing your home with tenants, then that’s when installing a basement apartment can be a good investment.
But before going ahead, make sure you’re allowed to rent out your basement to tenants in your city. Not all municipalities allow you to do it.
Putting in an extra bedroom
Is there a bigger room in your home? Then you might just want to put in an extra wall and split it into two rooms. At times the layout of homes isn’t ideal, but there’s nothing stopping you from altering it. Removing walls from your home can be risky business since you don’t know if it’s a loadbearing wall, but putting in new walls shouldn’t be a problem.
While it may be true many homeowners like open concept, when you go to sell your home, if you do the renovation properly, you can sell it for more. If in the real estate listing it says your home has four bedrooms instead of only three, then you may be able to sell it for thousands or tens of thousands more. This can easily make back the money that it costs you to put in an extra wall.
This post was written by Sean Cooper, bestselling author of the book, Burn Your Mortgage. Sean is also the managing editor of mortgagepal.ca.
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