When working with our clients and designers, the question of value often comes up. Where should you spend your renovation dollars? What gives you the biggest bang for your buck? What will yield the highest return on investment when reselling you home?
These are all good questions, and ones to consider before renovating or building a home. Many renovations are sound investments in your home, whether you choose to enjoy it for many years or are looking to flip it, but not all renovations are created equal.
Do it for the money
If you have plans to renovate or build with the intention of selling, consider these upgrades to maximize your return on investment.
- Painting. Due to the relative low cost, this update is recoupable at the time of sale, and offers a quick and inexpensive face-lift. ROI value up to 200%
- Insulation. Again, due to the relatively low cost, insulating your home, specifically you attic, can offer great returns. It has the added benefit of increased energy efficiency, which means lower ongoing heating or cooling costs. ROI value up to 117%
- Roofs are one of those areas of the home you simply can’t ignore when there are troubles, as such; the value of a new roof is easily recognized by buyers and highly recoupable. ROI value up to 105%
- Hardwood flooring. Aesthetics aside, hardwood floors are an excellent investment and yield great returns. Refinishing existing floors however, yields higher returns than replacing the floors all together. Refinishing ROI value up to 100%, replacing ROI value up to 91%
- Adding a bathroom is listed as a major selling point amongst realtors surveyed, with bathroom remodeling also offering good yields (although not as high). Addition ROI value up to 96%, remodeling ROI up to 70%
- This doesn’t appear higher on the list because of the typically high cost associated with updating a kitchen. Minor kitchen updates tend to offer higher returns than major renovations do, especially given the kitchen is often considered the ‘heart of the home’ and specific style preference play a big role. Minor updates ROI value up to 83%, major updates ROI value up to 70%
- Additional high ROI items include (ROI values in brackets)
- Adding a fireplace (wood or gas) (up to 94%)
- Replacing the front door (up to 92%)
- Adding a deck (wood performs slightly higher than composite) (up to 80%)
- Replacing furnace or heating system (up to 80%)
- New siding (up to 77%)
- Finishing a basement (up to 75%)
- Constructing a garage (up to 75%)
- Adding central air (up to 75%)
- Replacing windows and doors (up to 73%)
- Adding a family room/addition (up to 70%)
- Adding a second story (up to 69%)
For love
If you have plans to stay in your home, or are looking to renovate to better enjoy your space, consider the following upgrades, which tend not to yield high returns, but offer higher joy scores.
- Skylights. Unlike roofs, this overhead update has one of the lowest ROI scores due to the cost, perceived value, and perceived maintenance required. ROI Value 0-25%
- Pool. Don’t spend the money on a pool unless you plan on using it a lot. Pools are expensive to put in, but also expensive to maintain, costing typically thousands of dollars per year to maintain. ROI value 10-40%
- This may be the first impression you make on visitors to your home, but whether you are simply re-asphalting the driveway, or laying beautiful interlock, don’t expect to recoup more than half of the cost. ROI value 20-50%
- Whether it is adding a wood fence, a greenhouse, or a rose garden, landscaping is more beautiful than it is profitable. ROI value 25-50%
- Home Theatre. This is one of the few items on this list you can enjoy despite the season, or the weather, and requires little maintenance. Even still home theatre systems don’t yield high returns, even if you can watch Game of Thrones on a 10’ screen. ROI value 30-50%
- Closet Renovation. Due to the highly personal nature of a closet, custom closets rarely fetch back the money invested, even if they are worthy of Carrie Bradshaw’s approval. ROI value 35-57%
If you’re not sure whether a specific upgrade is right for you, let us help. Contact Alair Homes Forest Hill Toronto for expert advice and support on every aspect of your renovation or custom build.
Note: Values derived from multiple sources including Remodeling 2016 Cost vs. Value Report (costvalue.com), National Association of Remodeling Industry (nari.org) and Style at Home (styleathome.com) along with proprietary research .