Some Renovations Bring No Value
Homeowners plan renovations for different reasons. Sometimes it’s because they’ve seen a friend’s new kitchen or something on a design show that sparked their imagination. Other times it could start with a repair that turns into a complete makeover. But by the time the renovation is finished, most homeowners will want to know how much that reno has increased the value of their home. But value is a tricky subject. Let me give you a scenario: A homeowner decides to renovate their bathroom. They want the kind of bathroom that would be in a million-dollar home — but their house is actually worth closer to $500,000. The bathroom ends up costing $40,000. Has the value of the house increased by $40,000. No. At most, probably just $15,000. So was it a bad decision? It depends on why the homeowner did it in the first place.
If they did it just because they wanted the bathroom of their dreams, then I say the reno did its job. But if they got the new bathroom to increase the selling price of their home, then a $12,000 bathroom reno would have been enough. In other words, a $40,000 bathroom reno wasn’t a smart investment.
Then there are projects that could cost you a fortune but actually decrease the value of your home. This usually happens with very specific projects that are important and valuable to the current homeowner but not necessarily to everyone else.
For example, someone might be a huge hockey fan. So much so that they renovated their garage into a hockey-themed man cave. No doubt that reno could have cost upwards of $10,000 — at least. While the homeowner sees it as a huge plus, prospective buyers might see it as a huge minus — an extra cost they will have to take on to turn that man cave back into a regular functioning garage.
So, is customizing your home specifically to your taste and needs wrong? It depends on why you’re doing the renovation. Did you want to increase the selling price of your home, or are you planning on living in the house for 20 to 30 years, or even growing old there? This changes how you should approach renovations.
People used to buy homes to grow old in. They wouldn’t care how much a reno increased the selling price of their home because they weren’t interested in selling it. But things have changed. Now when most people buy their first home they’re already planning to move out within five years. If that’s the case, I don’t recommend renovations based on particular tastes or additions that potential buyers might see as extra costs.
Things like pools, home offices, man caves and saunas are not smart projects to invest in if you’re only interested in increasing the selling price of your home.
Pools take a lot of work and money to maintain. It could be a hard sell to potential buyers. That’s why there are so many companies out there that specialize in filling them in. A home office might work great for one family while others would rather have an extra bedroom or playroom. And man caves — well, I love them. But that’s me. Most buyers just want a place to park their car and store tools.
As for saunas, I never recommend getting one installed inside your home. I don’t care if you’re planning on living in the same house for the rest of your life. Getting a sauna means a lot of additional moisture is being created within your home’s envelope — not smart. If you want a sauna, build it outdoors. But don’t think buyers are going to cover the cost of your installing it. In most cases, they’ll get rid of it. And that will cost them, which means it will cost you in your home’s selling price.
I like the idea of buying a house that you plan on living in for a long time. That’s when renovating and customizing your home to your needs is smart, if it makes you happy. But only start focusing on the renovations and additions you want after you’ve taken care of the ones you need — namely repairs.
If your roof is leaking, it should be your No. 1 priority before anything else. Never mind a new kitchen or bathroom. A leaking roof compromises everything below it — trusses, insulation, drywall, joists, flooring. What good is a new kitchen if you have to tear it out because there’s moisture, mould or both?
Even if you have other repairs to take care of — such as a leak in the basement — address the roof first. A leak in the roof will travel to other areas in the house, damaging everything in its path. But a leak in the basement stays in the basement.
Investing in the most important repairs protects all future investments and renovations. Because when you get your priorities straight, the house always wins.
Catch Mike Holmes in his new series, Holmes Makes It Right, premiering Tuesday, Oct. 16 at 9 p.m. on HGTV. For more information, visit hgtv.ca. For more information on home renovations, visit makeitright.ca.