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Thinking about a home renovation?

 
Home renovation

Renovations can transform your home, but not all of them will increase its property value. This is important to keep in mind before investing your money into overhauling your home. Depending on the renovation, there is no guarantee that you will recoup your expenses when it comes time to sell your house.

We've rounded up four renovations that could increase your property value and four that won't. Understanding the potential implications (both positive and negative) of a renovation before you invest can end up saving you a lot of money.

Renovations that increase property value

Modern kitchens – The kitchen is a focal point in any home and remodeling or updating your kitchen can have the biggest return on investment when it comes to your property value. Upgrading appliances, cabinets and lighting significantly impacts not only the value, but also the appeal of your home. The trick here is not to over-renovate. If your kitchen looks shiny and contemporary but the rest of the home doesn't match, it can have the opposite effect of what you're after, making people realize how much work needs to be done on the rest of the house. Make sure your upgrades still fit the overall aesthetic of the home.

Bathrooms – Following kitchens, bathrooms are the other room in the house that can drive up the value of your property. These don't need to be major renos either—updating fixtures like the faucet, knobs and lighting can make a big difference for a relatively small investment. Even throwing on a fresh coat of paint can breathe new life into your bathroom and help potential buyers envision themselves at home. Never underestimate the power of small upgrades.

Finished basements – This is no easy renovation, but a finished basement can have a dramatic increase on the value of your home, especially if you upgrade it so it has the potential to be used as an income suite. You will need to check with your city’s by-laws, but a rental unit allows the homeowner to recoup a portion of their mortgage, something that is popular in some cities. However, again be careful not to overdo the renovations. Not everyone cares about having a finished basement and some homebuyers are not willing to pay for it.

Upgrading old wiring – Older electrical systems like aluminum wiring and knob and tube wiring used to be the norm, but these days they have the potential to do more harm than good. These outdated systems pose a fire hazard, making them less appealing to homebuyers and difficult to insure. Today's buyers expect homes to have modern electrical systems, so even if updating the wiring doesn't necessarily increase the property's value, it may make all the difference when it comes time to sell. Upgrading your wiring is also one way to save on your home insurance.

Renovations that won't increase property value

Swimming pools – You may think that adding a swimming pool to your home will increase its property value, but think again. Swimming pools can be difficult and expensive to maintain, and they also pose a safety risk to children, making them a complete deterrent for some families. Swimming pools can also increase the cost of your home insurance, as they are a liability. In order to keep premiums down, swimming pools need to be fenced in, which adds another expense to the property. While it might be nice for you to install a swimming pool for your family, when it comes time to sell there's no guarantee you'll get your investment back.
Related: Why Pools Will Impact Your Home Insurance Rates

Landscaping – While a little pruning can attract potential homebuyers to your property, major landscaping isn't going to increase the property value. There are also limitations on landscaping coverage, so it's important to check in with your OTIP broker to find out exactly what is and isn't covered. Instead of focusing on greenery outside of your home, try making the inside greener instead. Many of today's buyers look for eco-friendly and sustainable components in their homes. Making upgrades in these areas may have a bigger ROI.

Converted garage – Homeowners that have converted their garages into rec rooms, play areas, bedrooms and so on are sometimes surprised to learn that a converted garage can be a major turn off. Most people want the garage to remain a garage, so before converting it into something else, consider the significance of a garage to the average homebuyer.

Carpet – Carpeting is no longer coveted as it has the potential to harbour dust and allergens, something that can be especially disconcerting to families with children. If you're thinking of redoing the floors, skip the carpet in favour of hardwood flooring. It's a more contemporary aesthetic and a popular choice for many homeowners today.

Things to keep in mind when renovating

Before doing any renovations, call your OTIP broker at 1-866-523-4111. Depending on the type of renovations you're doing, you may require a different type of insurance to ensure your home is protected, especially if the renovations require you to be out of the house for a while.

As we mentioned, some renovations can also affect your home insurance rates. The best way to ensure you're covered is to give us a call. We're happy to provide guidance on how home renovations can affect your home insurance.

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