TORONTO - You may treasure your built-in wine cooler and enjoy summertime swims in the backyard pool, but will these additions ultimately be a boon or bust in increasing your home's value?
"A question people always ask me (is): 'What should we tackle first? What will make our house worth more money? If we're going to sell, what should we do to get top dollar?'" said Scott McGillivray, star of the HGTV series "Income Property."
The real estate investor and contractor has renovated more than 250 properties across North America and maintains several rental properties. In "How to Add Value to Your Home" (Collins) due out Tuesday, McGillivray outlines the most effective ways to get a return on investment and improve properties for resale.
He writes of three keys to maximizing a home's value through improvements: the quality of the renovations; ensuring changes are in line with the property's market value; and maintaining the consistency of the space, like not adding a "flashy, high-end bathroom" into an otherwise dated home.
McGillivray said one of the simplest changes homeowners can make is with lighting, noting that installing a new fixture can "completely change a way a space feels." As he shops for properties with potential buyers, he said many get "suckered in" to looking at such details.
"They'll see a light fixture hanging in the dining room and they automatically think that dictates the rest of the home. (A) 1970s light fixture hanging in the dining area and it's like: 'Oh, this place is old.'
"The same goes for the opposite. I've walked into places where they've put a new dining room fixture in there. People come in and they go: 'Wow, this place looks great.'"
McGillivray writes that while decks used to be a "bit of an afterthought" they're now "a huge deal." He recommended spending between 2.5 and five per cent of the home's total value, and under $10,000 on a 200-square-foot model. He said the addition should be big enough for a barbecue, a table with two to four chairs and feature sufficient lighting.
McGillivray said the kitchen is the place where homeowners can spend the most and still get a good return on investment. He recommended staying in the range of five to 10 per cent of the home's current value in allocating money toward the upgrade.
He writes that changing cabinet hardware is where homeowners can get the best bang for their buck, noting that knobs and pulls are the first thing people notice and that dated, flimsy or damaged hardware can also be off-putting. McGillivray writes of his preference for laminate slab countertops which allow for more flexibility when adding a backsplash to the wall.
He outlines several "just for you choices" where homeowners shouldn't expect to recoup the full value. In the case of kitchen countertops, that includes concrete, stainless steel or tile options.
After the kitchen, he cites the bathroom as the most important room to improve the home's value. The addition of a new toilet, sink, vanity, countertop and faucets are all part of a basic upgrade, with the inclusion of a heated towel rack seen as a value adder.
McGillivray writes that fancy extras like built-in wine coolers and water filtration systems won't add value, and advises homeowners to be mindful of additional maintenance costs they may incur as a result of other changes.
In the case of a pool, he writes that there is considerable cost involved in the upkeep, with an addition also costing extra money to heat and maintain. What's more, they may not necessarily help homeowners make a splash in resale for would-be buyers not keen on the maintenance required.
McGillivray said the purpose of the book is not necessarily to dictate to people what they can and can't do with respect to home improvements. Rather, the idea is to inform people of the possible consequences of their choices, particularly when it comes to seeking to recoup investments on personalized renos.
"People go to sell their house and (they say): 'I don't understand. We've sunk $50,000 into this addition and nobody's giving us offers that are high enough.' Well, I'm going to let you know that those are the types of investments that are sunk costs, and they're for your own personal gain."
While income suites can be a pricey home improvement, the greatest return they offer is the potential for long-term cash flow, McGillivray noted, adding that it's been a lot easier for him to sell multi-unit properties than single-family homes.
If comparing two properties each listed for $500,000 — one a single-family home, the other with an income suite that brings in $800 monthly in rental fees — property B is the clear winner.
"The property with the income suite in the basement will be accessible to many more buyers because it has qualified income. So if you don't qualify for a $500,000 mortgage, you may qualify for a $500,000 mortgage with an extra $800 in income."
McGillivray acknowledged that there may be homeowners who want to make amendments but only have hundreds versus thousands of dollars to spend. Painting, changing light switches, replacing bedroom and entry doors, putting up window coverings or caulking baseboards are potential options.
"Those small things might help on the value (of your home) if you're kind of struggling to work with a really small budget."
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