Property Investment Advice

Move vs. Renovate

You may own a home here on PEI and be in a quandary regarding whether you should renovate the home you have or sell and look for something new. There have been shows based on this scenario on TV lately (realtor vs. designer) and there are a number of considerations when making this type of decision.

Perhaps the first and most important is how long you would envision yourself staying in your current home even if it was renovated. You need to understand that even as renovations will add value to your home, there is only so much return on investment possible for each type of home improvement. Kitchens and bathrooms tend to create the best return at approximately 70%, surface re-decoration such as painting about 65%,

other improvements will create a smaller return such as creation of additional rooms, finishing of the basement, landscaping projects etc which bring the poorest return on investment in the 40 to 50% range. So if you can't get a 100% return when you sell your home you are not going to choose to spend money this way if you aren't planning on increasing your length of stay in your current home - and by probably 5 years or more. This way you will have extracted value from your renovation work and not simply passed it onto a buyer at a discount.

Before starting on any project you should have a realtor come by and give you a ballpark appraisal of the market value of your property as it is now. I have seen people begin a renovation project on an older home with limited land and find that they have now created a property that is not saleable at the price that they need to get because they have simply spent too much money on a property that does not have the intrinsic value to support that type of sale price.

So realize the top end that your home could be worth and work from that. A realtor should be able to advise you on that. If you decide to go ahead and renovate your current home you will have to decide what projects to undertake. This decision will be influenced by the top market value of your property that we discussed, what renovations would interest you and make your life easier and more pleasant right now, how large a budget you have and how long you estimate it will be before you sell.

Most people enjoy a good kitchen and/or bathroom so these are usually the projects most people opt for. They are also some of the more expensive projects as they almost always require the proper trades and don't lend themselves to DIY. Paint and paper and other decoration projects may be undertaken by a skilled homeowner but one should realize that these are professional trades as well and should be done to a professional standard if you are intending to DIY and plan to capitalize on increasing the value of your home through your efforts.

There is really no right or wrong choice about the type of project you undertake as it will always be a balancing act between what you want and what the market will be willing to pay later for the work you have done. Get a contractor in to have a look at the work that you are proposing - in fact get several contractors in to quote. Don't always accept the lowest quote automatically - choose based on references and how you feel about the individuals. Gut reaction can be important here.

Whatever your choice - this can be a fun and rewarding experience. Listen to the professionals and make sure that the goal is well defined and everything should come together. If you do decide to sell and move the same advice applies ' use the pros ' get a PEI real estate agent working for you!