Homes - Renovating

Renovate or relocate?

Should you stay or should you go? The experts weigh in and offer their best advice on renovating versus relocating.

Renovate or relocate? To help one family decide, we asked an investment advisor, contractor and real estate agent to assess their situation and give expert advice.

The family
Mark and Karen Podborski and their two-year-old daughter, Eve, live in a three-bedroom house in Toronto. Mark and Karen are both self-employed and work from separate home offices.

Before Eve's arrival, they renovated their kitchen and installed new windows throughout. Karen also converted her office into a nursery. When she returned to work, she set up shop in a corner of the living room, but it was too cramped. She needed an office. Mark and Karen also wanted a family room that would double as a playroom for Eve. They wondered if they should finish the basement with a bathroom, small office and family room, or move to a bigger house.

“If we renovate now, we want to make the money back if we sell the house in five years,” says Karen, who thinks they'll eventually move to be closer to a good school.

What the investment advisor said
Mark and Karen think they can afford to spend $20,000. “They want advice on a short-term goal, but it should all be part of a long-term plan,” says Priscilla Low, an investment advisor with BMO Nesbitt Burns in Toronto. "They need to invest in their retirement and Eve's education, too."

However, she points out some factors in their favour: they have little debt; their earning power will increase over the next decade; and interest rates are currently low, so financing a higher mortgage or borrowing for a reno is feasible. Her final opinion: "They can afford to do this."

What the contractor said
"The first thing I ask people who are thinking of renovating a basement is how long they're going to stay there," says Jim Caruk, a master contractor and host of HGTV's Real Renos. "If they say five or 10 years, I say 'OK, don't expect to get your money back.'"

He also suggests hiring an architect to draw up blueprints, which adds 10 to 15 per cent to the total cost. Without drawings, contractors might bid on different details, so you end up comparing apples to oranges.

Blueprints also cut down on changes a client is likely to make once work begins. "Changes cost money," says Jim. Even with blueprints, add another 10 to 20 per cent for hidden costs and unforeseen changes, he adds. That's a total of 20 to 35 per cent ($4,000 to $7,000) on top of Mark and Karen's budget of $20,000.

Jim also thinks their original budget is tight (see Real Basement Reno Costs, next page), especially if they decide to raise the basement ceiling height by digging down the floor.

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