High-Return Home Improvements: Smart Renovations for Maximum Equity
Fourteen years ago, Brendan Charters had a custom concrete integrated counter and sink with a farm-trough inspired tigerwood floating vanity installed in a bathroom at his Toronto home.
“It probably cost me triple what a standard vanity and sink would have cost, but I liked it,” he says. “It was cool and trendy and modern.”
Charters, a founding partner at Eurodale Developments, a design and build firm specializing in additions, renovations and custom homes, knows he’s unlikely to make the money he spent on the vanity back if he sells the home. “People would be like, ‘Whoa, what’s with this concrete sink that goes wall to wall?’ ”
Even a prospective work client was skeptical. “Do you think they’ll regret this bathroom in a few years?” the client had asked on a tour of the home, not realizing it belonged to Charters.
While a renovated kitchen or bathroom can increase the value of a house, other additions and changes are unlikely to get you a good return on your investment.
If you’re planning on selling your home in the next five years, resale value is important to consider, Charters says. “Anything you’re doing to the house, you’re trying to ensure that someone is willing to pay you back for it.”
Most experts agree that pools and hot tubs, over-customization and passing trends won’t increase the value of your home. What one homeowner may consider an upgrade could be considered a nuisance by a potential buyer.
Here are four “upgrades” you might want to skip if you want to get your money back.
Pools and hot tubs
“The pool industry exploded after 2020, because everyone was at home and they wanted to enjoy the space,” Charters says.
The return on investment for a pool is around six per cent, says Mike Heddle, broker and team leader at Heddle Group, Royal LePage State Realty. During the COVID-19 pandemic, Heddle was determined to have an in-ground pool installed for $100,000 or less. “That wasn’t a realistic expectation,” he says. “It’s a significant investment that you’re going to make, depending on the type of pool and landscape.”
Aside from the upfront costs of installation, pool maintenance — chemicals, heating, etc. — can cost thousands of dollars a year.
The neighbourhood you reside in also matters when considering whether potential buyers will want a pool. “If you’re in the Bridle Path, you expect a pool,” says Toronto realtor Barry Lebow. “But in a basic subdivision in Scarborough from the 1950s, you don’t expect a pool.”
If you do decide to get a pool, go for in-ground. Lebow says above-ground pools add zero value. He recommends keeping your maintenance records so that a buyer can see it for themselves.
Lebow, who also has experience as a real estate appraiser, says hot tubs are an especially bad addition if you’re looking to get your money back when you sell your home. “I never saw value in a hot tub,” he says.
Behind-the-scenes upgrades
Getting a new furnace or replacing your roof may help make your home more efficient and comfortable, Charters says, but you’re unlikely to get your investment back when you sell. “Real estate agents focus on square footage and ceiling heights, they don’t understand complex mechanical systems,” Charters explains. “So doing things like installing a geothermal heating system is not going to give you the return on investment.”
Heddle says installing a new roof, air conditioning or furnace will typically yield a seven per cent return on investment.
“If people don’t see it, they’re not going to pay for it. It has to be visual,” Lebow says.
Solar panels
Charters points out that the price of solar panels has come down significantly over the past decade. Typically, he adds, they’re less visually appealing than desired, but there are solar shingles and claddings that look nicer.
Eco-friendly upgrades can still require very significant investments up front, Heddle says. Some companies have contracts that are either very expensive to discharge if they want to sell the property or may not be transferable, he adds. “You’re going to want to be very cautious about the terms associated with installation of that type of asset,” Heddle says.
Over-customization and trends
Charters advises against “outlandish” interior upgrades if you’re planning on selling. “Don’t install red high-gloss kitchen cabinets, because there’s a very small market of people that are going to want to purchase that, and they will discount it.”
Buying into trends can also be a bad idea. Charters sees a lot of fluted wall panelling these days, which can cost thousands to install. “We know in 10 or 15 years, it’s going to look very dated,” he explains.
If you think it’s better to opt for a cheaper trendy option, like wallpaper with a fluted panelling print, think again. “The industry is very adept at seeing trends and then trying to reverse engineer it to make it cheap enough that it’s accessible to everyone,” Charters says. “Then it loses its cool factor.”
Upgrades with good ROIs
If you’re planning to sell and you want to make some improvements to boost the home’s value, a few simple — and affordable — changes are all it takes.
One of the most cost-effective changes you can do is painting, Charters says, as it can have a huge impact on how the space looks and feels.
Heddles says a fresh coat of paint will yield around 95 per cent return on investment. “So if you spend $10,000 on painting, you’re going to increase the value of your home by $9,500.”
Lebow advises going with neutral colours. “Minimalism is better,” he adds.
Other cheap and cheerful upgrades include changing door handles and hardware on kitchen cabinets and updating light fixtures.
Curb appeal is also important. “Look at your home from the curb,” Charters advises. “What do the gardens look like? What do windows look like?” The exterior may just need a coat of paint for it to look new and fresh.
Keep in mind that seasonality is important when it comes time to sell. If you have extensive landscaping but it’s covered in snow, you won’t get a good return on investment, Charters says, because people aren’t able to visualize themselves in that space. If you’re selling in the spring or summer, the same project could have a great return on investment.
Charters also points out that if you’re planning on staying in your home for 10 years or more, the majority of value related to the investment you’re making is enjoyment value.
Heddle agrees, adding that some people do extensive landscaping or add outdoor living touches like gazebos simply for their own enjoyment. “There’s a balancing act of return on investment and increasing quality of life.”
This article was first reported by The Star
