How Much Should You Upgrade Your Home?

Whether you are in the design centre of a new home builder or sitting around your kitchen table deciding which upgrade to perform on your home first, there are quite a few things to consider.

It should be stated that this article will speak of upgrades and home improvements, and what should be considered in that respect. What won’t be discussed are structural integrity issues, new roofs, cracks in foundation, cracks in driveway and other critical issues that should be addressed well before any cosmetic issues.

As I was part way through the purchasing of my first home, which was new construction, I had to start making upgrades. i was very surprised to find that there were a large number of upgrades that the builder did not offer in their town homes. I was surprised that they wouldn’t sell people whatever they wanted, but after some research I realized they might have been saving buyers from making some big mistakes.

As I went through the process there were 4 things that I considered when making upgrades:

How much more will I enjoy the house after the upgrade?
How much will this increase the value of the house?
How much will this aid in the sale of the house?
What is the cost of the upgrade?

All four factors are very important when making the decision to upgrade, but I would argue that none is more important than Number 1, which of course is tied closely to Number 4. Cost is always a factor.

Unfortunately there is no magic coefficient to discern whether or not the upgrade is a good idea.

In order to be able to easily convey these four ideas, I will demonstrate them through examples.

Finish the basement - One of the best upgrades you can make to the house is to finish the basement. A games room, home theatre or rec. room is a great addition to any home. Depending on how the work is performed, it can be done favourably in relation to all four of the factors listed above. For a family, having another area for the house allows the living room to become more formal while giving the children (both young and old) a place to play. A finished basement can greatly increase the joy of owning the house by creating extra livable space. The extra square footage can also increase the value of the house and its salability. If the work to be completed is relatively simple and does not involve major plumbing and electrical work, it can be accomplished quite economically. Finishing the basement is easily one of the best upgrades that can be made.

Granite countertops - This “mixed bag” upgrade is very dependent on your house and the kitchen in which you wish to renovate. The most important thing to take note of is if you are not in an expensive neighbourhood (i.e. you live in a townhouse) then this is not an upgrade to make. When it comes to increasing the value of your house one of the cardinal rules is: Do not have the most expensive house on the block. This upgrade is a great idea if you live in a larger single family home, but not if live in a less expensive home.

Front porch - Putting a front porch on your house can be a great upgrade particularly if you live in a neighbourhood where all of the houses look the same. It increases curb appeal by differentiating your house from the rest of the neighbourhood making the house easy to see. If you are the type of person who likes to sit outside and read in the morning or evening, then this upgrade may substantially increase your enjoyment of the house.

Exterior paint/new roof line - If you paint is peeling and looks absolutely dreadful, exposing the wood underneath, then yes do this; if not, it’s not going to add much to your investment. I saw one example where an individual spent over a year slightly modifying this roof line. I will concede that the house looks better, but for the effort there was almost no value added to the house. As well, I highly doubt that it increased the enjoyment in the house.

If you take from these examples and look at increasing the value of your house, increasing your enjoyment of it, decreasing your operating costs, and making your house more attractive, you will have made a good upgrade. Of course there are other upgrade options to consider, including new windows, fireplaces, and flooring - just follow the four simple considerations demonstrated above to determine if they really are worth your while.