Episode #31 - Home Ownership: Tips for Renovating the Right Way
Announcer: Welcome to The Money Clip podcast series from The Vault, Scotiabank's online guide to helping Canadians get ahead financially. Listen in to gain a deeper understanding of your personal finances and find out how a few small changes to the way you manage your money can make a big difference.
Michael Seaton: Thank you for joining us on The Money Clip podcast series from Scotiabank. I'm your host, Michael Seaton, and with The Money Clip, we provide Canadians with a deeper understanding of personal finance and money related matters. This is our home ownership series and today we will look at things to consider before you renovate. Home renovation has become a national pastime for Canadians. Besides sprucing up your home and enhancing your lifestyle, renovations can also boost your home's resale value. To help you get on the right track before you renovate, we are joined again by Mark Salerno of CMHC, Canada Mortgage and Housing Corporation. Welcome back, Mark.
Mark Salerno: Thank you.
Michael Seaton: Let's begin by reviewing the main reasons behind renovating a home.
Mark Salerno: Well, first of all, it could be maintenance. It could also be replacing major components that have reached their usable life. As well it could be ways to improve energy efficiency, or just enhance your lifestyle and your home.
Michael Seaton: And how do you decide which renovations are right for you and for your situation? And can you discuss the potential rewards for a homeowner?
Mark Salerno: Well, it's important to put maintenance renovations first and foremost before luxury items. These are going to help you to protect your investment in your home. As well, replacing major components, like retrofit projects of mechanical equipment. These are also quite important as well. Lifestyle renovations are wonderful, because what they do is they help you to stay in your home longer. You may love the neighbourhood, but your house doesn't any longer meet your needs. But by, let's say, doing kitchen or bathroom renovations, adding a room, creating a basement suite, you can stay in that house longer and accommodate your family's changing needs.
Michael Seaton: And do all renovations increase the financial value of your home, or do some offer a greater payback than others?
Mark Salerno: Well, generally, any investment you make in your home can be a good one and will have a good return on your investment. There are, however, some that certainly can lead to greater returns. Kitchens and bathrooms, generally, would fall in that category; more and more so, energy efficiency upgrades as well, because when you turn around and sell your house, people are very much concerned about the operating cost of the home.
Michael Seaton: And hold that thought; we're going to be back on energy efficiency in a question or two. But once I decide to conduct some maintenance or renovation work, how do I proceed? How can I ensure that I'm doing it properly from the initial stages and onward?
Mark Salerno: Well, it's important to get an expert opinion. One way you can do that is to hire a home inspector. They'll walk through the house and recommend that you walk with them, and they'll point out areas of deficiency, things that maybe need to be maintained. They'll let you know if your furnace ought to be replaced, or if windows and doors need caulking or weather stripping. They'll also give you some indication as to how you may undertake certain renovation projects. You also maybe want to look at-if you're planning to do renovation work-look at meeting with your local municipality to find out what building permits may be required and what is required in terms of drawings and hiring professionals to do the work.
Michael Seaton: Now back to energy efficiency. With all the attention on the environment and being energy conscious-what are the ways that you can make your home more energy efficient? I've heard about audits and rebate programs… Can you shed some light on this and what's available?
Mark Salerno: Okay, well, there is a federal government program where you hire an energy auditor who will come in your house-so you do have to pay, it's a fee for service-but they'll walk through and they'll look at all of the different components in your home. And they'll be able to tell you what the energy efficiency of those components are and recommend what sorts of upgrades you can undertake. When you go ahead and undertake those upgrades, they will then come in afterwards and have a look at what you've done, and then there'll be an according rebate that comes through the federal government.
Michael Seaton: Now, Mark, how do I know if I'll be paying a fair price for the work and also ensure that the things I have contracted will go as planned and according to schedule? Is it wise to have a contract with the contractor? And what should that contract cover to protect the homeowner?
Mark Salerno: Well, first off, in terms of ensuring that you've gotten a fair price, if you ensure that you have proper drawings, detailed drawings, and you're seeking bids from contractors, when those bids come in, you're going to have a basis of comparison. So that's the first step. When you do end up hiring a particular contractor, it's very important that you have a contract. It spells out the rights and obligations, schedules, and a whole range of details. CMHC can help with this. We have a sample renovation contract on our website, and that's at cmhc.ca.
Michael Seaton: And we'll make sure to put those in the show notes for listeners who want to check that out for themselves. Now, as a homeowner looking to renovate, when it comes to selecting one contractor versus another, what advice do you have? Does it ultimately come down to price, or are there other deciding factors that I should take into consideration?
Mark Salerno: Well, first of all, choosing your contractor will be one of the most important decisions that you make. And you'll want to, first of all, check their references, you'll want to see their work if it's possible, get estimates. You'll want to have a signed contract. Find out how busy they are, because if their schedule is quite tight, it may be that you can't have the work undertaken in the timeframe that you're looking at. Now assuming that all those things work out, what's important then is how comfortable you are working with them, because renovation does lead to a lot of disruption of your life and can be quite frustrating. But if you're comfortable working with that person, things will work out as well as they possibly can.
Michael Seaton: So it does come down to a relationship because they will be involved in your life for quite some time.
Mark Salerno: Exactly.
Michael Seaton: Hopefully not too long. So there are some documents on hiring a contractor and what to look for in reference checking and we will link to those in our show notes again. And Mark, thank you very much. That will wrap up our look at renovating the right way. Again, thanks for sharing your insights and those of the CMHC, and thank you to our listeners for joining us, and we hope you will return for our next Money Clip podcast from Scotiabank.
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References in this podcast:
1. CMHC Sample Renovation Contract