Homeownership is still considered one of the best investments. Unlike other tangible purchases where the product depreciates from day one, homes typically gain value, depending on the market. There are three things that can boost your property value—time, major or small home renovations and increased demand based on location.
Home improvements, if done with purpose, can make your real estate investment even more profitable. By updating through renovations, additions and general maintenance, you can increase your home's value and command a higher selling price.
It’s important to remember that not all home renovations will be profitable, but there are certain types that have a higher return on resale, so you can live comfortably and be confident you’ll be able to sell your home for more when the time comes.
While not every home purchase is done with selling in mind, it makes good sense to establish a plan for boosting your property value based on the following criteria:
What the house needs
Whether you've got a fixer-upper that needs an entire overhaul or a home that needs some slight updating, you really need to start with the essentials. While these items may not appear to boost your property value, without them, you may end up taking a loss.
First, the home must be structurally sound. That means that the roof and basement are leak-free, the gutters and downspouts are working properly, and that the windows and doors operate properly and are not deteriorating.
Second, potential buyers will have basic expectations when they consider purchasing your home, such as fully functioning electrical, plumbing, and HVAC systems.
Assuming all of these fundamental components are in place, now you can start doing some improvements that will help your property stand out from the competition.
You've heard the phrase, "Don't judge a book by its cover." Unfortunately, that's exactly what some prospective buyers will do. If your home lacks curb appeal
, there's a good chance those potential buyers will keep on driving.
Some of the best things you can do to give your property value a little boost are things that cost very little—trim the trees and shrubs (or replace overgrown bushes with some fresh, low-cost landscaping), weed the flowerbeds and plant some bright-coloured annuals if weather permits, clean out the gutters, replace any missing roof shingles, power wash the front of the house, and add a fresh coat of paint to the front door and trim (also paint the garage door if it's attached).
Invest in some new light fixtures, update the house numbers (those old rusty ones have got to go), and replace that old dilapidated mailbox with something more modern. Do the work yourself, where possible, to save time and money.
If you're ready to take the exterior to the next level, consider installing new siding, replacement windows (add energy-efficient features like Low-E or Argon gas for an added benefit), or refurbish your deck. According to HGTV
, the average return at resale for these renos is a whopping 95.5%. These things will benefit you while you live in your home, and you should recoup the majority of your money when you sell.
Still among the top property value boosters, bathroom and kitchen remodels can provide a return at sale from 91% to 102%. So you could actually make a little bit of money with a bathroom or kitchen remodel.
A minor bathroom remodel costing an average of $10,500 can see a return of 102% on resale. This includes replacing (or re-glazing) the bathtub and surround, floor, sink, vanity, toilet and light fixtures. Repaint the walls and replace shower doors with clear glass to make the room look bigger.
Even a major bathroom reno that involves expanding the room, relocating plumbing fixtures and adding designer sinks and faucets, replacing floors with ceramic tile, and replacing the countertop with quartz or granite, you'll still see an average of 93.2% of your money back when you sell.
Even if your kitchen is functional and somewhat stylish, it will definitely payoff if you do a minor kitchen remodeling project. Expect an average 98.5% return on resale for refacing cabinets and drawers, replacing the sink and faucet, adding new laminate countertops and vinyl or laminate flooring. Add some recessed lights, pendant lights above an island, and under-cabinet lighting to make the room bright and cheery.
While a major kitchen overhaul won't net you a big profit, it might just be the feature that helps your home stand out against the competition. Your kitchen remodel budget shouldn't exceed 15% of your home's value.
This will allow you to install new cabinets (including an island), add quartz or granite countertops, undermount or farmhouse sink, add a custom backsplash, new flooring (hardwood or 12” x 12” ceramic tiles are trending), modern light fixtures (include plenty of recessed lights), new appliances, and walk-in pantry. Two-tone painted cabinets are popular now but be careful that you choose neutral tones like grey or white to appeal to a larger market.
I just listed a bunch of different things you can upgrade and some average returns on resale, but it’s important to remember that there’s a wide variety of materials and associated costs. If you splurge on your kitchen flooring, there’s a chance you won’t find buyers that see the value.
What the market will tolerate
Check with a real estate agent to understand where your home fits into your neighbourhood relative to features and pricing. Finishing your basement as an extra bedroom, home office, or entertainment space will allow you to add square footage, compete with area homes, and boost your home's property value without breaking the bank.
Adding a family room or sunroom will add value in high-end communities, but be careful you don't push your home's selling price higher than the market will tolerate.
Regardless of how long you've owned your home, investing more money through renovations can be very effective in boosting your property value
. By establishing a plan and balancing what your home needs with what buyers want, you'll increase your chances of making your money back and then some.
Serge Bojinski writes regular columns on real estate, home improvement and a healthy lifestyle. Founding editor at renohood.com. His contributions appear on home improvement and real estate sites across Canada. He loves outdoors and adventure. Supports his callisthenics community. Lives by the motto, "We rise by lifting others". Connect with him on Twitter.