# Townhouse upgrade plan



## J Watts (Jul 19, 2012)

I just bought my first house. It's a starter townhouse, built in the mid-70s, and generally in good condition.

It's going to need a new furnace, AC, and water heater almost immediately. My plan is to try to get one last year out of both, and do the upgrades next spring (2015). Total cost: $5000-6000.

Next I want to look at upgrading the electrical outlets in the kitchen and bathrooms to GFCIs, which I should be able to do myself. Total cost: $20-30 each = $120

Next I want to re-frame a wall in the basement that was built improperly. The framing was done wrong, making the wall wavy and uneven. Total cost: ???

Next I want to look into upgrading the kitchen, with some better cabinets and a new counter top. Total cost: ???

Basically, I want to space out the renovations so I can save-and-spend $5000-6000 per year to be reinvested into the house. Does that sound like a good idea? What's the average increase in property value I could expect to see from the upgrades?


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## HaroldCrump (Jun 10, 2009)

J Watts said:


> Does that sound like a good idea?


Yes, in fact, these don't sound like "upgrades" - rather absolute mandatory fixes that must be made (except for the kitchen reno.).

Keep in mind that with the furnace and the water heater, you are tempting fate - they may conk off right in the middle of winter, during one of the coldest days (Mr. Murphy is alive and well).
Therefore, have the cash ready on hand to deal with such a situation.

If you have the cash now, it is probably worthwhile to purchase a new furnace and water heater preemptively now during the summer/fall.



> What's the average increase in property value I could expect to see from the upgrades?


Unless you were able to buy this townhouse at a discount because of these issues, I'd expect no appreciation.
The changes you are talking about sound like basic, fundamental, structural changes that must be made before you can re-appraise the house or try to sell it.
If you were able to buy this house for say $10K discount, then that is your expected return.

You may get some appreciation out of the kitchen reno, but depending on how bad the cabinetry looks, it may not be much (i.e. it may also be a necessary "upgrade").


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## wendi1 (Oct 2, 2013)

Harold is smart.

The water heater might fail catastrophically - flooding your space with city water under pressure. If you see rust when you turn on the hot water (but not when you turn on the cold), the liner is rusting, and needs attention PDQ (especially since you don't know how long it's been going on). Don't ask me how I know.

I would be tempted to upgrade the water heater and furnace now, and hold off on the A/C until next fall, when the specials come out. High-efficiency or better - and you might be eligible for grants if you improve energy efficiency.

Framing a wall is inexpensive - some two bys and drywall. Pick nice straight lumber at the yard. And a level. Don't skimp on the level. Get someone who knows to check that the wall is not load-bearing before you take it down.

The kitchen is not possible to ballpark - but you need to be careful. You can go nuts, or under-renovate and make the value of your investment go down. For instance, townhomes don't usually need granite, but do benefit from a backsplash... Sheet vinyl might make more sense than ceramic tile... enjoy!


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## rikk (May 28, 2012)

It's going to need a new furnace, AC, and water heater almost immediately. My plan is to try to get one last year out of both, and do the upgrades next spring (2015). Total cost: $5000-6000.

Suggest you start planning/getting quotes now ... e.g. furnace, water heater, AC ... type? capacity? ... and to avoid contingencies ... e.g. ... townhouse may require new through the roof vs through the wall exhaust/intake ... and you might save a bundle on sales, having all done at the same time. I'm thinking $5K to $6K is low if you plan on having the work done ... I'd think more like $12K plus minimum ... and that's what those estimates will help with eaceful:


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## J Watts (Jul 19, 2012)

rikk said:


> Suggest you start planning/getting quotes now ... e.g. furnace, water heater, AC ... type? capacity? ... and to avoid contingencies ... e.g. ... townhouse may require new through the roof vs through the wall exhaust/intake ... and you might save a bundle on sales, having all done at the same time. I'm thinking $5K to $6K is low if you plan on having the work done ... I'd think more like $12K plus minimum ... and that's what those estimates will help with eaceful:


I've received 3 quotes so far that were in the $5000-7000 ballpark. To be fair, they haven't been in the house yet since I haven't taken possession. I'll have them out to the house to get a better estimate.


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## J Watts (Jul 19, 2012)

HaroldCrump said:


> Unless you were able to buy this townhouse at a discount because of these issues, I'd expect no appreciation.


Doesn't the average house in Ottawa appreciate by about 1.2% anyway? As a factor of property values, inflation, etc? If that's true, then I was thinking that investing an additional $5000 per year (2.6% of the value of the house) would mean increasing the property value by 3.8% per year. Or am I missing something?


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## HaroldCrump (Jun 10, 2009)

J Watts said:


> Doesn't the average house in Ottawa appreciate by about 1.2% anyway? As a factor of property values, inflation, etc?


Those are all nationwide averages and statistics.
Individual properties can always be different, and can always divert from the general averages.

For instance, a well maintained house with good features and upgrades can easily sell for far above general market averages.
Conversely, a poorly maintained house with problems will normally sell at a discount.

If you were aware of these issues, ideally you would have bought this house for a discount off the fair value.
Once you make these fixes, the house should "appreciate" back up to fair market value, but I don't think you can expect any substantial appreciation over & above that.



> If that's true, then I was thinking that investing an additional $5000 per year (2.6% of the value of the house) would mean increasing the property value by 3.8% per year. Or am I missing something?


It doesn't work that way.
What do you plan to keep spending the $5K a year on?
Are you going to keep upgrading other aspects of the house every year?
If there are reasonable and needed upgrades required, then sure.
If not, you might simply end up over-upgrading (yes, it is possible to over-upgrade) for which you will never recover the appreciation.

In fact, over-upgrading puts off some buyers because they feel the property is being over-priced to recover the cost of upgrades and they don't want to pay for someone else's work.
As wendi1 said above, a relatively small kitchen in a townhouse usually does not need a granite countertop.

None of us have seen your house, so it is hard to get specific.
But just be careful of over-upgrading.


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## Just a Guy (Mar 27, 2012)

What are you planning for the place? Are you looking to flip? Refinance? Live there forever?

Increases in value are rather relative...if you fix up the kitchen, but live in it for years, it initially may increase the value but depreciates quickly for example.


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## J Watts (Jul 19, 2012)

HaroldCrump said:


> If you were aware of these issues, ideally you would have bought this house for a discount off the fair value.


Correct, I did.



HaroldCrump said:


> What do you plan to keep spending the $5K a year on?
> Are you going to keep upgrading other aspects of the house every year?
> If there are reasonable and needed upgrades required, then sure.
> If not, you might simply end up over-upgrading (yes, it is possible to over-upgrade) for which you will never recover the appreciation.


Stuff I mentioned above. Then maybe closet doors (right now they're the tall tracked mirror doors, like you'd see in a lot of apartments). Maybe getting rid of the popcorn ceilings. Maybe upgrading the bathroom, etc.


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## J Watts (Jul 19, 2012)

Just a Guy said:


> What are you planning for the place? Are you looking to flip? Refinance? Live there forever?


This is a starter home, although it does have enough room if I were to start a family here in a few years. I figure stay for 5-10 years until I have more income to purchase another house.


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## Just a Guy (Mar 27, 2012)

Then I'd say to renovations for your peace of mind, things that you'll benefit from...the increased value, monetarily speaking, will be meaningless as you'll probably have to redo it to sell.

Plus, no one knows what will happen to prices going forward.


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## jcgd (Oct 30, 2011)

Your kitchen receptacles might be split receptacles where the top and bottom of the plugs are separate circuits and the neutral wire is shared. If that is the case you won't be able to use GFI receptacles. You will want to install a two pole GFCI breaker into the panel in place of the standard two pole breaker, which typically run over $100. 

If they aren't split receptacles you'll be okay to swap the receptacles out for GFIs. Make sure you don't put 20A plugs on a 15A circuit by accident. Also, you can put a GFI at each outlet box, or you can just put one on the first plug of the run and use it to protect the rest of the plugs down stream. 

If it's for a customer I'll go the cheapest route. I would prefer separate GFIs at each outlet box so I don't have to back to the panel or tripped plug to reset it. 

Be careful with your wiring. People screw up electrical a lot because they don't understand the devices and how they operate.


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## rikk (May 28, 2012)

J Watts said:


> I've received 3 quotes so far that were in the $5000-7000 ballpark. To be fair, they haven't been in the house yet since I haven't taken possession. I'll have them out to the house to get a better estimate.


My thinking when I was retrofitting fwiw ... I went with Trane furnaces for future maintenance/parts/house resale considerations ... when my electric hot water tank went I replaced it myself and relocated it to a more out of the way location which you might consider for both your furnace and hot water ... when the gas line inside the house was upgraded to accommodate the second furnace, I had "Ts" installed at no additional cost where I might use gas in future to e.g. service the kitchen (stove), living room (fireplace), basement (clothes dryer/hot water). Direct Energy did the gas/furnace installation ... they did an excellent job, even installed at my request at no cost an additional cold air intake on the basement floor making the basement a lot more comfortable. Just suggesting give it some thought while you have the opportunity, maybe make some changes to the current layout for down the road.


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## J Watts (Jul 19, 2012)

jcgd said:


> Your kitchen receptacles might be split receptacles where the top and bottom of the plugs are separate circuits and the neutral wire is shared. If that is the case you won't be able to use GFI receptacles. You will want to install a two pole GFCI breaker into the panel in place of the standard two pole breaker, which typically run over $100.
> 
> If they aren't split receptacles you'll be okay to swap the receptacles out for GFIs. Make sure you don't put 20A plugs on a 15A circuit by accident. Also, you can put a GFI at each outlet box, or you can just put one on the first plug of the run and use it to protect the rest of the plugs down stream.
> 
> ...


Good to know! Thanks.


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## J Watts (Jul 19, 2012)

I have about $6000 in savings left, about $5000 of which will be needed to replace the furnace, AC, and hot water heater (like I said earlier).

After that, I have the maintenance plan of what I want to do to the place over time. To do this, I want to start building a home maintenance fund at $500 per month that will be kept in a HISA. That gives me $6000 per year for those renovations.

I have my property taxes and condo fees coming out automatically at the same time as the mortgage so I shouldn't have any other major foreseeable expenses.

After that, I'll have about $200 per month to save. I was thinking about keeping all of it for an emergency fund until it gets back to $3000-4000, then splitting it between TFSA and RRSP contributions (for both future plans and savings).

What do you think? Do I generally have the allocations right?


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## the-royal-mail (Dec 11, 2009)

I don't feel these types of improvements do anything to increase the value, anymore than car repairs and washes increase the value of your car. They don't.

Maintenance on your property is just that. The stuff being discussed here maintains value at best. If you don't do these things you may get less for the house when you sell, than other houses that have done these things. Buyers shop around and look for the best place for the best price. They are king.

The best you can hope for is these things will help you sell the house faster. You want to keep the house as move-in-ready as possible. It's not about increasing your asking price.


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## Cdnwife (Sep 10, 2013)

Advice on replacing appliances on your terms rather than when they fail is very wise. We just purchased a townhome about the same age and within 6 months sprung a leak in the water tank. We opted to put in a tankless unit and replaced the archaic furnace at the same time due to venting requirements for the tankless. Bill was 9k. Unfortunate that it happened at that time as three months later there was a grant for furnace replacements which would have covered almost 20% of the cost. If you are. Able to scope out these savings and replace it before you are forced to you may end up with a bit more savings.


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## carverman (Nov 8, 2010)

Cdnwife said:


> . We opted to put in a tankless unit and replaced the archaic furnace at the same time due to venting requirements for the tankless. *Bill was 9k*. Unfortunate that it happened at that time as three months later there was a grant for furnace replacements which would have covered almost 20% of the cost.


I think these furnace replacement discounts are just a ploy to get people to buy new furnaces and tankless water heaters.

The tankless venting goes through a hole in the wall. 
So does the induced draft water heater that has a tank and is far cheaper to install.

What was wrong with the furnace that it had to be replaced?... at the same time..or did you just decide to spend some of Harper's plastic money before it gets devalued even further? :biggrin:


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## johnlena (Sep 6, 2014)

Townhouse building plans, which are several row houses connected by a sidewall, are commonly referred to as multi-plex home plans, small apartments, duplexs and condos. Townhome plans are available in many sizes and architectural styles. These multi family designs make great INVESTMENT property and work well where space is limited due to cost or availability.


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