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Renovating
for Fun and Profit |
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There
are three levels of quality in houses being built or renovated: The
house that you build to sell, the house that you build to rent out,
and the house you build to live in yourself. The quality of
construction and materials increases with each one.
Spend
on yourself, satisfy your tenants, but skimp on the resale. |
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If
you're renovating with the intention of getting your money back when
you sell, renovate to appeal to the average buyer's tastes, not your
own. Touring decorated builders' model homes is a great way to
develop an understanding of which decors appeal to the average buyer today.
There
are two types of buyers out there: renovators and non-renovators.
The
buyers who are able to renovate are not going to buy your house
after you fix it up. They are looking for a fixer-upper. Your target
market is the buyers who do not know how to renovate or can't be
bothered doing it.
They're
looking for a house that they can move into and not have to lift a
finger to decorate. First time homebuyers, buyers who have been
living in a condo or with family, are classic examples of this type
of buyer. They want the financial advantages of owning a home, but
not the headaches. They haven't experienced those hassles before. |
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Non-renovators
do recognize obvious structural problems, such as drafty windows or
potato-chip shingles, and those deficiencies scare them away.
In
most cases though, if the repairs have been done, these buyers don't
have enough knowledge to recognize the difference between quality
long-lasting materials, or fixtures, and the short-lived lower
quality ones. They are attracted by cosmetics, and that is the key to
renovating for a profit. |
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If
the roof shingles are new, the buyers see a roof that doesn't need
their attention, and that's all they care about. No headaches. No
hassles. Whether they are 10 year shingles or 50 year shingles is not
an issue for them.
If
you're in a climate where buyers pay a premium for quality windows
because they recognize the savings in heating costs over time, you
can afford to spend money on new windows. If heating costs are fairly
low, you likely will not get any kind of payback at resale if you
replace medium quality windows with high quality windows.
There
are windows that make buyers think "shack". If your
windows create that impression, replace them for cosmetic purposes,
using inexpensive wood and vinyl clad bottom-of-the-line windows. On
the other hand, if your windows will clean up well with a coat of
paint and replacement of only the glass portions of thermal windows
with vapour-lock defects, go only that far.
It's
critical to spend money on the aspects of the house that the buyers
actually notice, in order to get you the biggest bang for your buck.
The
walls in the living areas generally blend into the background, but
the fixtures in the house are what generate the excitement. Kitchens
and bathrooms really do sell houses. Spare the expense in the living
and sleeping areas, and use it to make the kitchen and bathrooms as
spectacular as a small budget will allow. Appearance also sells. |
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The
smaller the house, the more lifestyle will help to sell it.
A
two bedroom house will be more suited to a single person or a
childless couple. (See Selling
a Country Cottage) Those buyers will be swayed more by a deck
and hot-tub than a buyer looking at a 3 or 4 bedroom house would be.
A feature like a hot-tub has more of an impact in relation to the
size and scale of the smaller home's features.
A
gourmet kitchen also has more of an impact in the smaller home, and
it must be well designed to make efficient use of the smaller space available.
Again,
don't go crazy. You're not building it for your enjoyment. Buy and
decorate for flash and appearance, not for longevity. |
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Cosmetics
are also key to sequencing the repairs before you sell. You want the
house to look freshly renovated when the for-sale sign goes on the
lawn. Some aspects of the reno will hold up for a few years, while
others will show wear almost immediately and have a low payback. |
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You
can move walls early on in the reno. They don't show age, aside from
nail-pops if you've used wet studs. The sheet-rock might needs some
patching and painting at the last minute if you let your kids play
hockey inside the house, but often that's the last step anyway just
before a sale.
The
bathtub can be done early on, as long as it's cleaned after every
use. A plastic tub surround is a quick fix, but might show more wear
depending on the minerals in your water and the materials you've used
for it.
Ceramics
are durable, although the grout can show age and mildew damage
without careful maintenance. Ceramics tub-surrounds are one of the
"flash" items in a home where spending a few dollars on
quality makes a worthwhile first impression on the buyer. They just
have to be cared for if you're going to live with them. Consider
installing a plastic tubsurround on blueboard for your use, then
installing fresh ceramic wall tiles at the end of the reno.
Generally
speaking, less durable surfaces should be left until later on in the reno.
Kitchen
counters and cabinet doors wear rapidly and the payback on them
drops rapidly with time. You almost want to install them in the last
weeks before you plant the for-sale sign in the lawn.
For
example, you can install the base cabinets in the kitchen, but live
without the doors until you're ready to sell. They are not going to
be top quality cabinets, and they will age rapidly with use.
Stainless
steel kitchen sinks are durable, while the modern composite or
plastic white or coloured sinks stain easily. They are another
"flash" item though. A white sink sunk into a blue
countertop on with white cabinets is one of the hottest looks now.
Consider installing a cheap countertop and stainless steel sink for
yourself to use, then just before selling, install a coloured top and
white sink. Then eat at the restaurant!
When
you're shopping for fixtures, buy the most attractive ones you can
find for your price. You can buy quality plus appearance, or just
appearance. Buy for appearance. It's the pizzazz that will sell the
house, not quality. |
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Expensive
flooring materials are not practical for a reno. Expensive flooring
is durable flooring. You don't need durable. You're moving out.
You
also don't need flooring or carpeting in the house while you're
living in it and renovating. Paint the subfloor and spread some
attractive area rugs around to make your space attractive and warm.
When you're ready to sell, install an attractive but cheap vinyl
flooring and carpeting, with a thicker underpad. The underpad creates
the illusion of a plush carpet without the expense.
Quality
is expensive, and quality pushes the price of most houses out of the
range of the average first-time buyers. They have accepted that fact.
They've been around to the builders.
If
you think you've got problems satisfying them, just think what the
builders have to content with dealing with 21st century labour costs,
material costs, land costs and taxes! |
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There
is one expense that I recommend you should consider, unless you have
the skills to do it well for yourself.
An
interior designer can show you how to pull together the entire look
of your home; the exterior colours, the interior wall and accent
colours, the carpet and flooring colours and patterns, cabinet
colours and hardware, and the layout of the rooms.
It's
like having a new product and hiring a marketing consultant to
design the package for it for you. The few hundred dollars that it
will cost to put your house's package together can turn into a few
thousand dollars if it attracts even one more buyer with an offer in
his hand. |
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Here's a
tax tip: Go to Revenue
Canada's
website and read how you can get back most of the GST you spend when
you renovate your own home! |
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costvsvalue.com
is a useful website
if you're trying to determine how much of your investment you'll be
able to recover on resale. |
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Basements
are complicated enough to require a separate discussion. Please see
The Profitably Finished Basement if that's on your to-do list.
Putting
more money in your pocket is the objective of renovating for a profit.
If
you're buying a house to renovate and flip, as part of my No-Mystery
Home-Buyers System, I can review the renovations you have
planned, and project what the house will sell for when it's finished.
You can subtract average renovating costs, for the improvements you
plan to make, to determine what is a realistic price to pay, and to
determine if your budget is realistic.
My
FAQ page contains useful
information about financing renovations and other renovating issues.
If
you already own a house, and are renovating to make it more
saleable, I can help you make the most of your renovating dollar. See How
To Sell for More and What
If I Just Want It Sold?
I'll
drop over and review the plans you have. I'll help you determine
what the house will sell for, and what you can afford to spend. I'll
show you how my Home-Marketing
System can drive buyers and multiple offers to your front door.
I
have the skills to help you achieve your goals. That means you'll
put more money in your pocket after you buy, renovate and sell.
Contact
me now! I love working with renovators and I'm looking forward
to working with YOU! |
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