Should you renovate or sell?
When I was about to become a father two years ago, I had to make the tough choice between renovating the apartment I was living in (which was in one of my apartment buildings) and moving. It’s the eternal question for most homeowners: should you renovate or sell? You could sell your home and buy a turnkey property elsewhere, or renovate because you like the location but not the interior, for example.
Believe me, you should think long and hard before you make such an important decision. A number of technical, financial and personal factors must be taken into consideration before deciding whether to sell or renovate your property.
Do you plan to stay in the same neighbourhood or city?
This is probably one of the first questions to ask yourself. If you can move easily and your work/life situation allows you to live in another city or neighbourhood, you will have a lot more flexibility in your plans. In my case, I didn’t want or need to stay in the Ville-Marie borough of Montréal. As most of my work projects are abroad, whether I live in Montréal or Lanaudière makes almost no difference to my commute.
What features do you want to improve or avoid at all costs?
Does your old apartment lack light? Soundproofing? Storage space? A second bathroom? A third bedroom for baby number two? Which boxes does your property fail to tick?
For me, the issue was the lack of soundproofing in old buildings, particularly in the ceilings and floors. I didn’t want to keep my little boy from running around and yelling. Even with my soundproof ceilings, footsteps and vibrations from the upstairs tenant would wake up my child. What’s more, the apartment was completely divided up. We wanted to open up the rooms and add square footage to the space by reclaiming the basement apartment.
If you are seriously considering the renovation option, remember that you will have to live in your property while the work is being done or move out for a few weeks to avoid living amid the dust.
Is the cost of the project worth it?
I recommend properly designing and planning your renovation project so you can assess its costs. If the work is major, it’s worth hiring a designer or architect to properly guide you and make detailed plans. This could cost a few thousand dollars, but you will then be equipped to ask for bids from contractors. You should also look into the grant programs offered by the city and government, such as for windows, insulation, or energy efficiency improvements.
In our case, after working with a design team for several weeks, the contractor bids took us by surprise. The price tag would be nearly $200,000. According to a real estate broker and a certified appraiser, the renovation would not have added that much value to the property. To make matters worse, we’d still need to have two renters upstairs, which wouldn’t completely eliminate the problem of hearing vibrations from upstairs.
My accountant’s opinion put the final nail in the coffin of our not-so-profitable renovation project. By reclaiming the basement apartment, I would be changing its use and it would result in a capital gain, which I would have to declare on my taxes. This would add $30,000 to the cost of the project.
For the same $230,000, we found a single-family home in the suburbs without any soundproofing issues and with more space. It ticked all our boxes. The money invested in hiring designers enabled us to make the right decision.
Instead of selling the apartment building, I simply rented out the apartment to tenants who found it perfect for their needs!
However, not everyone wants to trade in the city for the suburbs. The financial component is only one factor to consider when making such a decision.