Say what you will, but spending $20k,$50k or more on a basement renovation, with the intent that you can recover the money spent, and then some...is wishful thinking in most cases.
While a RE appraser can tell you that the renovation "adds considerable value" to the resale of the property,
it all depends on locale and the area you live in, and whether the basement is separate from the rest of the house and considered INCOME PROPERTY for the new homeowner.
If the new owner can rent out the finished basement (done to code) for $1000 a month to help with mortgage payments, then maybe.
Real estate agents go by the average prices of homes in your area, and if the average is say $300k, and you spend $50K on basement renovations in the hope of recovering your investment and then some...you may be in for a big surprise.
While buyers may appreciate that the basement has an extra bedroom, rec room for the kids and maybe a two piece washroom in the basement, the listed price is compared to other homes in the same area that may (or may not) have a finished basement.
After all with the 20% down requirement now needed to even qualify for a mortage,
the monthly mortgage payment + taxes +utilities and the listed price (that is subject to negotiation) is what will determine whether the house you just spent $20K renovating the basement is worth a second look, if the same style house next to it is listed $20K to $50K cheaper.
Sure, you can go above the RE recommendations to arrive at a listing price, but then you run the risk of not selling it because it's just listed too high for the area.
Last edited by carverman; 2017-03-06 at 08:51 AM.
Originally Posted by carverman
This is a better way of putting it. It all depends on what you do to the basement. There are people that spend thousands on work, but do it incorrectly, and don't do it to code, or even pick really ugly finishes that nobody else likes. In these cases, it's not really adding any value. In some cases you might be lowering the value of your house if everything has to be re-done. But if you are creating an income property by making a legal apartment, now THAT is some real value added.
Originally Posted by Danny
Thanks for the comment! I'm in Guelph Ontario. I generally invest in properties in the Guelph/Kitchener/Waterloo areas. If you want, send me an email to ask a more in depth question: Swingingthehammer@gmail.com
All renovations are not equal, the 10% number refers to renovating an already functional space. For example if you replace a perfectly good counter top, with a granite one, you probably aren't going to recover the full cost of the upgrade on a sale.
That said, taking a completely unfinished basement and finishing adds real value to a house. It's tough to say exactly how much, but it's going to be more than 2-3 thousand dollars. That number that someone said about 10% of the total value of the house is probably closer in this case.