Renovate smart: Tips to consider before knocking down walls
Unless you’ve purchased a new home custom designed to your liking, chances are you have a few renovations in mind. In fact Canadians are predicted to spend $46 billion on home renovations in 2011, up slightly from $45.3 billion in 2010.i
If you are thinking about renovation, you’ll want to do some research to make the most of your renovation dollars. And while it may be tempting to add a Jacuzzi or a state-of-the-art home theater system, it is always wise to approach renovations with resale value in mind. After all, circumstances can change quickly requiring a sudden move to a new location. You may be asking ‘where should I start?’ Here are some general recommendations to keep in mind.
Be Aware of Passing Fads
Like all things that rely on fashion, home renovations can also get caught up in the latest fads. With this in mind, consider renovations that may not mirror your personal tastes exactly. For example, neutral and classic colours and textures rather than bold or unusual ones will likely appeal to a larger audience. If you plan on holding on to your home for an extended period of time, it will also be important to remember that the more up-to-the-minute your project appears today, the more out-of-date it will seem 10 years from now. Include trendy, inexpensive pieces such as accents and pillows that can be easily switched up as trends change.
Keep an Eye on the Competition
Before laying down your plans, it will be wise to get a solid perspective of what’s going on in your own neighborhood. When you decide to sell, it’s important to remember that you will be competing directly with your neighbors and not the high-end designed home you visited recently. Recommendations on how much to invest in a home renovation do vary, and a good rule of thumb is to spend between 20 and 30 per cent of the homes current estimated value.ii Consider going to open houses or speaking with a local real estate agent to determine what’s standard in your local area.
Hire an Architect
While likely unnecessary for smaller projects, for larger projects like an addition or knocking down load-bearing walls, hiring an architect can go a long way towards ensuring your investment delivers what you are hoping for. Consider speaking with a local real estate agent or neighbor for a good reference.
Get a Permit!
For all but the smallest projects, a permit will likely be necessary, and that includes changes to the inside of your home. It will add to the expense and take some time to plan, but compared to the potential problems you could face down the road, it’s a smart move. Depending on the area where you live, undertaking a renovation without a permit may be breaking the law, and could even complicate the process of selling your home.
Get it in Writing!
It’s very important when dealing with contractors to spell out the details of a home renovation in a contract before you begin. If the contractor is reputable, this should never represent a problem. For a sample of what a renovation contract should cover, consider visiting the Canada Mortgage and Housing Corporation (CMHC) websiteiii for some tips, or consider speaking with a legal representative before signing any contract.
Financing your Renovation
One way to finance a renovation is to put you home equity to work for you through an all-in-one account. All-in-one accounts typically combine all of a client’s savings and loans, including their regular income and mortgage, in one efficient product secured by their home. These all-in-one accounts can give homeowners with substantial equity in their home the financial flexibility to tap into their investments at any time. With some accounts, it can be as simple as writing a cheque, using a debit card or transferring funds online.
For more information on opening an all-in-one account to help finance your home renovation projects, please contact your advisor.
The following resources may come in handy as you plan your renovations:
iGlobe and Mail, June 1, 2011. Diane Nice, Globe and Mail Blog.