Category: renovation (3)

How to Make an Extra $50k When Selling Your Home

Volition was featured on HGTV.ca to share strategies for getting top dollar for your home – you can check it out here.

As usual, we have more to say. Read on for the extended version!

To get top dollar for your home, you need to be strategic.  We’re going to go beyond the “regular” advice (i.e. staging, remodelled kitchens, curb appeal, etc.) and challenge some of the preconceived assumptions around getting top dollar for your home.  Any run-of-the-mill Realtor can throw something up on MLS and hope for the best… What separates an average realtor from a great one is their strategy and their market knowledge, and their ability to create a personalized Market Strategy for your home.  Also keep in mind: Investor Realtors make the best Realtors!  Investor Realtors work with regular home-buyers and home-sellers as well, and are trained to have higher-order thinking skills and possess the ability to see value where others can’t, leading to better outcomes and higher sale prices for you as the seller.  

Be Strategic

  1. Realtor Strategy: You need to be strategic about who you select as your Realtor.  Your Realtor is the quarterback for the entire transaction, so don’t hand out this responsibility lightly.  And definitely don’t go with someone just because they are “cheaper”: you may very well be stepping over pounds to pick up pennies.  The $5,000 you may save could mean that you’re leaving $25,000 or even $100,000 on the table – it’s not always “all things equal” because you may not be getting the absolute top sale price for your property.  You wouldn’t want a discount heart surgeon; why would you settle for anything but the best on the biggest financial transaction of your life?  Do your due diligence and find the best; you owe it to yourself.  What makes the best Realtor?  Keep reading to find out.
  2. Market Strategy: not to be confused with Marketing, a market strategy will help you understand the inner workings of your particular market, and give you deep insights into the current market environment, including important considerations such as supply/demand, mortgage interest rates, new government-imposed vacancy property taxes, pending tenant law policy changes, etc. – and more importantly, what this means for you and selling your home.  A good market strategy would then create an ideal target buyer persona and determine how to best position your home in light of the market conditions, and then cater all activities toward trying to attract that particular buyer profile.  If your expert Realtor develops a personalized Market Strategy for you and your home, then everyone else flows naturally from this… marketing, renos, staging, descriptions. 
  3. Reno Part 1 – Reno Strategy: Now that you know who the intended audience is, does your home already fit your particular buyer profile’s needs, or do you need to make upgrades to cater to their desires?  Don’t just make changes on a whim, or because you read an article about it.  Your Realtor expert should be able to clearly identify with laser precision what fixes or upgrades need to be done in order to attract the right buyer and what increased selling price you can expect as a result.  It’s even better if your Realtor expert has the renovation team internally (for example, Volition Properties has done many $25k kitchen upgrades resulting in an increased $75k sale price for clients!) or at least has partners who will do the renovations under the supervision of your Realtor expert. 
  4. Reno Part 2 – Best Reno Bang For Buck:  That begs the question: will spending $25k on a kitchen remodel always yield an extra $75k in selling price?  Will I get a better ROI if I finish off the basement or if I improve curb appeal?  Contrary to popular belief, there is NO one size fits all answer – every property and every market is different.  Perhaps your property is a starter townhouse and your target buyer needs a move-in ready home because they won’t have any money left over for renos, in which case it makes sense to do renos prior to listing and you would see the ROI in the increased sale price.  There are lots of simple, general, easy to understand, but wrong, answers to this very popular question.  Get expert advice from your Realtor as your starting point. 
  5. Reno Part 3 – Knowing When To Do Nothing At All:  Sometimes, you just aren’t going to get the money back, and the ROI isn’t worth it.  In a hot sellers market, perhaps you just need to get it listed ASAP to catch the hot market.  Timing could be everything, especially if you’re trying to get sold prior to new stricter mortgage regulations coming into effect, or other proposed changes that could affect the market.  Or maybe you do nothing because in your particular property in your particular neighbourhood, buyers require a blank canvas to put their own finishing touches on.  In addition to reno costs, other things to consider are time/energy spent, additional holding costs, living through renos or moving out, approvals/permits, and additional headache that you may not wish to take on. 
  6. Listing Strategy: It’s not just maximum exposure that you want, you want the right exposure.  Your Realtor will create a Listing Strategy, which will demonstrate how they plan to target your ideal buyer, while simultaneously getting you maximum sale price.  What is your pricing strategy, should you have an offer date, and is this best served as an Exclusive Listing?  Should you be advertising in foreign language publications and marketing to overseas buyers?  How is your Realtor going to target their list of private buyers/investors?  Your Realtor’s marketing plan should demonstrate how they will be highlighting the property against current market needs (i.e. during Covid, outdoor space, walk-out/rooftop patios, and dedicated office nooks demand a huge premium).  Keep in mind – much of the “advertising” that regular Realtors do is really just to generate more business for themselves, and does very little to actually sell the property for a higher price.

Putting an Investor Hat On

  1. Be Flexible: Buyers may value certain things that aren’t important to you as the seller.  The key is to hone in on those aspects, and offer them to the buyer – especially since it’s no skin off your back.  This could include offering flexible timing on closing, or allowing the closing date to be extended at the buyers’ sole discretion (to a limit, that is). Perhaps if the buyer is planning for an extensive renovation, you could allow unfettered access to the property, allow permits to be drawn up and submitted prior to closing in your name, and then transferred to the buyer at closing.  You’re only limited by your imagination – Volition’s Investor Realtors have the depth of expertise necessary to conceive and negotiate these considerations to get you top dollar. 
  2. Be Creative:  Creative deal-making can be an excellent way to get an extra boost in sale price.  If you don’t need the entire proceeds from the sale, you could offer the buyer a  Vendor Take Back, a form of Seller Financing in which you act like the bank and receive regular interest payments by lending the equity in your home to the buyer… and if this is not your Principle Residence, a VTB reduces your capital gains tax by deferring it over many years.  Other forms of creative deals include Rent-To-Own, Agreement For Sale, Sandwich Leases, Joint Venture with a contractor prior to sale, etc.  Caution: these are advanced-level strategies; make sure you are working with an expert Investor Realtor like Volition on these. 
  3. Get Your Rents Up Before You Sell:  As an investment property, one of the primary ways that a buyer valuates the property is by looking at the rents it generates.  The higher the rents, the higher the ROI and therefore the higher the property value.  This means staying on top of rent increases every year.  Depending on your province, this also means investing in an area where there is a more transient tenant profile where you can increase the rents upon tenant turnover.  This also means looking for creative ways to boost income sources; for example, coin-operated laundry, renting out the garage separately, renting out parking spaces separately, etc. 
  4. Create Value For The Buyer: this isn’t necessarily for the novice home owner, but you can create tremendous value though change of use.  Examples include putting in a basement rental suite, getting approvals for an extension or a laneway suite prior to sale, changing a single family home into a legal luxury triplex, severing/assembling a large plot of land for development use.  If your land is well-positioned for a land assembly by a big developer, perhaps band together with your neighbours in a united front to demand top dollar.  Change of use can, but doesn’t necessarily always involve, expensive renovations but time/energy will definitely be put into the planning process 
  5. Work With Your Tenants: Investment properties can be more challenging to sell due to them being tenanted.  This often means that you can’t stage the property, access can be restricted, sometimes the units can be messy due the tenants, coordination of schedules can be difficult, etc.  One of the best tactics is to incentivize tenants: gift cards to Tim Hortons or Starbucks often work well in exchange for cooperation with showings, keeping their unit tidy for showings, vacating the unit for showings, agreeing to house their pets at their parents’ place for the listing period, etc.  More extreme action could include asking them to temporarily move out for the listing period and you put them up at an AirBnb as a mini vacation for a week, or maybe if you need the property completely vacant you could negotiate a mutually beneficial scenario.  Volition Investor Realtors are experts in navigating these tricky scenarios and mediating these discussions with your tenants for you. 
  6. Is It All About The Money?:  Although as sellers we always want top dollar, it’s also worth considering the non-monetary aspects that are important to you.  A quick sale may be an important factor for you.  Minimized headache might be your most important consideration.  Perhaps reduced disruption to your lifestyle is paramount.  While maximum sale price is typically the #1 goal, have a frank discussion about this with your Realtor expert about what your priorities are, and this should be incorporated into your Listing Strategy as well.

Ready to sell? The Volition team is here to help. Get in touch with us at info@volitionprop.com

 

We are back with the second installment of the pre-reno walkthrough at the Danforth project!

We are considering options for our basement, which include:

  1. Leave unfinished, but move the mechanicals and electrical panel
  2. Finish as a recreation room plus den, extra bedroom and bathroom
  3. Finish as a legal secondary suite

We initially planned to leave the basement alone, but we realized that installing a new furnace and hot water tank (and removing the existing boiler and rads) present an opportunity to move the mechanicals, and plan future room layouts so the mechanical engineer can plan HVAC systems accordingly.

We worked with the architect to assess feasibility for a legal secondary suite as well as potential floor plans for options 2 and 3.

Considerations for each option:

1. Leave unfinished

Pros:

  • Lowest-cost option
  • Creates a more usable basement for now (storage space without the “icky” feeling) and future (can do rough-ins for drains and space plan for the future)
  • Assess waterproofing options and effectiveness as there are leaks through the cinder blocks with every rainstorm

Cons:

  • Delayed gratification – no finished space to enjoy right away
  • Costs more to do later as there are efficiencies rolling the work into the same project
  • Inconvenient – will have to dedicate headspace to finish later, and live through renos after move-in

2. Finish as a recreation room plus office/workshop/den, and add extra bedroom and bathroom

Pros:

  • Best “quality of life” option – we gain an extra floor to use and to grow into
  • Will still increase the value of the house and as it will become a 3 + 1 bed, 2.5 bath family home
  • Don’t have to rent out part of our primary residence

Cons:

  • No rental income to offset additional expense
  • Locks us into a less flexible option
  • Additional costs if we decide to create a legal basement suite in the future, although we can reduce costs by roughing in a kitchen now

3. Finish as a legal secondary suite

I will begin by emphasizing it is critical to work closely with professionals if you are considering this approach!

Construction strategy is one of my specialties (and one of the perks for Volition clients, as we guide investors through optimizing renovation investments and maximizing rental income), but there are many requirements to meet in creating a legal secondary suite, and I consult with the experts (i.e., architects and engineers) to ensure compliance with fire and building codes.

Here is why 80% of Toronto’s basement apartments don’t comply with all the rules – look at the steps involved to create a legal one!

Source: https://www.secondsuites.info/resource-centre/

Legal secondary suite considerations would be multiple blogs on its own, but here is a flavour of what we contemplated with this option:

  • Basement walkout – does one exist or would it need to be created?
  • Side setback to the property line – 0.9 m minimum, but our house is grandfathered due to its age and 0.8 m is sufficient (this is where I rely on SMEs), but we would have to demo part of the chimney to comply
  • Minimum ceiling heights – if we have to underpin, it is not financially viable
  • HVAC – independent or shared system?
  • Fire separation requirements
  • Sound attenuation requirements
  • Egress (escape window)
  • Attractive layout for two use cases: tenants now, and us later with the option to reclaim for personal use

… and the list goes on!

The key determinant for us is whether we can reach the basement minimum finished ceiling height of 1.95 m (6’ 4¾” – but I said 6’ 5” in the video) without underpinning.

This is a tall order (see what I did there?) when we take the extra layer of drywall and resilient channel for fire separation and sound attenuation into consideration, which is why we were digging the holes shown in the video to determine how far down we can go by breaking the slab.

Source: https://www.ontario.ca/page/add-second-unit-your-house

Pros:

  • Rental income to offset the additional cost of finishing the basement
  • Apply our specialized knowledge to create a rare legal secondary suite, and increase the potential buyer pool with a mortgage helper if we sell in the future
  • Flexibility through thoughtful design to reclaim the space in the future with multiple use cases: age-in-place option for family members, in-law suite for personal/non-rental use, convert back to recreation space plus office/workshop

Cons:

  • Most expensive option due to conformance with requirements
  • Giving up personal space that we may need, and realizing we could have just gone with option 2 with less time and cost instead
  • Minor costs to reclaim the space for personal use (e.g., open wall from interior stairs to basement, will end up with an extra set of washer/dryers, may get rid of or reduce size kitchen in the future)

There is a lot to think about and we haven’t made a decision yet. What would you consider? What would you choose? 

Welcome to Volition’s new blog series on construction projects!

I’m Florence (but everybody calls me Flo), the Strategic Initiatives Manager at Volition. I started attending Volition meetups in 2016, and the education and community here enabled me to grow my portfolio from a one-bedroom condo in 2013 to eight doors including legal triplexes in Trinity-Bellwoods and Little Italy in downtown Toronto.

I became such an advocate for Volition’s mission to help investors build wealth and achieve financial independence that I crossed over from the corporate world to join Volition and help grow the business.

Having been through several renovations including a 16-month legal triplex conversion, I am also applying my renovation and project management experience to oversee large-scale multi-family construction projects on behalf of clients.

For those who are new to construction, it feels like a black box with lots of pitfalls and things that could go wrong. It’s all true and not for the faint of heart, but it is incredibly rewarding to take something run-down and turn it into a warm, comfortable, and beautiful home.

The intention for this series is to journal two projects underway at our new property. I say “we” because this is the first renovation my boyfriend Fred and I are fully completing together. As you can see, Fred’s not afraid to roll his sleeves up and swing a hammer!

It is a detached house close to the Danforth on a 20.5’ x 140’ lot. We chose the neighbourhood as it has a great school and family-oriented community, proximity to TTC, and walking distance to retail infrastructure. These are characteristics to look for not only in your primary residence, but investment properties as well.

We chose the house due to the potential (dun dun dun…) – having shared walls with tenants and adjoining houses over the years, we value having a detached property. It’s an incredibly charming old house that is easy to fall in love with, and with the deep lot, offers options on what we can build over time.

On to the project details!

  1. Main House
  • About 1,400 square feet above grade and 830 square feet below grade. The barn/garage is 970 square feet
  • Original plan: Quick refresh of the kitchen by painting the cabinets, adding new countertops and appliances, plus a powder room
  • New plan: Drastically different after we confirmed asbestos covers much of the main and second floor walls and ceiling. Since the remediation involves stripping much of the material, we’re taking the opportunity to take down the interior walls and completely redo the main floor. There will be a new kitchen, new flooring, and we are adding a powder room and closet. Watch the video walkthrough and see what we have in mind!
  • We also conducted an energy audit as we are looking to improve insulation and efficiency, and will apply to the Enbridge rebate program
  1. Laneway Suite
  • I have been “house hacking” for years, and would like the luxury of living in an entire home by ourselves 🙂 I am still a real estate investor at heart, so we like the potential of a laneway suite to have rental income, but enjoy privacy and extra space for our own use such as a garage, office/workshop, and potentially support aging-in-place for family in the future
  • We love the existing barn/garage in the back and contemplated whether it could be converted to a laneway suite, but it would involve significant additional cost and removal of much of the existing brick and character to meet today’s building standards
  • Our property is eligible for a 2-storey structure at 1,340 square feet. The lot depth provides for the opportunity to build the entire second floor with a full height ceiling and not be subject to the 45-degree angular plane requirement

 

I am excited to blog about the construction process and share our journey with you!

Let us know in the comments if you have any questions, and I’ll do my best to answer them in future posts!

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