Upgrades and renovations

What upgrades are worthwhile?
Spend money on bathrooms and the kitchen. Even then, don't go crazy. An upgraded wood floor may pay for itself when it is time to sell but perhaps not.

Actually, nice furniture and fluffy matching towels and getting rid of all the clutter will help you sell your unit faster and for a better price than a lot of upgrades that stay with the unit.

Who are the potential buyers
A lot of potential buyers are investors who want to rent the unit that they are buying and have no plans to live in it themselves. The cheaper the basic unit, as long as it is in good shape, the better as far as they are concerned.

It would be different if you live in a condo that attracts owner-residents. Since they will be living in the unit, upgrades should make the unit sell quicker if not for more money. As the old saying goes; time is money.

Renovations
There is a two-bedroom unit that is for sale in the condo where I live. (January 2015) The asking price is $470,000. Similar sized units in this building have sold in the range of $290,000 to $320,000.

It does not matter if the owners renovated the walls with solid teak wood and pure ivory columns, the toilets are made of gold and Michelangelo painted the ceiling himself—this unit is not going to sell for anywhere near what they are asking. Impossible.

Okay, for this ceiling, we will pay an extra $10,000. Tops!

They are asking $150,000 to 160,000 more than what the highest priced comparable units in this building sold for—a 50% premium.

Our unit
When we bought my present condo, we found a unit in the building where we wanted to live that had been languishing on the market for over a half a year. There had been three price reductions and it was still unsold. We arranged an appointment and give it a good look.

The previous owner spent a lot of money on renovations. She claimed to have spent $40,000 on the kitchen alone.

She may have, but although the kitchen was nice, it was definitely not what my wife and I would have done so we added some money to our first offer but only about half as much as she wanted.

The rest of the apartment was definitely not too our taste and we knew every room needed repainting, all the new light switches, receptacles and door handles had to go and the engineered wood floors had to be replaced. The bathrooms were ghastly. They had to be completely ripped out and replaced.

Also there was no way we were going to pay an extra $10,000 for a used European electric stove and matching fume hood.

We came to a deal with our second and final offer. They took their European stove, the fume hood and the light fixtures with them and I bought new replacements, that we believe are superior to her aging appliances, for a fraction of the price.

Now we are having a go at renovating the apartment. We are gutting both bathrooms and replacing the hallway tiles with a style that we like.

The cheap pantry is being replaced with a custom built one and the walk-in closet has been completely redone.

Will we get our money out these renovations?

For sure we will get most of the money we are spending on the bathrooms back and maybe something for the new pantry but not the money we are spending on the new hallway tiles or the walk-in closet. That money is being spent to satisfy us as we plan to keep our unit, hopefully until we die.

Flooding—a constant peril
Having unit insurance is a must. The more upgrades you have, the more critical having adequate unit insurance becomes.

This is because condo units can (will) be flooded from the units above, the common element plumbing pipes and from the building exterior. If you are on one of the top floors, then add roof leaks to this list. Having a unit underneath a condo's swimming pool or hot tub is begging for trouble.

The condo's insurance will pay for the damages, if they exceed the insurance deductible, but only to put the unit back to the "standard unit" specifications that are listed in the condo's by-laws. You need insurance to pay most of that deductible and to pay for any and all upgrades that you paid for when you bought the units and for everything you later added.

A realtor's opinion
David Fleming wrote an excellent article on condo upgrades and features that do not result in increased selling prices. Well worth reading.

top  contents  chapter  previous  next