Hidden renovation costs can quickly eat up your profits when it comes to Greater Toronto Area real estate. Learn more about what to watch out for in our latest post.
When buying an investment property, there will likely be all sorts of renovations you would like to make. It’s important to know which will kill your profits and which will provide a solid return on investment. Below, we will discuss some of the hidden renovation costs to watch out for when making improvements to your Greater Toronto Area investment property.
Getting It Up To Code
Many older houses in particular, have been through renovations that may not be up to today’s standards. Bringing the house up to code can throw a wrench in your plans once the inspections have been done. In some cases, you will have to tear out things that had already been done, redoing them to be up to current building codes. Before you begin any renovations, make sure permits were pulled for any previous work and that everything passed inspection.
Building permits need to be pulled for any work done to your property. Whether you are making a small or large improvement, you’ll need to file the correct paperwork with the department who handles permitting in your area. You will need a permit for additions, major renovations to the home, electrical and plumbing work, and of course new construction. The average cost of these permits is anywhere from a few hundred dollars to a few thousand dollars depending on the work that is being done. Getting the right permits is possibly the most important part of the construction process. Failing to do so can have serious repercussions over time.
Once you start tearing the house apart, you’re likely to find many things you didn’t know were there. Whether it’s termites, mice, raccoons, or a colony of gophers, evicting these unwanted tenants from your property can be expensive. It can also hold up your construction, causing further delays in the renovation process. It is important that at pests are professionally addressed at the very first sign of infestation.
Child and Pet Care
If you are living in the home during a renovation project with your pets or small children, you might have to pay for extra care while the work is being done. Many people bord their pets as to not frighten them and to keep them out of the way. If you are doing much of the work yourself, it can be dangerous for a toddler to be running around. To keep everyone safe, kids will often be sent to the sitters during the periods of heavy construction.
Water Damage & Mold
Once a portion of the home becomes torn apart for renovations, it’s not uncommon to find signs of water damage and mold. Unfortunately, fixing these problems can be an expensive process. You’ll need to determine the source of the water and the extent of the problem. Mold will need to be professionally removed and repairs will be required to anything damaged by the leaking water.
Underbidding and Unplanned Costs
Without fail, you will find yourself dealing with unplanned costs and expenses. Bids will often be low and new things will inevitably come up along the way. It’s a good rule of thumb to budget 10-15% of your available funds for hidden renovation costs. You don’t want to find yourself in a situation where you are out of money with the project not yet completed. By adding this to your budget ahead of time, you can be sure you won’t go over budget or get stuck with unfinished projects.