Whether you just purchased, are looking to freshen things up or are getting ready to sell, renovating could add significant value to your home! Making the right investment can improve your living experience, generate a return on investment and make your home far more desirable to potential buyers.
Join us as we give you a primer on home renovations and maximizing the value of your investment. If you need help, Keasy’s in-house investment specialists, appraisers and home inspectors have years of experience and are happy to help! Click here to connect with a professional today.
Where to begin? A Framework for Home Renovations
A good rule of thumb is to complete projects as professionally as possible and to stay far away from “lipstick” renos to cover up underlying issues with your home. Most renovations when done right will add value, although the key to maximizing your ROI remains choosing the right projects and budgeting properly. We created this short guide to help if you’re not sure who to consult or where to start with your renovations.
As a starting point, we recommend prioritizing potential renovations that address core issues with your home. Addressing these issues will minimize risk and save you money while you are living in your home and give potential buyers peace of mind enabling you to maximize the price of your home when selling. Aesthetic renovations and other improvements should then be considered to add the “wow” factor.
Core Renovations – The “Bones” of your Home
Core renovations can be analogous to issues with the “bones” of your home and can significantly affect the value of your home. Some examples of serious issues are outlined below.
- Foundation: A cracked foundation may allow leaks and moisture to enter into your home. Moisture combined with lack of light creates mold which is a serious health concern, particularly in a finished basement that is being used all the time. There are several waterproofing investments that can be made to address this issue.
- Electrical: Knob-and-tube wiring and aluminum wiring that has not been installed using best-practices may pose a serious fire hazard. Addressing key risks or replacing outdated wiring with copper wiring will reduce risk and also reduce your home insurance premiums.
- Plumbing: Older home sewage systems typically use clay pipes and cast iron stacks. These pipes can be compromised over a long period of time and result in significant issues and costs when they fail. Clay pipes can be compromised overtime from frost and shifting soil resulting in cracks and root infiltration which may lead to sewage backup. Cast iron stacks can also be compromised over time resulting in cracks. These pipes are typically replaced with PVC, a durable plastic. Such renovations should be done prior to “finishing” a basement as doing them after a basement is finished can be significantly more costly.
- Heating, Ventilation and Air Conditioning (HVAC): Improvements to your home’s heating and cooling system, such as installing high efficiency windows, furnaceand air conditioner can significantly reduce your heating and cooling bills and are desirable features for new homeowners when you are looking to sell your home.
Keasy’s partners are registered and reputable home inspectors that can help you identify potential investment opportunities. You can learn more about our inspection services by clicking here.
10 Best Home Renovations that Add Value to Your Home
On average, home sellers are willing to invest 2.5% of the value of their home into renovations before listing it on the market. With an average home price in the GTA (Greater Toronto Area) of $902,680 in 2020, the average amount spent on presale renovation came out to $22,567. The table below indicates approximate pricing and the potential value increase realized from the 10 best renovations based on a home value of $900,000. The cost of every renovation will vary depending on variables specific to your project such as the type of reno, its size (square footage), the materials used, all associated labour costs, city permits, and any extra features you may wish to include. Also, every location has varying micro and macro housing markets so the numbers will vary. Market conditions at any given time will also affect the figures.
| Reno Rank | Renovation Project | Potential increase in selling price (based on a $900,000 home) | Typical ranges of renovation costs |
|---|---|---|---|
| 1 | Kitchen Remodel & Renovation | 12% ($108,000) | Minor: $10,000 – $20,000 Medium: $20,000 – $40,000 Major: $40,000+ |
| 2 | Bathroom Remodel & Renovation | 2.5% ($23,000) to 12.5% ($112,500) | Half-bath (20 sq ft): $2,000 – $5,000 Small size (40 sq ft): $5,000 – $10,000 Regular or Large size (40 sq ft+): $10,000 – $20,000+ |
| 3 | Finished Basement | 2.5% ($23,000) to 12.5% ($112,500) | $15,000 to $50,000+ |
| 4 | Eco-friendly Renovations (New windows, attic insulation, HVAC etc.) | Under 10% ($90,000) | $5,000 to $40,000+ |
| 5 | Basement Apartment/Rental with Walk Out | Under 10% ($90,000) | $20,000 to $50,000+ |
| 6 | Landscaping & Curb Appeal | Under 7.5% ($65,000) | $2,000 to $25,000+ |
| 7 | Interior Paint & Finish | Under 7.5% ($65,000) | $2,000 to $25,000+ |
| 8 | Exterior Paint & Finish | Under 5% ($40,000) | $5,000 to $30,000+ |
| 9 | Backyard Deck or Patio | Under 2.5% ($23,000) | $5,000 to $100,000+ |
| 10 | Swimming Pool | Under 2.5% ($23,000) | $30,000 to $50,000+ |
Consider this before deciding on what to renovate
Home renovations may seem straightforward but in reality many of your options are anything but. Depending on which renovation project you’re thinking of doing, there may be some added costs that you haven’t considered. For example, adding a walkout to your basement will require a permit, so you’ll need to have an engineer and architect draw up plans, as well as pay any city fees associated with this project. This process may cost anywhere from $3,000 – $5,000 before you even begin work on the project. A survey will also typically need to be submitted with your application. If you don’t have one and nothing is available online, then you may need to spend extra again just to have surveyors come and draft a new one. Not only does a survey cost approximately $2,500 it also takes time to arrange.
Basement apartments (to rent or otherwise), and home addition renovations will likely involve much the same process and costs before you can get started. Even some landscaping and deck builds may have extra requirements attached.
This isn’t to say that these renovations aren’t worth it, because they very well could provide a nice return on your investment, but make sure you know the process and all the hidden costs involved before making your renovation plan.
1. Kitchen Remodelling and Renovation
Potential increase in selling price: 12% ($108,000)
Average cost of renovation: Minor: $10,000 – $20,000, Medium: $20,000 – $40,000, Major: $40,000+
Renovating your kitchen is the best home improvement you can do to add value to your home (the bathroom is a close second). The kitchen is the real showcase for potential buyers so make sure it’s worthy of being the heart of your home.
Start your essential kitchen renovation by updating the appliances and cabinetry for a cost-effective modern look. Step up to a full remodel by removing a wall to expand the kitchen area or add an island to enhance the look and the useability. Don’t cheap out on the countertop as a nice one will make even average cabinets look great. Consult your realtor about what could work in your home and be creative. There’s lots you can do at varying budget levels to create an amazing kitchen buyers will love.
2. Bathroom Remodelling and Renovation
Potential increase in selling price: 2.5% ($23,000) to 12.5% ($112,500)
Average cost of renovation: Half-bath (20 sq ft): $2,000 – $5,000, Small size (40 sq ft): $5,000 – $10,000, Regular or Large size (40 sq ft+): $10,000 – $20,000+
The bathrooms in your home come in at a close second place to the kitchen in importance to potential home buyers. Bathrooms are a great area to upgrade in your home because there’s a wide range of budget options and it can often be done for less cost than you think. Swapping in a new vanity and mirror along with some fresh paint and a good cleaning can work wonders for relatively little cost.
Depending on the layout of your home and your budget, you can also look to go bigger. Expand the space or reposition the toilet, sink and shower for a complete remodel that will make buyers drool. If your home has only one bathroom but enough space for another or even a simple half-bath (toilet and sink) for guests to use, this addition could be a worthwhile consideration. Many homeowners also choose to incorporate a bathroom into a basement finishing renovation. Make sure there is a bathtub in at least one bathroom and a shower in the other. As with all home renovations keep potential buyers in mind and consult with your real estate agent regarding design trends.
3. Finished Basement
Potential increase in selling price: 2.5% ($23,000) to 12.5% ($112,500)
Typical cost of renovation: $15,000 to $50,000+
Adding more livable space is a sure-fire way to raise the selling price of your home. Many newer houses are sold by developers without a finished basement which leaves you lots of room for improvement. The costs of basement renovations vary greatly, depending on size, and the extent of finishes and furnishings. There’s lots of options to consider, such as adding a bedroom, a second or third bathroom, a media room, kitchen or adding a walk out. Extensive renovations might be worth it but would cost a lot, while simply finishing the floor, walls and ceiling is a great cost-effective option too. Less is often more when it comes to basements, so we often recommend to simply finish the floor, walls, and ceiling of the basement and let potential buyers choose how to use the space.
A useful tip to consider is making additional value-added investments as work on the space is underway. For example, if the basement is unfinished, consider adding a waterproofing system, extra electrical and plumbing before doing all the framing and drywalling as it would be harder to install these systems once the basement is finished.
It’s also important to make sure your space will benefit from the finishing treatment. A finished basement with 5’5” ceilings is not very desirable, so you’ll want to consider underpinning to a lower depth before investing in finishing the basement. A minimum ceiling height requirement for a basement apartment is typically 6’5” and most buyers will look at ceiling height as an important factor of the desirability of your property. Having it at the right height gives buyers the option of turning the basement into an apartment and create a much more useful space.
4. Eco-friendly Renovations (New windows, insulation, HVAC etc.)
Potential increase in selling price: 2.5% ($23,000) to 12.5% ($112,500)
Typical cost of renovation: $5,000 to $40,000+
Eco-upgrades include things like energy efficient windows, insulating the attic to prevent heat loss, installing a high efficiency furnace and smart thermostats, or adding anything that helps in reducing your homes energy consumption. The best part is that you could be eligible for Government eco rebates that will cover a portion of your costs. Eco-upgrades also offer great advertising opportunities and future value for buyers through lower monthly energy costs. Most eco-upgrades are also areas that a home inspector will definitely be checking on so you can score some bonus points if these have been updated. There are “energy audits” available that will shed light on the areas that could be addressed in your home to save energy and update your home eco-friendly.
Eco-upgrades you should consider:
- Attic insulation
- Basement insulation
- Wall insulation
- Energy efficient windows
- High efficiency furnace
- Smart thermostats
- High efficiency water heater
- Energy efficient appliances
- Low flow toilets
- Duct insulation
Additional resources:
Government of Canada Energy Efficiency Financial Incentive Programs by Province
5. Basement Apartment/Rental with Walk Out
Potential increase in selling price: Under 10% ($90,000)
Typical cost of renovation: $20,000 to $50,000+
Basement apartments are great selling features for your home. They’re perfect for families with an older child or for someone looking to generate income by renting it out. There’s a catch though, legal basement apartments must adhere to bare minimums (height, access, fire codes, etc.) so check with your local municipality for the requirements. For example, if your basement doesn’t have enough height, you’d need to do underpinning and dig out the floor which will greatly increase your costs. You might also need to install windows and add an egress for each plus a door, all of which will be extra expenses. A walkout if your basement doesn’t have one already is also a very costly renovation. Maximizing ROI on a basement apartment build requires careful planning and may not be a value adding renovation for many homes.
6. Landscaping and Curb Appeal
Potential increase in selling price: Under 7.5% ($65,000)
Typical cost of renovation: $2,000 to $25,000+
Landscaping is probably the most varied of all home renovations simply because there’s so many options and expense levels to choose from. Curb appeal is important so that potential buyers aren’t turned off when they first pull up to your property, but it’s typically enough to make sure your home looks neat and well-kept. You don’t need to roll out the water feature or lily pond to impress, as a smaller renovation for stone tiles, a paved driveway, fresh grass, flowers etc. will give a great impression. While necessary, your spending on landscape renovations for selling your home should be kept to a minimum.
7. Interior Paint and Finish
Potential increase in selling price: Under 7.5% ($65,000)
Typical cost of renovation: $2,000 to $25,000+
Stained, faded or peeling paint can be a real turnoff for buyers viewing your home so make sure you’ve taken care of the basics. A fresh coat of paint works wonders on buyer’s perception and if they can picture themselves living in your home they’ll likely spend more. Every wall in your home is a candidate – kitchen, bathrooms, bedrooms, hallways – so consult with your agent or a designer to choose colours that suit and sell well.
Paint isn’t the only thing necessary to complete the fresh look of our home. Pay attention to decorative finishes as well, such as crown moulding, wall designs, finish carpentry, electrical outlets, light switches etc. All are amazing and cost-effective upgrades you need to consider.
8. Exterior Paint and Finish
Potential increase in selling price: Under 5% ($40,000)
Average cost of renovation: $5,000 to $30,000+
After the initial curb appeal, the exterior of your home is the next thing potential buyers see when viewing your home. Crumbling paint, broken eavestroughs and holes in siding or stucco can put a serious damper on first impressions. The return here isn’t very large so don’t go overboard, just make sure there are no obvious flaws and that everything is presentable.
9. Backyard Deck or Patio
Potential increase in selling price: Under 2.5% ($23,000)
Typical cost of renovation: $5,000 to $100,000+
While adding a deck to your backyard (if one fits) is a good idea, it’s not recommended to spend too much on this renovation. A deck or patio is nice to have but not necessary and buyers don’t typically buy a home for one.
That being said, rooftop deck additions have been growing in popularity amongst sellers and buyers over the last few years and can be achieved at many different budget levels. A rooftop deck can add quite a bit of square footage and creates a whole other space for enjoyment. You’ll need to research and think carefully about how it would fit into your home and what return on investment you’ll be able to realize, but a rooftop deck can really set your home apart and draw buyers in.
A deck or patio isn’t usually at the top of our list of value-adding renovations but at the right price, for the right home, these enjoyable additions could be worth the investment.
10. Swimming Pool
Potential increase in selling price: Under 2.5% ($23,000)
Typical cost of renovation: $30,000 to $50,000
Having a place for the family to cool off in the summer sounds like a great idea but not everyone wants a pool in their backyard. Swimming pools come with a host of associated maintenance costs that may put your home out of a potential buyers budget. With a low ROI, this one made last place on our list of renovations that increase the value of your home.
Looking at the list of potential areas to upgrade, the interior renovations are where you should be focusing your investments. Start in the kitchen, next the bathrooms and then the basement. These add great livability and more space to your home, both of which will give you the edge over other houses in your neighbourhood. Simple renos like paint and finishing are also great cost-effective ways to enhance your already great home. We recommend consulting with your real estate agent, a designer or contractor to get an idea of which renos would be most valuable to your home and their associated costs. There are also lots of interesting apps to help you design and plan your home renovation. Happy renovating and successful selling!
Proudly Canadian
Great article!