Post: #1

Calling the RE pros regarding some dilemmas I'm having right now and I hope to get your expert feedback on these issues.

- if units in a given condo are priced between a price range difference of say 30-50k between the cheapest and most expensive unit in that building, does it make sense to spend 10-20k to renovate it to get a meaningful value/price increase before selling?

- if yes to the above question, can the price of a renovated unit go above the market rate for units in that specific building? I'm not talking about anything drastic, but if I were to spend up to 20K in renovations on it, would that give the value a boost of say 40-50K? Cause to me, only a boost in value of 40-50K+ would make it worthwhile to spend up to 20K to renovate it.

- what kind of renovations are the best bang for the buck and give a property the biggest jump in value? is it renovating the kitchen? bathroom? living room? bedrooms? floors? walls? painting?

Any other tips you guys could give to boost the value of a condo unit to get the most $ out of it before selling are very much appreciated!

Cheers guys!

Post: #2

(09-10-2013 01:29 AM)Vacancier Permanent Wrote:  Calling the RE pros regarding some dilemmas I'm having right now and I hope to get your expert feedback on these issues.

- if units in a given condo are priced between a price range difference of say 30-50k between the cheapest and most expensive unit in that building, does it make sense to spend 10-20k to renovate it to get a meaningful value/price increase before selling?

- if yes to the above question, can the price of a renovated unit go above the market rate for units in that specific building? I'm not talking about anything drastic, but if I were to spend up to 20K in renovations on it, would that give the value a boost of say 40-50K? Cause to me, only a boost in value of 40-50K+ would make it worthwhile to spend up to 20K to renovate it.

- what kind of renovations are the best bang for the buck and give a property the biggest jump in value? is it renovating the kitchen? bathroom? living room? bedrooms? floors? walls? painting?

Any other tips you guys could give to boost the value of a condo unit to get the most $ out of it before selling are very much appreciated!

Cheers guys!

Will the condo sell as is? I am assuming there are other condos for sale and you would be competing with them for buyers. It may be worthwhile to make renovations just for that alone.

Kitchen and bathroom improvements are the big money makers. I would still get a new paint job which shouldn't cost you much in the grand scheme of things. Unless it looks great now.

Also staging your condo when you go to sell it will a big help. There are companies you can hire to come in and do that type of stuff.

Another enticement could be money back at closing for repair costs if you don't want to deal some of the renovations.

Post: #3

Just get some nice corner tops and cabinets, and a nice color scheme.


Putting $20k the property will only raise its value $5k-$7k. But it depends.

I should explain!

A lot of times home owners will blow thousands of dollars on improvements that they think will raise their home value, even make money off the improvements. But the reality is that will be pissed because the property's appraisal won't come close to the amount of money they put into it.

I took an appraisal class earlier in the year. If I an find my worksheet I'll scan it and email it to you.

Post: #4

Thanks for chipping in WWT!
The condo is in a very popular building, in a great residential area in one of the best areas in town. Units don't last long in that building. It would go within 2-3 weeks no problem as is. Even tough it's an older building (around 40 years old) it's a very nice building and very well maintained. The unit would definitely sell as is now with some very minor touches. But I was wondering whether it would be worthwhile to make any major renovations before selling.

I had some renovations already done last year. In the main bathroom, the wall and tiles were redone as well as a new toilet seat was installed. Might have to replace the sink and the bath. Nothing wrong with them, but newer models would give it a facelift.

Post: #5

(09-10-2013 02:39 AM)Vacancier Permanent Wrote:  Thanks for chipping in WWT!
The condo is in a very popular building, in a great residential area in one of the best areas in town. Units don't last long in that building. It would go within 2-3 weeks no problem as is. Even tough it's an older building (around 40 years old) it's a very nice building and very well maintained. The unit would definitely sell as is now with some very minor touches. But I was wondering whether it would be worthwhile to make any major renovations before selling.

I had some renovations already done last year. In the main bathroom, the wall and tiles were redone as well as a new toilet seat was installed. Might have to replace the sink and the bath. Nothing wrong with them, but newer models would give it a facelift.

That is good news. I would hold off on the renovations and see what you can get without them. Clean it up, stage it and list it.

Like I added to my previous post, at least in the US, you can give them some money back at closing for additional renovations. Now, that doesn't mean it has to come out of your pocket if you knock up the price more. heh

Post: #6

Awesome feedback kickboxer!
That's what I thought too about putting any serious renovations into it, but family is highly recommending to go on a renovation spree.

If you could find that worksheet and email it to me, that would be fantastic!

Cheers!

Post: #7

(09-10-2013 02:39 AM)Vacancier Permanent Wrote:  The condo is in a very popular building, in a great residential area in one of the best areas in town. Units don't last long in that building. It would go within 2-3 weeks no problem as is.

That was going to be my primary question. How active/popular is the building. Make sure you are getting actual closing prices, not just asking prices. Anyone can ask for what they want, you want to know at what real price the asset exchanged at.

The one thing about doing upgrades/remodels is that it ends up costing more than you had planned. Once you open up walls (if that is what you are doing) and you are doing it with a permit (not sure where you are - I am speaking from my US experiences) things can go haywire. In the US, when you start making modifications, even though the existing house/condo is grandfathered in, they will make you bring it to current standards. These are things people don't think about sometimes before they start.

As some have mentioned maybe find out what you can get for it without doing anything.

Once again, not sure where you are, but doing cosmetic stuff is great, I would stay away from structural (i.e. moving walls, etc.) End of the day, women often make the decision or heavily influence it, so kitchens and bathrooms are key.

Another way to think about it is the return on cash. What will the 20k return? It sounds like maybe 100%. Which is great but adjust it for the risk, and there is always risk in everything nothing is risk free. Even US Government bonds have int rate risk.

Post: #8

Thanks for the very insightful feedback guys! Very much appreciated!

Kickboxer, the PDF you sent me is GOLD! Going to print it and go over it in more details! Thanks a lot my friend! +1 more than deserved!

(09-10-2013 02:27 AM)kickboxer Wrote:  Just get some nice corner tops and cabinets, and a nice color scheme.


Putting $20k the property will only raise its value $5k-$7k. But it depends.

I should explain!

A lot of times home owners will blow thousands of dollars on improvements that they think will raise their home value, even make money off the improvements. But the reality is that will be pissed because the property's appraisal won't come close to the amount of money they put into it.

I took an appraisal class earlier in the year. If I an find my worksheet I'll scan it and email it to you.

Post: #9

Sam,
You're raising some excellent point about working with a permit or without and renovation work going over what you initially budgeted for. Will be contacting a few real estate agents to get their feedback on the current value and whether making any major improvements will be worth the effort. Thanks everyone for your feedback. Keep'em coming guys!

Cheers!

Post: #10

Why sell and not rent out for passive income?

Post: #11

Check out http://www.biggerpockets.com

Post: #12

I thought about that, but I don't want to have to do anything with Toronto anymore. It's officially official, I'm out of that shithole for good!

(09-10-2013 10:01 PM)Black Quixote Wrote:  Why sell and not rent out for passive income?

Post: #13

Great link! Thank for sharing!

Cheers!

(09-10-2013 10:14 PM)renotime Wrote:  Check out http://www.biggerpockets.com

Post: #14

One more thing to consider. Since you think it is a shit hole. You wanna be stuck in that property for a few more months? Or just sell and be gone?

I am not predicting interest rates and I know in Canada you can't get 30 year mortgages - so maybe interest rates don't drive buying behavior as much there, since every few years you need to re-finance. But markets can turn cold. Rates rising in the US have affected some markets. Mortgage companies have been laying off people recently due to slowing volume (mainly a drop in refis).

Some bad news here and there and buying interest will dry up. Trust me you don't want to be stuck in something you don't want to be in.

Post: #15

It's very rare to see a dollar for dollar (or more) improvement renovating a house or condo to sell. Like others said, it's easier to repaint, stage, fix anything obvious.

Homes will usually follow the market. It doesn't matter how much you paid for the house, or how much work you put into it. It will sell for about what the other comps in the neighborhood are priced at.

When I was a Realtor, I toured a new listing that another Realtor in my office had. It was a really nice house priced at about a million dollars. I think they bought two lots and built a big house on it. But the house was in a neighborhood where the average home was $250,000. None of us expected that house to sell. I have no idea if it ever did or not.

I'm trying to short sale my own house in a divorce. I bought it in 2001 for $106,000. I overleveraged it during that decade. At one point, it appraised for $180,000 around 2005. I'm currently trying to get the mortgage company to accept a short sale offer for $65,000. That's how far the market has fallen. The market doesn't care that I replaced the kitchen floor, upgraded the electric, added central air, converted the family room into a Master Suite. The market only cares what other houses of that type are selling for right now.

If you buy an $80,000 condo in a neighborhood where the average condo sells for say $75,000 to $105,000 depending on location and amenities, and put $20,000 into it, you're not likely to see that much return on investment.

Post: #16

Thanks for the great insight emuelle1!
What you wrote only confirmed my own sentiment that a unit will only sell for what others in the area sell for, regardless of how much improvements have been made. At this time, I'm going to hold on and not do any major renovations, just some minor aesthetic ones to make it look nice for a quick sell.

Sam,
Toronto is a shithole as far as living there as a single guy. But it's a great place for a guy with a family to raise or looking for a career in the corporate world.