Not all home renovations are what you’d expect them to be. Before taking on a renovation project in your home, you’ll want to consider payback on your investment. When you sell, how much will you get back?
A renovation should increase the value of your home by at least the amount you spent on it. Although some people do choose renovations that are strictly for their own enjoyment, most people want to know that they’ll get the greatest return on investment.
According to the Canadian Housing and Mortgage Corporation, 37 per cent of homeowner households renovated their home in 2011, with the majority of homeowner households renovating to update, add value, or prepare to sell. The most popular type of renovations were remodelling of rooms, followed by painting or wallpapering, and renovations involving plumbing fixtures and equipment. So do these renovations have good return on their costs?
Here is a list from The Appraisal Institute of Canada of the percentage recovered upon resale:
Kitchen upgrade: 75% to 100%
Bathroom upgrade: 75% to 100%
Interior painting: 50% to 100%
Roof replacement: 50% to 80%
Replacement of furnace or heating system: 50% to 80%
Expansion (addition of family room): 50% to 75%
Doors and windows: 50% to 75%
Deck: 50% to 75%
Installation of hardwood floor: 50% to 75%
Construction of a garage: 50% to 75%
Fireplace (wood or gas): 50% to 75%
Central air conditioning: 50% to 75%
Finished basement: 50% to 75%
Wood fence: 25% to 50%
Interlocking paving stones on driveway: 25% to 50%
Landscaping: 25% to 50%
Asphalt driveway: 20% to 50%
Pool: 10% to 40%
Skylights: 0% to 25%
Research shows year-after-year that new or improved kitchens and bathrooms are at the top of the payback list, with most or all of the expenses being recovered at resale. Also, it is important to realize that the amount put into the renovation needs to be relative to the value of your home