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Payback for shelling it out on those leaky windows

Posted: October 26, 2012


This summer, Mike and I finally bit the bullet. We bought new windows. We figured it was time when we noticed that our daughter, Rachel, was wearing a raincoat to bed every time it rained.

She said the towels she placed all over her bed weren’t cutting it anymore because they didn’t stop the rain that was splashing on her face. I admit we had been putting it off, but who wants to put in new windows? They are expensive ($20,000 in our case) and they aren’t fun like a hot tub or an outdoor kitchen. But Mike convinced me that if they weren’t fixed, other damage would occur.

I had to remember that our house is one of our most valuable assets and we need to take care of it. Mike and I aren’t alone. For most of us, our home is our biggest investment, so we need to plan and prepare for capital improvements.

Sometimes your house will tell you what capital improvements need to be made, like our leaking windows. Before this happens, however, it is a good idea to sit down and assess what capital projects might be necessary down the road and what improvements you might like to add to the top of your wish list.

Before you start dreaming about the hot tub and home theatre, you’ll want to consider any repair projects that will need to be done to maintain the integrity of the home. Structural items such as the roof, exterior painting, windows, furnace or electrical work. These projects need to be done first. Putting in a home theatre when your roof is leaking is like rearranging deck chairs on the Titanic.

Ask any lender and they’ll tell you the improvements they value most are structural. They know buyers will be looking at the bones of the house. While it is true that decor might pull at buyers’ heartstrings and inspire them to put in an offer, structural issues will scupper the deal once the home inspection is complete.

While you want to make renovations that you’ll enjoy, you want to consider how they will improve the value of your house when you go to sell it. In other words, what is the rate of return on this renovation?

The Appraisers Institute of Canada came up with a list of renovations and their rates of return. Here are the top 10.

Interior painting and decor: 73 per cent

Kitchen renovation: 72 per cent

Bathroom renovation: 68 per cent

Exterior paint: 65 per cent

Flooring upgrades: 62 per cent

Window/door replacement: 57 per cent

Main-floor family-room addition: 51 per cent

Fireplace addition: 50 per cent

Basement renovation: 49 per cent

Furnace/heating-system replacement: 48 per cent

As you can see from this list, renovations do not have to be extensive or expensive to earn a decent rate of return. Mortgage renewal time is a great time to review your plan because it is at this time that you will have access to your home equity with no extra fees. You can work with your mortgage agent to crunch the numbers to see if using your home equity for that particular reno makes economic sense.

Julie Shea is a mortgage broker with The Personal Mortgage Group in Hamilton and can be reached at jshea@personalmortgage.ca.


Original Article Found Here – http://www.thespec.com/news/business/article/822757–payback-for-shelling-it-out-on-those-leaky-windows