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Home Ownership

One of my colleagues spent his holiday break with his family down south in Myrtle Beach. It's not that they necessarily wanted to get away from celebrating the holidays at home; it's just that their home is currently overrun with contractors. They are in the midst of a major kitchen renovation. With no kitchen, and the rest of the main floor blocked off with plastic to minimize the dust, Christmas entertaining didn't look promising.

The good news (besides a warm, sunny vacation) is that my colleague is actually investing in his home with his renovation. He is increasing the home's value and if and when he sells he will likely get his money back.

The Appraisal Institute of Canada says kitchen and bathroom renovations provide the highest possible renovation pay back. The Institute says that between 75% and 100% of the cost of a kitchen or bathroom reno can be recouped when the house is sold. However, kitchen overhauls are also one of the most costly changes you can make to your home. Simply painting the inside and outside of your home can also increase its resale value and you will likely recoup 50% - 100% of those costs.

The Institute warns that the pay back you may get from your renovation depends on many factors. Those factors include what work is done, the location of the property including what province you live in, if you live in a rural area or urban area and your neighbourhood. Most importantly, the pay back amount depends on the quality of the work done and the materials used.

Meanwhile, there are a number of renovations that likely will not result in a large pay back for the expense. Most of these jobs involve changes to the exterior of your home. For example, new landscaping, interlocking paving, building a fence and asphalt paving will only pay back 25% to 50% of the cost. And, while your family may enjoy that brand new backyard swimming pool, it will only increase the value of your home by 10% – 40% of the cost.

Renovations can be a great way to customize your home to meet your personal style and needs, without having to move from a neighbourhood you and your family love. But, if you are counting on getting your investment back, choose your renovation project carefully.

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