While some renovations add value, in our latest post, we want to let you know about the worst projects for adding ROI to your Greater Toronto Area property.
Not every renovation project is good for your bottom line. Some renovations simply aren’t worth it. Below, we will discuss some of the worst projects for adding ROI to your investment property.
Adding A Bathroom
Having an extra bathroom is a feature most people would love, but when it comes down to it, they aren’t always willing to pay the thousands of dollars that extra bathroom cost to build. An overage bathroom addition will cost $40,000+, however, when it comes to time to sell, you’ll only be able to mark the property up about $20,000.
Some people believe that remodeling their entire kitchen or bath is the way to bring buyers in. While these areas are important, a major remodel is never a good idea when you’re looking to add value for a sale. Major renovations are expensive and can often times lead to additional repairs you weren’t ready for. The costs can quickly snowball without the value of your home rising enough for the project to make sense. Renovations that are highly personalized will inevitably drive some buyers away. Not everyone has the same style or taste, so offering buyers a credit to repair according to their own preferences is a great incentive for potential buyers.
While the idea of a sunroom is lovely, adding one can be expensive. Extra insulation, construction costs, and the maintenance that will come along with it can add up quickly. A sunroom can be an extremely enjoyable space, but you’re likely to get only a small percentage back in return upon the sale of your home. A sunroom can also increase your heating and AC costs each month. Having great insulation will help keep the room from getting too hot or too cold.
Garages are great, and whether you are storing your car or just your stuff, everyone is bound to find a use for a garage. That said, the overall value of your home isn’t going to increase enough to justify the cost of building the garage. The permits, materials, and construction costs will add up, making a garage addition simply not worth it if you are looking for the highest profit margins. As a bonus to your buyers, you can show where a garage could go, and what it would cost to add.
Who doesn’t love the idea of floating in a pool? Having a pool is wonderful, but it doesn’t add much to the value of your home. Pool maintenance can be expensive and may even deter some buyers who would have been interested in your property otherwise. If the new owner wants a pool in their backyard, let them add one after the sale. If pools are a popular feature in your neighborhood, you could always offer a schematic showing what one would look like in your backyard. This way the buyer will be able to visually see the potential, helping them paint a picture in their mind of what a pool could look like.
Before making any renovations to an investment property, consider what the return will be like for you. Some projects will be great additions to the house, but won’t provide much of a return on your investment. Run the numbers to really understand which improvements and renovations you should be making to your Greater Toronto Area investment property.