You’ve heard it before and real estate investor Edward Black will say it again.

The money you spend on a basement development or reno may make your home easier to live in, but it’s not usually the kind of home improvement you can take to the bank.

With so many of us living in homes we won’t pay off before moving on to something bigger and better (or smaller and easier to manage!), a lot of time and money goes into making sure our homes hold their investment potential.

Indeed, Alberta leads the Prairies in terms of money spent on renovations. According to Canada Mortgage and Housing Corp. (CMHC) data, renovation spending in Alberta (that’s everything from new paint to massive additions) should rise 5.5 per cent over last year with another 2.9-per-cent increase forecast for 2005.

Larry MacDougal, Business Edge
Real estate investor Ed Black has compiled a list of 10 items to help homeowners decide what renovations will pay dividends.

With beauty in the eye of the beholder, Black admits there are no hard and fast rules about what home improvements buyers will pay for. But some renovations and repairs are more likely to make you money down the road, says Black, who got his start in the business by living in the properties he bought to renovate and resell.

A long-time real estate investor and a Realtor with Sather Real Estate Pro Brokers Ltd. in Calgary, Black has developed a list of 10 items residential real estate investors can use to guide home improvement and renovation decisions. The last two, upgrade windows and add a dishwasher, are especially important to the rental market. The other eight work for rental and resale markets, including owner-occupied.

His caution over basement developments (No. 8 on his list) is based on experience. Black has seen bank appraisers value a $25,000 basement development at $10,000. His advice? Develop or renovate a basement to your own taste, or stick to the basics if you don’t plan to live in the house for long.

In his experience, a bathroom, an extra window, good-quality carpet and a fireplace are basement additions that can boost resale potential and price. That is, you might not make back your investment, but they could help the house sell.

Even though you won’t recoup the investment on every repair or renovation job, Black notes seven things worth doing. The first is based on a market fundamental: Location. If you don’t plan to live in a house for a long period of time, remember that its investment value at sale time will depend on the market’s view of the neighbourhood. “It all still comes down to price,” but your ability to attract top dollar will depend on where that house is at, says Black.

The next two items, curb and entryway appeal, are especially pertinent to those preparing a property for appraisal and resale. A big believer in the lasting impact of first impressions, Black wants a property to look good when he pulls up with prospective buyers. “If you can’t see the property, that’s just like hiding something,” say Black.

You might not want to replace windows and doors or paint the siding or trim, but you should at least cut the lawn and trim the trees and bushes.

Similarly, the front entryway should be de-cluttered – and that includes closets.

What about those worn-out pine shingles plaguing many suburban Calgary neighbourhoods built about 15 years ago?

Replacement for a sale in 2005 may not be worth it. But most buyers use a home inspector, and that kind of item will be used “as a tool in the negotiations,” warns Black.

As for potentially high-ticket repairs and renos inside a home, “the kitchen is one of your best bangs for your buck. You’re not throwing your money away there,” says Black.

If you’re not in the market for a major reno (including floors and cabinets), but want to spend money on items that add value, look at affordable changes such as new light fixtures, taps, countertops, cabinet knobs and paint. Just remember: Professional renovations make you money, homemade jobs can cost.

Bathroom improvements are fifth on Black’s list of worthwhile investments. Floor coverings, tap fixtures, new tub surrounds or liners will pique a buyer’s interest. “The bathroom is one of the most expensive renovations for the amount of space,” a fact buyers appreciate, says Black.

Flooring upgrades, which can be part of kitchen and bathroom renos, get Black’s nod for another good use of your home improvement dollar. Hardwood heads the list of flooring upgrades most likely to help sell a property. Again, Black’s not big on the do-it-yourself job. He recommends home owners consider the hardwood a long-term investment in their property’s value – and hire a professional.

His eighth choice? A fresh coat of paint. If you’re painting to help sell a property, think neutral tones or hire an interior decorator to aid colour selection.

THINKING ABOUT SELLING?

If you’re thinking about selling your home, you’re not alone, says Canada Mortgage and Housing Corp.’s latest market report. Resale housing activity in Alberta will hit a record high of 54,000 sales in 2004, beating last year’s record of 51,334. This is expected to slow down during 2005, with resales predicted to drop to 50,000 sales. The same report says resale housing prices in Alberta will rise 5.6 per cent over 2004 and another 5.7 per cent in 2005.

(Joy Gregory can be reached at joy@businessedge.ca)