THE UGLY DUCKLING VS. THE SWAN
Or…in other words, should you buy the pretty updated home or the basic outdated home? Buy & Rehab vs. Turnkey. Well, it starts with some basic questions.
What is your knowledge when it comes to construction?
Can you ‘picture it’? Do you have the vision when it comes to removing walls or reconfiguring kitchens? If you don’t, but you still want the Ugly Duckling, you do have some options. First and foremost, hire a Realtor who does have the vision. A Realtor who has personally overseen many home upgrades and renovations for clients. A Realtor who has done upgrades and renos on their own properties. Rely on your Agent’s expertise and trust them with this process.
What is your skill set when it comes to construction?
Know what you’re doing? Fantastic. Go for it. And for those with no construction skill set, hire a Realtor who has great contacts in the renovation world, from Contractor to Painter to Kitchen Companies to Design Companies. Trades people are loyal to certain Realtors who provide them with a lot of business, and you can benefit from your Realtor’s discounts. Second, you can take advantage of companies that provide Virtual Design. IKEA for example will provide you with a virtual rendering of a new kitchen.
What are your timelines?
And let’s not forget about your long-term goals. Write them down. Discuss them with your family. Are you looking for a 1-2 year home? A 5 year home? A home until your kids are launched? These timelines will affect both your ROI, your lifestyle, and your home choice. As well, if you want to make this an interim home with an eye to a larger home or a better neighbourhood in a few years, then waiting for market appreciation only may never get you the ROI to buy up. But add in Property Appreciation with some well-targeted renovations and your dream home just might be attainable!!
Is a Turnkey the answer?
Turnkeys (or Turnkeys that need just a little upgrading) are in high demand when the mortgage rates are low (like right now). However, keep in mind that the perfect turnkeys may lose value as soon as you move in – perhaps it was about the artwork or the furniture or the perfect floor and paint job. Maybe they didn’t have children. There are many factors that can influence a price. And remember, if it’s the highest priced home in the neighbourhood, chances are its property appreciation has been maxed out, so your only ROI going forward will be the market appreciation – which is beyond your control.
What about the Neighbourhood?
Another influencing factor is the neighbourhood. If you want to increase the value of your home beyond market appreciation, you have to keep in mind the standards of the neighbourhood relative to the value of your home. For example, you would never recoup your investment if you put a high end kitchen into a home priced under $1 million. Your Realtor is your best resource for where and when to invest in upgrades.
And just a Post-Script – talk to your Mortgage Broker about a home + renovation mortgage. They are not common, but if you can prove (with a Realtor’s help) that it will increase the value of the property then you may qualify. Folding your renovation costs into your mortgage definitely eases the pressures of reno expenses.
Good luck with your house hunt, and let me know if I can help!! (And remember, some Realtors are better than others when it comes to finding the perfect Ugly Duckling!!)