Reader question: When should you renovate your new home?

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Renovate Your Home When It Is Right For You

A fan sent me an email the other day and asked me the question, When should you renovate your new home? He said that him and his wife had just bought a home and they weren’t sure if they should renovate before they moved in or after they moved and wanted to know what we did when we bought our house.

Home renovation checklist

It was a question that I really didn’t have to think much about because we are in this position now. We did not renovate before we moved in and preferred to save the cash first before renovating. When we bought our home I created a checklist so I knew exactly what I needed to do although over the years it seems the list keeps growing. It was easier to read my list as I was going along rather than trying to remember in my head. Every smart planner will have a list so they have information to fall back on. There is no custom list here, you design your own. Grab a piece of paper and start making notes.

I also wanted to have the opportunity to fix what needed to be fixed on my own rather than paying someone else to do it unless of course a tradesman is needed for the job to get it done right. Besides it gives my wife time to go through those renovation type magazines to pick out what she likes.

Neighbourhood home renovations 

Every time I look out the window in the morning there is a new renovations truck on our street at a neighbour’s house doing something. Our homes range in age from 15-25 years old so most things inside the homes may be outdated and need freshening up or are starting to fall apart due to age.

Our neighbour who is a single-homeowner told me the other day while I was weeding the garden out front that she was in the middle of having her bathroom re-done and this is after living in the home more than 8 years. What she said was that she could only afford to do x amount per year to upgrade her home but when she moved in even though the house needed some work she decided to save the money to do over time.  So, not everyone wants to rush in and have the fast and ready or instant home (just add water) before they move in.

Needs vs Wants

Not everyone wants to spend money renovating their home, heck some people think we’re nuts for wanting to put a brand new kitchen in but it’s something we want to do, for us. There are however differences between renovation needs and wants. We don’t need to renovate the kitchen just yet but we do need to focus our attention towards the bathrooms.

In the summer we see many homes up for sale around us and open houses that garner lots of attention only because we are in a sought after neighbourhood. Just lately though we notice that of the homes that sell before the new owners move in they have a tonne of renovations done to the house. I have to question the worth of these renovations so soon after purchase when I consider the price they paid for the home.

When you live in a house for even a year or two you can judge which renovations are wants or needs and how you want those renovations to turn out. When you use the house on a daily basis you will learn what you like and don’t like which gives you time to start saving money in your budget for exactly what you want.

Too many renovations

When you are already buying a home at the top of its value you must be careful how much money you soak into your home because you may never recoup that money for a long time, if ever. An example would be a modest home that was on the market for $495,000 around the corner. This house was priced at the top range of what the home would sell for. It sold in less than 2 weeks for $5000 less than asking price. The home has an in-ground pool, deck and is a back-split.

Over the course of 4 weeks after the previous owners moved out we watched contractor after contractor tear the inside of that house apart. Not only did they put in all new flooring, new bathrooms, new kitchen they also put on a brand new deck. They even got all the interior doors removed, sprayed and then re-hung.

In my head I’m running numbers viciously because I can’t believe how much money they are willing to put into the home after purchase. I can understand if you scored a great deal on a house like we did and then decided to renovate but not at the top price range.

What would happen in the event that they needed to sell fast right after renovating? They are risking losing money on the house because their house might not be worth as much as they think it will be, although I often say “it’s worth as much as someone is willing to pay”. This is when you may see a house that is overpriced for the area and the homeowners get upset at the real estate agent asking, Why has my home not sold yet?

The thing about that is you can’t have $500,000 comparable homes on one street and then a similar home to those and you price it $100,000 more because you renovated it but who will want to buy it? You know the real estate agent will pull the comparables for the potential buyer and they will compare those prices to that of your home. If you are not sure of the value of your home you can log in to MPAC to view your MPAC home assessment or call them for a copy to be sent in the mail. While you can see the value of your home you will also be able to see what other homes in your area are valued at and that may give you a better idea of which direction to go.

When we bought our home for $265,000 the same model on our street was selling for over $300.000 a mere 12 months after. Now, 4 years later a couple are over $400,000. Our house is 1 of 4 in our subdivision. I’m afraid we don’t live in a custom-built home but we do live in a home built by a well-known builder in town.

Time and funds

When we decided that we would wanted to buy rather than rent the savings for a new home was kicked into high gear while we were renting. We couldn’t afford to complete all the renovation needs or wants before moving into our current home purely because the spare cash wasn’t available.

After saving up for a down payment on our home which was more important to us we figured our home was livable and so what if the carpets were purple. Over the course of time projects have been completed mostly on the basis of priority. It’s a slow process but unless you have the available cash to complete all the renovations before you move in that’s the way it happens.

There is an alternative but taking out a line of credit against the property or increasing your mortgage just seems bonkers. Unless you’re planning to stay in the house for the entire length of the mortgage you’ll be paying for those renovations even after the house has long since been sold. We wanted to be mortgage free before we were 40 so it was important to us that we kill the mortgage as fast as we could while taking care of projects along the way. Saving up by budgeting for renovations and searching for the best deals on quality products for your home project may help you to save some money or renovate your home for less like my friend Catherine at Plunged in Debt did. They renovated their first home for under $25,000 and it worked out for them even though they are as savvy with money as we are.

Handyman work

There are advantages to doing all the renovation work before you move in. First, you don’t have to live with the mess that comes with renovations and secondly there’s no inconvenience of nowhere to wash dishes for example. You can get your ductwork cleaned out and then move in to basically a new house and enjoy that new house smell.

The homeowners at the time were both very old and did no renovations to our home, not even the roof. When we went to put an offer in we considered the comparables and knew we had room to go down on this one given the state of the home.

The previous owners smoked in the house, carpets had burn marks in them and were very old, nothing was upgraded, no deck, unfinished basement.. and a few other things. The one thing we loved about our home was the size and layout and new we had stumbled on to a gem. The house was bought the same day we found it, with-in hours actually. We’re not into flipping houses and I wouldn’t spend my money buying a house that has been flipped by someone else.

All these contractors coming into homes to renovate is great for the local economy,I suppose, but I do have to wonder where the skills of modern man have disappeared to? I can rarely remember any contractors at our home as a child growing up as my father was in the trades and taught me skills that I have retained over the years. However, when looking at open houses with my wife while shopping for our current I noticed vast amounts of badly executed DIY jobs.

DIY home improvement show

I blame some of those HGTV home and renovation shows for trying to get people to renovate on their own when they have no skills whatsoever to get the job done right. The list of home renovation shows on TV is endless but not useless as there is always something to learn although sometimes I wonder where they come up with some of these ideas for TV shows.

Even Mike Holmes says do it right, so do it right. As much as I enjoy watching those TV programs it doesn’t make me a professional it only gives tips and ideas. Working in the trades of education and experience and not something that the average person will learn overnight or by watching the tube. All kidding aside, if you don’t know what you are doing, don’t begin a project and waste money that you worked hard for to botch up a job that may cost you more in disaster clean-up down the road.

So when it comes to renovations I’d sooner renovate as I go along taking my time to make sure I do it right and the way I want it rather than spending thousands upon thousands before I move into a home. If I need to call in the right people to get the job done, I’ll do it. If you fancy watching those DIY renovation reality shows and want to take on a project, be warned and at least do your homework.

Taking the time to save up the cash in our budget  that we need to pay for our renovations has worked for us rather than rolling it into the mortgage or line of credit. It’s a personal choice either way, do what makes you happy.

What renovations did you do to your home before you moved in?

Did you add the renovation costs to your mortgage or line of credit or did you save up cash? 

Was there a job you completed on your own where you should have called in a professional?

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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. We really did not do any renovations before we moved into our house. The sellers had to fix a few minor things and we did a bit of painting, but nothing other than that. The renovations we’ve done since, we’ve saved for and did what we could and hired out what we couldn’t.

  2. Hello Mr. CBB. I really like your suggestion about living in a house for a few years before you dump a bunch of money into renovations (my paraphrasing!). We really loved that our townhouse was freshly painted in neutral colors and that it had fresh carpet (though we prefer wood floors…that is a looooong way off after years of travel). We have not made any upgrades in ten years. Some may find it ludicrous, but we are very happy. We could not have anticipated spending many thousands to replace both inside and outside A/C units and we would not have been able to pay for my master’s degree in cash if we’d renovated our home, so I lean on the side of Less is More with the home renovations. I’d rather spend my money on learning and travel!

    • Many people are very happy and don’t want to renovate. That is why there are many homes that need to be renovated when a new owner moves in BUT that’s only if the new owner wants to, some don’t.

  3. Great Jollyhoombah (@Hoombah) says:

    CBB! We’ve replaced things like air conditioning units and a dishwasher, but cosmetic renovations have yet to be done and may never be done. We bought the house in 2003 and love it just the way it is. flaws and all. And lo and behold the damn thing did not fall down on us and no one has complained that when they visit, they live in squalor and filth. Amazing, right?

  4. Great post Mr. CBB.

    I have a gripe about HGTV too, because they strive to create in viewers a need for things they can do perfectly well without. Let’s be honest here: their programming is funded by advertisers, and the advertisers want to sell home improvement and decorating products. What they promote has scant relation to what we actually need and, like you say, it’s important to differentiate between needs and wants.

    We bought our most recent home because of ease of maintenance and affordability but there are some things we now need to do. I stress the word “need” because I’d quite happily do without making the changes if I could, but my husband has some mobility issues that will soon require a bathroom renovation and a stair lift. Neither are optional, and both are big expenses that must be budgeted for.

    Thankfully, there is assistance available in the form of grant money to help cover the cost of renovations required as a result of health issues or physical disabilities. Others may want to know this too, if they are in the same situation. If you are unsure where to start in seeking assistance, a visit to your local MLA’s office may be a good beginning. They’ll know about the available programs and are often willing to help with the paperwork.

    As for other renovations, my approach is mostly “use it up, wear it out, make it do, or do without.” It’s important to keep things in good repair and to consider modern preferences when considering resale, but if it’s just for yourself and you’re going to be in a place for the long term, think long and hard about making big changes, especially if they require that you go into debt in order to achieve them. Better an ugly bathroom or worn carpet than a big chunk out of your line of credit!

    • Well said Beth thank you. A friend of ours has problems as well with his leg and is on disability. He gets services provided like house cleaning and will get a portion of a lift covered. Some people don’t know about the help out there .

  5. iheartbudgets says:

    Great post! And I agree, with this statement “I wouldn’t spend my money buying a house that has been flipped by someone else”. They are in it for profit, so you are NOT getting a good deal in this situation.

    I am all about DIY, but know when I’m out of my league. Honestly, I wish I took more time on laying level ground for our patio, because now it’s slightly tilted and feels a little weird to sit on. Too much grade for water runoff, but I was soooo tired that I decided not to level it further. DUMB!

    With most things, I will DIY, but I’ve learned my lesson, and will DO IT RIGHT the first time, because it’s not worth short-changing myself and taking shortcuts. Never is :)

  6. Christine Weadick says:

    We bought our current house from the bank as it was a power of sale unit. We had planned to re-do the kitchen once we were in as there was bugger all for cupboards and such. We knew the wiring was sub-standard from what we could see touring the place. Once we got in the house we realized just how bad the wiring was as we could now punch holes in the walls to see what was back there and it was not good. Wiring took top spot on the to-do list. Like almost every other house we had looked at it was very clear that who ever had done wiring in these houses didn’t know what they were doing and sure as hell didn’t get the work inspected. One example…. the attic had a flourecent fixture up there screwed in to a couple of rafters (not code) the wire running from the fixture to the switch was, I kid you not, an old extension cord with both ends cut off so it could be wired in. Definately NOT code. Re-wiring this house was a need, that much was clear. It was a fire hazard plain and simple. Our kids were young at the time and hubby worked nights. I didn’t sleep worth a darn the first year, until we got the place re-wired, because if anything happened(a distinct possibility!!!) I would have to get three sleeping children out safely by myself….. Even the inspector from Ontario Hydro agreed when we had a contractor come in to upgrade the fuse box to breakers. The old wire was so bad that at one point I was helping to feed wire down from upstairs and the old wire fell apart in my hands, literally, fell apart as I was guiding it out the hole. We did the re-wiring ourselves, but hubby had taken a night school course in home wiring and we had a permit and the work was inspected. Passed with flying colours by the way……
    All that said I would love to be able to do the cosmetic stuff like painting to be done before I moved in as it would avoid the hassle of moving furniture and such from pillar to post and back in order to do the work. I’m pretty sure my back would agree there. I would definately not be paying the asking price if the place needed a lot of work. What I paid would reflect how much I would have to spent to fix things up to bring it up to code on the safety issues. I don’t want to go through all the crap we went through with this house again….EVER!!!!

    • That’s exactly what happened with our house. We paid $265 where an identical home was $300k across the way. Mostly ours was the smoking in the house, roof, carpets, smoke really does mess up a house. You did what was right, safety first. Thanks Christine for your awesome responses to my posts!! I love it

      • Christine Weadick says:

        I hear you with the smoking issue.I remember when helping my sisters-in-law try to get the mother-in-law’s house ready for sale. Mom used to smoke as did Dad before he died and her friend that lived with her did as well. The only want to get the smell out is to replace all the carpet and paint the walls. We cleaned, steamed and cleaned some more and you could still smell it….. The smoke leaves a film on things too, you should have seen the colour of the water when we washed the blinds….it was black…. If the house smelled of smoke when I was looking at it, that alone would knock several thousand off any offer I made.

        • I’ve just about replaced everything in the house. The upper level is brand new. There is no longer any smell in here. It took LOTS of work but it was still worth the amount we saved on the house.

  7. We did a lot of work when we first moved in, but ours was a foreclosure in REALLY rough shape, so it needed to be done. But, we moved in, and did it all ourselves. =)

  8. Hi Mr. CBB! I’ve been thinking about this for the past while.We have a fence that goes around three sides of our yard and only need to fill in the two sides to the house. Our dog keeps escaping and it would be nice to have but there seems to be so many other more important things to focus on – like paying down debt.
    I want to go through the house on a yearly basis and do upkeep – like painting and other things as they come up. If we get into this habit, it would probably go a long way to prolonging the life of things like our deck, flooring, whatever. Thanks for the article – you put out some good guidelines and food for thought.

  9. I appreciate wanting to live in a nice, updated home, I wouldn’t renovate until you know that you plan to move within the next couple of years. This is particularly true if it is your first home; you want to be able to get the most from it.

  10. Your situation sounds like the ideal type of house for a renovation: you got a great deal, loved the layout, size, etc., but just wanted to clean up and renovate the interior to your liking. I think these are such important considerations before making a renovation decision, so that you don’t end up underwater on the house. And I totally agree with what you said about doing it right: the people who lived here before us did lots of the renovations half-arsed, we’re learning, and we are living with their mistakes.

    • Yup and we have to pick up the money mess with these half arsed jobs. The lady across the road who paid $7000 for new hardwood floors… well you would just die if you saw the cuts… rip it out and start over BUT they sold the house highlighting those floors.

  11. I think there are a lot of different factors that go into this. If you can afford to renovate and really don’t like anything other than the newest of the new, then go for it right away. However, renovating can be expensive and most people can’t afford to put everything into it.

  12. Great topic CBB! As long as one understands that you will most likely never get all of your investment back I say go for it! You can save a ton of money by doing some DIY projects yourself. The other danger with renovations is when you go to sell you need to be careful about not pricing your property too high as that could increase days on the market.

    • That’s just it with some of these homes. They go in with major renos to a home that may be outdated but take the risk that if something does go wrong and they need to sell them may not recoup the cash. Cheers mate

  13. Ha! That’s funny I just wrote on a similar subject. It’s amazing how crazy people get with wanting to renovate their homes. When I was in Italy, it was interesting how much of stark contrast it is to here. They were much more focused on fashion, because they spent the majority of their time outside the home, where we probably spend the majority of time inside. I’m sure that’s changing there now as well though. I agree, there are some things that are definitely better left to a professional. But I’ve also saved quite a bit from DIYing. I’m not the handiest person, but after I’m proud of what I did. I know I built that deck! It’s a great learning experience too. You just have to plan your projects carefully and consider all the costs before tackling on a major job. But at the same time I think it’s important to not have to go rely on calling a plumber or other contractor every time that something needs to be fixed.

  14. I would only renovate if I really need to (ie, really ugly carpet or a damaged roof!). Otherwise, I wouldn’t spend the extra money

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