Thursday, 15 December 2011

To Renovate or Not to Renovate?

Existing House or New House, Move or Renovate Spreadsheet, image by
Image: Existing House or New House: Move or Renovate Spreadsheet
A homeowner dilemma: To stay-and-renovate an existing property
or to buy-and-move into a new house

2011 @

When talking to prospective clients often they wrestle with the choice “Shall we renovate or just move?”

Even though there are many reasons that will play a role in the decision, such as loving the house, proximity to schools/amenities, friendly neighbours, gardens, making the house exactly as you want it etc, money is high on the list.

Let’s look at the following scenario: An existing house and a new house located in the same Toronto’s west end neighbourhood.

The existing house required a rear or side extension to gain extra bedroom or family space : Current value: $ 400,000 + Reno cost $100,000 + HST

New house with required extra space (some renovation required): Estimated: $475,000 - $500,000

Scenario 1: To Renovate an Existing House
(owner can live in property while it is renovated)
Current value: $400,000
Renovation costs (Addition): $100,000 + HST
Estimated renovation cost: $113,000

Total staying and renovating costs to get the extra space: $113,000

Scenario 2: To Move to a New House
(some renovation required)

Estimated value: $475,000 - $500,000
Upgrade costs:
Difference to existing house : $75,000 – $100,000
Land transfer tax: $11,200 - $12,200
Difference to existing house buying costs $86,200 – $112,200

Moving costs:
Commission: $24,000 + HST
Moving expenses: Estimated: $2,000 + HST
Legal expenses: Estimated: $1,500 + HST
Home inspections: Average: $500 + HST
Minimum renovation: (window coverings, painting, bathroom upgrades, new carpets etc): $10,000 + HST
Estimated moving costs: $42,940

Total upgrade and moving costs to get the extra space: $131,140 - $154,940

Of course this is a simplified calculation and in reality the cost will vary according to the specific circumstances, but the case can be made that a renovation is more cost effective in the above situation.

Martina Ernst
Wo-Built Inc. - Innovative Design and Build

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