Canada's Condominium Magazine
For new-build condominium home-owners who take the long-view — to maximize future resale value — deciding on the appropriate value-adding upgrades can be the most important decision — after which floor to buy on. The wrong choices can be wasteful.
Generally, for new condominiums (or newly built detached homes) you should anticipate a 10-20 percent budget for upgrades. The decisions you make impact your lifestyle — but also your resale value.
Investing 10 to 20 percent now can be significantly more cost-effective than deciding to renovate in the future. If you choose wisely, you could save at least fifty percent over the cost of a renovation — and avoid the future inconvenience.
If you are on a tight budget, only upgrade those things that cost significantly more as a retrofit, such as floors, wiring, recessed accent lights and so on. Totally eliminate anything that is simply a break-even investment or a resale loser — such as painting the walls an unusual colour that only you like.
Resale value impact
Upgrades, if chosen carefully, can strongly impact resale value, especially if — when you sell — you have competition in your own community. Two big factors play in same-community comparables: upgrades and floor. [For a discussion on floor value, see our previous feature>>]
As a rule of thumb, most experts tend to agree that you can easily double your upgrade or renovation budget. A $20,000 upgrade (or future renovation) should conservatively return at least double the invested amount — likely considerably more.
What has the highest return on resale value
Counter tops, kitchens — including appliances — lighting, and bathrooms are the biggest returns on investment. Ask any realtor: kitchens and bathrooms should take priority.
Wiring and flooring are also big contenders for upgrades since both are much easier to install as upgrades, versus a retrofit renovation. Condominium high-rises are concrete, making wiring and flooring more involved as a retrofit than on a frame house, for example.
Upgraded designer ceramic tiles, granite counter tops and hardwood floors are big demand upgrades in the resale market. The biggest returns tend to be on (in order of higher return):
- Hardwood flooring, or, if you can’t afford hardwood, laminate hardwood.
- Accent and recess lighting: they tend to be the lowest cost for the highest return after hardwood flooring
- premium granite kitchen and bathroom counter tops (or second choice marble — remembering, that marble is “softer”). Second choice, premium surfacing materials such as Caesarstone).
- Upgraded marble, granite or, if on a tight budget, ceramic, on kitchen floor and bathroom.
- Upgraded kitchen cabinetry.
- Appliances, especially built ins and flush-mounts, particularly if they are sophisticated choices. Research this one, if the upgrade choice is poor, you could consider installing yourself later — but remember that the more expensive appliances are often over sized or non-standard, so you may be in for major renovation if you choose to do it later.
- Upgraded ceramic on walls and back splashes in kitchens and bathrooms.
- Mouldings: crown mouldings and oversized or ornate floor mouldings really enhance the luxury feel and significantly impact perceived value.
- Oversized doors (if available) are a strong signal of “luxury” and tend to trigger high perceived value impressions.
- Closet organizers and more elaborate close doors: although these are relatively easy retrofits.
What is the lowest return (i.e. don’t bother)
Normally, you could count on a return-on-investment on all upgrades, but there are less sizable returns on some things that you could fairly easily upgrade later. You might still want some of these for your own lifestyle, but from a resale point-of-view, these have the lowest return:
- Window coverings
- Minor counter-top upgrades (if you’re not bothering with a significant upgrade to granite or marble, or a least an obviously premium surface, it’s normally not worth the investment from a resale point of view.
- Light fixtures: referring to the fixtures themselves (i.e. such as chandaliers). Recessed lighting, as mentioned, is usually a good investment.
- Slightly upgraded laminate flooring.
In a typical $600,000 condo, new build, an average upgrade would be $60,000 to $85,000. For this budget, you can almost certainly really bump up fixtures, appliances, counter tops, ceramics and floors. Don’t waste money on cosmetic things that are easy to add yourself later, such as window coverings, paint choices and light fixtures.
Having said that, do upgrade the number of electrical outlets, and have your builder install any kitchen accent lighting, recessed lighting or difficult wiring upgrades. For your own lifestyle, and later for resale, you can never have enough electrical outlets.