ANALYSIS: House-proud Canadians descended on home improvement stores last quarter. According to payments processor Moneris, retailers that feed into the housing supply chain posted sales increases into the double digits compared with a year earlier.
Escalating house prices are likely helping to fuel the home improvement trend, but spending on your home has advantages beyond a simple investment. A new kitchen or bathroom can provide an enjoyment dividend that can’t be measured.
It can also add to the value of your home. Here’s a look at which projects are most valuable, according to a dollar-for-dollar breakdown by the Appraisal Institute of Canada:
- Bathroom and kitchen renos can provide a 75-cent-to-one-dollar return on each dollar spent. Adding a kitchen island returns 65 cents on the dollar, while installing an independent whirlpool bath has a 64-cent return. The recovery rate on a spa-style shower system returns only 36 cents.
- A paint job, inside or out, yields 67 cents on the dollar.
- Energy efficient projects return 61 cents on the dollar but have the added advantage of generating immediate savings. The best returns come from heating system upgrades such as furnaces, windows and insulation. Surprisingly, the institute found hot water heater upgrades had the lowest returns in energy efficiency.
- Hot tubs, swimming pools and skylights have the least impact on resale values.
As a do-it-yourselfer, I can attest to the financial advantages of rolling up your sleeves and investing sweat equity in a home. My wife and I have renovated two of our homes top to bottom. Here are some DIY tips I have learned first-hand:
- You have to want to do it: People who get nagged into a home renovation project usually don’t complete it, or do it wrong. You really have to enjoy the satisfaction of doing something yourself. In many cases you will do a better quality job than a paid professional because it’s your home.
- Prepare yourself: Read instructions, watch videos and plan. Planning starts with measurements and diagrams, and leads to acquiring the right materials. It also involves financial planning. Set a budget and stick with it. Financing often involves a home equity line of credit, which makes sense since you are putting the money right back in your home.
- Admit mistakes and don’t be afraid of a do-over: When you do things yourself, you can save a lot of money. If you screw something up, the extra time it takes to rip it up and redo it – combined with the cost of extra materials – is normally a fraction of those savings.
- Call a pro when you’re in over your head: Unless you’re really good, leave the electrical work to the electricians and the plumbing to the plumbers. One way to save on costs is to do the grunt work and clean up yourself. I have a deal with an electrician where I pay him to come over and tell me where to run wire, and then I pay him to return to hook the wires up to the electrical panel and ensure its safe. Use your imagination.
Dale Jackson is BNN's Personal Investor. Follow him on Twitter @DaleJacksonPI
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