Scott McGillivray, star of HGTV’s Income Property, encourages “homeowners to aim for economically savvy renovations that can improve the home for their own use and increase its value beyond the cost of the work.”
Renovating can be one of life's most stressful experiences, but with the right plan, the right financing and the right contractors, you can dial down the stress and increase the rewards.
A recent CIBC poll conducted by Nielsen found that four in 10 Canadian homeowners are planning some type of renovation this year, with an average expected cost of almost $20,000 – up almost 30 per cent from a year ago.
"Our poll shows that home renovation will continue to be a big business in Canada this year," says Todd Lawrence, senior vice-president, products & payments at CIBC. "But homeowners still need to be wise about how they spend their budget, as some renovations provide more value than others."
Scott McGillivray, star of HGTV's Income Property and a licensed contractor and real estate investor, shares the benefits of his early mistakes and what he's learned since from many years of successful (and highly public) home renovations.
What are the most important considerations for homeowners when planning renovations?
It's important to start by thinking about whether you're renovating primarily to improve your home for your own needs or to increase its value.
If you work from home and want to expand the office, for example, it can be a great asset to you. But it's not necessarily going to increase the value of your home significantly. In fact, some renovations may actually decrease your home's value.
I encourage homeowners to aim for economically savvy renovations that can improve the home for their own use and increase its value beyond the cost of the work. That way, they can enjoy the improvements they've made, and when they sell, they'll be paid for the work they're doing.
What are some of the most effective ways of adding to a property's value?
Start by focusing on the kitchen. Kitchens can make or break your home's value. Buyers and renters will very quickly assess whether the kitchen is up to par or not. If it needs work, they're going to discount the price of the home immediately.
At the same time, the kitchen is where you can knock it out of the park by doing a good job on everything – from the layout, to the cabinets, to the finishes, to countertops, appliances, lighting and flooring.
For the biggest impact, do renovations that will add the most value. You might not need to gut and replace the whole kitchen – if it has a good layout and cabinets, perhaps you only need to update the appliances, faucets, fixtures and countertops. But don't cut corners.
Bathrooms are also important. An old and tired bathroom can quickly undermine the value of a home. Updating even simple things like the toilet and the vanity can make a significant improvement.
What are some of the most common ways that homeowners go wrong when renovating?
The way to recognize the greatest value when renovating is to maintain quality both behind and in front of the wall. A lot of people think, "Well, I don't need to throw that insulation in back there – once we close it up, no one will know."
But home inspections are becoming more and more thorough, and buyers are becoming savvier. We have thermal cameras, so we know if it's insulated or not. We can do electrical tests to determine if the wiring is shoddy. Don't try to cut corners behind the walls – it can be more important than the visible renovations.
As a licensed contractor and a real estate investor, I'm not just renovating other people's properties, so I see how renovations play out over time. In some cases, I've learned by trial and error. I've seen the longer-term effects of renovating decisions. And it always costs more to fix it later, particularly when it comes to anything behind the walls.
What's your best advice on choosing materials while staying on budget?
You want to maintain quality throughout, but you don't have to invest in the most expensive materials. When you overspend on materials, you tend not to get the best return on your investment, but if you underspend, you lose overall quality and value very quickly.
Some people think expensive is better, but I always look for somewhere to save and somewhere to splurge. And never choose the cheapest products. Somewhere in between is a balance of quality and value.
For more information, visit cibc.com/mortgages.