Big or small, all renovations take planning

Determining the return on investment from renovations starts by evaluating your intentions

“There are many reasons why you might decide to renovate,” says Korina Buchanan, Manager Consumer Lending at SCU’s Linden Ridge branch. Home renovations can transform your space, add value to your property, and enhance your quality of life.

Whether you want to increase your home’s curb appeal,carry out general maintenance, or give your home a personal touch, it takes planning to execute a renovation successfully. Before you begin, ask yourself these important questions:

What are the goals of this project?

Before you determine how much you want to spend, consider defining the goal of your renovation project. Are you renovating to increase the property value, improve functionality or efficiency, or to reflect your personal taste? Another important factor to consider is whether or not you're putting money into the right home. Do you have plans to stay in the home long-term or are your renovations in preparation for resale? If you're planning to move, weighing the cost of the renovation against the potential return on investment (ROI) can help establish a range for your budget. 

How much will the renovations cost?

The best place to begin is by estimating your expenses. Buchanon recommends adding up all the expenses so you know how much you'll need to confidently proceed with the renovation. The more information you collect, the better your estimated costs will be. Of course, when it comes to renovations, it's always best to prepare for the unexpected and add a contingency fund to your budget. Renovations often uncover unknown issues, like outdating wiring or mold. Be flexible, and prepared to adapt, including for the potential that you may need to live outside your home during the renovations.

Choose the right professionals

Speak with at least two licensed reputable contractors and collect multiple estimates. Ask for references and check online reviews or Better Business Bureau ratings. Confirm that your contractors have liability insurance and workers' compensation coverage.  

Permits and appraisals 

Although permits are not part of the approval process, we strongly recommend consulting with your municipality or city website to determine if permits are required for your renovation.  Ensure your renovation complies with local building codes and zoning laws, and obtain the necessary permits for structural changes, electrical work, or plumbing upgrades.

Will this renovation add value?

"Of course some renovations add more resale value than others" says Buchanan. Modernizing and improving functionality is a good way to raise the value of your home, but adding custom millwork or industrial-grade appliances may suit your personal needs and tastes, but won't appeal to everyone. Kitchen, bathrooms, and curb appeal upgrades often yield the highest ROI.

Buchanan says there's also a limit for how much resale value you can add to your home, depending on factors such as the size of your home, the neighbourhood, and market trends. This may include opting for sustainable materials, energy-saving upgrades, such as smart thermostats, solar panels, or LED lighting for long-term savings. 

Think about consulting a realtor in making this detetrmination. After you receive estimates, and prior to moving forward, ask an appraiser for the "upon-completion" value of your home so you know whether your investment will be rewarded. 

How should I finance my renovation?

"The answer to this question is really based on your needs," Buchanan says. Your financing choice will depend on your home equity, the size of your project, and how you want to access your funds. For instance, if you want the ability to access your money as you need it, a line of credit may work for you as you can get approved once, re-use the funds in the future, and only pay interest on the funds you use. Or, if you're planning to pay for your project over a number of years, a loan might be the better choice.

If you decide to purchase another home, but recognize improvements will be required, SCU's Purchase Plus Improvements option allow members to borrow the cost of the renovation and add it to the price of the home at the time of purchase. 

Another option Buchanan recommends to members is the SCU Renovation Mortgage, a specialty product that allows you to spread the costs over the duration of your mortgage. It's a unique product that helps you borrow at a lower rate and leverage your home's current value or the value of your home upon the completion of your renovation. 

By keeping these considerations in mind, you can ensure your renovation is a smooth and rewarding process. Wheher you're upgrading for personal enjoyment ot resale value, a well planned renovation is always a smart investment.  

Here's a tip: If your renovation plans include upgrading the energy efficiency of your home, such as new insulation, energy-efficient windows, or heating and cooling systems, these expenses may qualify for rebates under federal and provincial government programs.