Thinking about renovating? It’s a huge undertaking and millions of Canadian homeowners do it every year. But do you know all the pros and cons involved with a decision like this? It’s a fact that an upgrade to your living quarters can mean a better resale value, more space, additional comfort and no need to buy a new, possibly over-priced property. There are also some downsides, like a higher cost of insurance and out-of-control construction expenses. Here’s a balanced look at the good and bad points of renovating:
Con: Increased Insurance Premiums
Anything that adds value to your living space can mean higher insurance premiums. That only makes sense. Coverage is based on the value of the structure, not its original sales price. So, remember that when you add an extra room, a pool or even a carport, replacement value of the asset may increase, and may cause your premiums to rise. That’s why Toronto home insurance premiums tend to be high; it cost a lot to replace a house in today’s real estate market,
Pro: The Home’s Resale Value Could Go Up
Of course, the biggest advantage to an addition is a potentially higher resale value. There are no guarantees in any type of market, a rising or falling one, but an extra bath, larger living area, swimming pool or bedroom can give you leverage to ask for more once the property goes on the market. In most cases, owners do recoup a sizeable portion of their renovation expense when it comes time to sell.
Con: Costs Can Get Out of Hand
As is the case with all kinds of construction projects, costs can rise unexpectedly during a job. That means you can’t accurately estimate the final cost of an improvement, even the day the work begins. Some homeowners have been badly burned in scenarios like this. It’s the reason many folks are a tad gun-shy about making any kind of major improvements to their property.
Pro: You’ll Have More Room
What happens if costs don’t burn you and the job comes off successfully? In addition to that higher resale value you’ll have more room for living your life. Many people opt for additional space to accommodate growing families. That one-bedroom house you bought five years ago might have been ideal for two adults. But now that you have three children, it’s time for a lot of extra square-footage. If you can’t afford a new home, or love your current location, an upgrade might be the smartest way to go.
Pro: You Won’t Have to Build or Move
When the Canadian real estate market is not being kind to buyers, it makes sense to wait things out and stay put. Besides, moving across town or across the country is not everyone’s idea of fun. Moves are inherently stressful and involve countless hidden costs. That’s one reason the home improvement industry is usually quite solvent. Enough people want to stay where they are and simply add space or extras to their current abode rather than move.