Welcome to June's Homewatch post. In this installment, we discuss how Toronto homeowners can better set their property up for financial success.
In today’s Toronto housing market, the housing hunt is often characterized with a search that is emotionally exhausting, fraught with bidding wars and near misses. Once you ultimately find the “one”, there is the immediate celebration of this achievement and excitement for the future. However, once you realize that you’ve tied up the bulk of your finances in your home (both cash and debt), you’ll want to take the appropriate steps to ensure that you not only preserve but increase the value of your house. Here is how to set up your home (and your real estate investment) up for financial success.
Real estate is a great investment, but generally speaking you need to let it grow over time in order to really reap the rewards of equity. You’ve probably heard water cooler chatter or dinner party conversation where friends, family, colleagues or neighbours seemingly are buying and selling their homes in short order, apparently amassing a small fortune along the way. Rest assured, chances are their calculations are off. There's a laundry list of costs associated with buying and selling a home that significantly erode the bottom line, which essentially takes years to accumulate to the positive.
Location, Location, Location
That mantra we espouse as the cardinal real estate rule "location, location, location" is so commonly repeated because of its simple wisdom. That bit of wisdom slides into: "You can change the house, but you can't change the location!” Strategically purchasing a property that sits nearby that ideal real estate trifecta: access to amenities, public transport and green space means you’ve already crossed a major element off of your asset-boosting to-do list. The reason for this is that people will always pay a premium for proximity. It’s all about being near amenities that will enhance quality of life and provide convenience - like shopping, schools, parks, community centres, cafes, restaurants, etc.
Return on Investment
In terms of physical steps that you can take with your own property to increase and boost its value, it ultimately depends on your short and long term budgets, the state of your home and on your tolerance and desire for renovations. The greatest ways to elevate your property's value are to focus on the kitchen, washrooms and the master bedroom sanctuary.
The numbers will vary, but in general, you can expect to recoup upwards of about 75 percent of your cost for a kitchen or bathroom overhaul. Other smaller improvements (like doors and windows) will also pad your bottom line. In many cases, less is more. That is to say, if you're financially limited, don't fret as smaller projects ultimately combine to add overall value.
In addition to the kitchen and baths, homeowners should concentrate on other investments too. We're fans of investing in landscaping and curb appeal and upgrading lighting and flooring because they renew and refresh a space; these improvements are perceived to be costly and more difficult to install that they really are. Buyers always value an updated roof because it speaks to the fundamental for comfort in shelter, and repainting both your interior and exterior in today's colour palette subtly communicates how on trend a property is.
Another worthwhile point: if you're upgrading with an eye to resale value versus your own particular taste, make sure your finishes and fittings stay heavily in neutral territory; by employing a neutral palette and an intelligent space plan, you’ll appeal to the greatest number of Buyers.
The Condominium Conundrum
While there are common steps that will apply to increasing a freehold property's value, there are certain specific aspects condominium owners should be mindful of when trying to boost value. Urbaneer has written frequently about the role the condominium market plays in Toronto real estate. The value of condos is more vulnerable given the potential oversupply of smaller units in the ubiquitous point towers. Because of this, it's more crucial than ever that condo owners be proactive in styling their spaces. As a rule of thumb, presenting the unique is your ally. Thoughtful space plans with quality finishes in premier locations are always clear winners in the condominium market. Upgrades don't need to be expensive, but they need to be executed regularly to ensure your asset value keeps growing, as condos tend to become dated more quickly given the constant arrival of new fresh on-trend product.
In addition to some the general suggestions that we extend to all housing types, we recommend that condominium owners pay attention to the details. Emphasize or create storage space. Replace hardware in kitchens and bathrooms with what’s current. Flooring carries even more weight in a smaller space; avoid carpet if you can in favour of durable, rich hardwood planks. Countertops are a focal point, so make sure you make this a clean, crisp design element that stays within your budget.
Are you wondering how to actively engage in your housing future through making a smart buy - and then setting it up for growth? We at urbaneer have decades of experience navigating the sometimes turbulent waters of the Toronto housing market with great success. We’d be delighted to help you, or someone your love, on the journey to home sweet home!
Steven Fudge & The Urbaneer Team
Bosley Real Estate Ltd., Brokerage
- we're here to earn your trust, then your business -
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