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Renovate for Profit
& Boost
Your Home's Value

Renovate for Profit

By renovating your home you win twice - once when you enjoy the improvements, and once when you calculate your net worth. The most strategic move for you may be to improve the value of a property you already own, namely your home

Getting ahead in real estate is not just about buying properties - the most strategic move for you may be to improve the value of a property you already own, namely your home. If you are happy where you are, renovation can be a sound financial strategy. When you renovate your own home, you win twice - once when you enjoy the benefits of a better home, and once again when you sell the home.

When it comes to resale value, however, not all renovations are created equal. Let's look at an example. Suppose you fancy a hot tub on your back deck, and decide to invest $10,000 or so. Will that add $10,000 to the value of your home? Likely not. The truth is, not everybody wants a hot tub. In fact, somebody bidding on your home might not want to bother with the maintenance, and may be inclined to get rid of it. Their bid, therefore, will not take your investment into account - it might even be seen as a negative.

The lesson here is that when you're prioritizing your renovations, make sure you consider which ones add the most value to your home. Here are some guidelines:

Chose improvements that are most popular with prospective buyers.
Kitchens and bathrooms are at the top of the hit list according to statistics gathered by the Appraisal Institute of Canada. The institute also has a useful on-line guide on their website which shows you the return on any renovation you are considering. The guide is called "Renova" and can be accessed at www.aicanada.ca.
Capital Direct Tip
Keep your home in top shape.
Homes that are not looked after deteriorate rapidly in value. A leaky roof, for example, can cause damage to your hardwood floors. Siding that is in bad shape can lead to squirrels and other pests getting into your attic and causing further damage.
Capital Direct Tip
When the time comes to sell, put your maintenance operation into high gear. 
Painting the exterior, repairing the roof, and re-doing the gutters will ensure that buyers get a positive impression.
Capital Direct Tip
Rental suites are a big plus: 
As mentioned above, renovations that make it possible to derive rental income are generally big plusses for potential buyers.
Capital Direct Tip
Avoid amateur reno jobs.
The "do it yourself" reno market is all the rage in Canada right now, but if you put an addition on yourself, and the roof leaks, a prospective buyer won't be impressed. If you can't do a professional job yourself, hire somebody who can.
Capital Direct Tip
Invest in energy efficiency.
With rising energy prices, you can be sure that the payoff from investments in insulation will give a return that keeps rising. If you improve your energy efficiency, you also may be able to qualify for a grant through the Government of Canada Office of Energy Efficiency. Use your eco mortgage for renovations that are eco friendly. For more information, visit their web site at http://oee.nrcan.gc.ca/corporate/incentives.cfm?attr='0'
Capital Direct Tip
Track Housing Prices

Today, you can look at housing prices anywhere in Canada at the click of a mouse. At good resource to use is  www.mls.ca  , which shows MLS listings from any seller in Canada. Another excellent resource is www.royallepage.ca This quarterly report tracks housing prices for various types of houses, in all regions of Canada. By checking every quarter, and reading the accompanying report, you can get a sense of where the markets are headed.

There are also a number of magazines, sponsored by the real estate industry. They contain interesting articles and forecasts. But beware - these tend to be on the optimistic side. Best to track the numbers and come to your own conclusions.

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