Home makeover shows give you the impression you can transform your house in a few short weeks. Real renovations are nothing like what you see on TV. The expectations of consumers have been changed by the fancy reveals and glamour which TV brings to a renovation project.
The costs on TV aren't realistic. You can't do a complete high-end kitchen reno for $20,000. The TV costs don't always factor in costs such as, donated materials and free labour. Do your research and make a realistic budget for your project. Plan for 20% to 40% mark-up on the labour as you never know what you'll run into. (See below for a chart of costs vs home values realized)
Renovations take a long time. On TV you will see the reno's go from conception to finished project in a few weeks. The timelines for TV are tight and renovations seem to take only days sometimes. Draw up a timeline with a contractor to have realistic expectations. Permits take time to get from city hall so factor in possible delays. Contractors aren't always readily available to start tomorrow and they usually book two to three months out. It is always a good idea to buy your materials ahead of time and give the contractor the ability to purchase the materials that they need if you can't obtain them yourself. Plan the renovations in stages as you don't have to do everything at once.
DIY isn’t as easy as it looks. Watching the hopeless couples on a TV reno show roll up their shelves and do some work makes it look easy. In reality it is a lot harder to do unless you have some experience in the trades. Maybe you have an electrical background or drywalling experience which will save you money. Remember, you can't do it as well as a professional unless you’re a professional!
Paying for the renovation. The option most used is a Line of Credit. You might not have to pay it off right away and usually you just pay interest on the borrowed amount until your done borrowing. It is advisable to save a chunk on money in advance of the project. A high interest savings account inside a TFSA (Tax Free Savings Account) is a good place to put your money as it will be readily available. If you go the route of a line of credit secured against your home you will get a lower interest rate and but you might need to pay $700-$1200 for legal fees and appraisal. Make sure you have the cash flow to make payments and make a deadline to pay it off. Credit from lenders is usually extended if monthly debts are less than 40% of your gross income. If you can't pay the debt right away you can refinance and lock in at a cheap rate. Refinancing with a locked in rate can save you interest up front, shield you from variable-rate risk and pay lump sums based off the prepayment privileges of the lender.
The reno may not add to your home's resale value. On the TV reno shows you will have seen the hosts tell the homeowners that doing a reno will net an increased home value. For example doing a $50,000 reno will add $80,000 to the value of the home. The truth is that your have value will increase by 2/3 of the reno costs. If you do the wrong renovations or make a unpopular design choice the may get no return on your investment, or even decrease the value of the home. Remember that your new kitchen is only considered new if you sell in the next couple of years otherwise it will have no impact on the amount buyers are willing to pay.
Job Costs and Increases in Value!
Cost (appr) Increase in home's value(appr)
Two-story addition - $165,000 $105,000
Master Suite addition - $106,000 $ 62,000
Family Room addition - $81,000 $ 49,000
Basement remodel - $60,000 $ 40,000
Attic bedroom - $58,000 $ 30,000
Major Kitchen remdel - $50,000 $35,000
Bathroom addition - $40,000 $20,000
Home office remodel - $19,000 $13,000
Bathroom remodel - $15,000 $9,000
Deck addition - $10,000 $8,000
Entry door - $1,000 $1,000
This list gives you a glimpse into the approximate cost of renovations (always consult a licensed home contractor for exact costs) and the value they add to your home.
Adding a rental suite to your home always increases the homes value.. So count on at least a door and kitchen reno and you will be on your way (depending on your home setup).
Stay current as to trends and in terms of renovations always be realistic as to the budget, length of time to complete and the extra costs that may come up.
If you have any comments or suggestions please feel free to call or email me.
To your health,
Arran
All the figures are approximate values and must be treated as such. Always consult a licensed builder and tax advisor for your unique situation.
Comments:
Post Your Comment: