As with just about anything in life, there’s a right way and a wrong way to do things. When it comes to remodelling your home, you need to consider a number of factors, which are often complex and challenging, before deciding if a home renovation is of value.

It’s a good idea to start off by thinking about how long you plan to live in the house. Do you intend to raise your children there? Or is this home simply a stepping stone to something bigger and better? Perhaps you want to downsize now that the kids are gone or maybe your house is outdated and a little tired and in desperate need of some TLC?

Next consider your budget. Are you willing to spend $5,000 or $50,000 on that main-floor bathroom reno?

Now you need to devise a plan that honours your purpose and your budget. If you’ve always dreamed of cooking meals in a deluxe, restaurant-style kitchen and you have the funds to support this costly renovation and you think it’s well worth the expense, go for it. But be aware that changes you make today may not net you great gains five or ten years from now when you go to sell your house.  If, however, you’re updating your kitchen with the hope of selling quickly, nix the gourmet kitchen and go for something more modest and economical.

There is plenty of online information about how to determine the dollar value of a renovation. But there is no easy formula. Most of us know that in-ground swimming pools, wall-to-wall carpeting and sunroom additions aren’t the best remodeling projects, investment-wise. Getting the most bang for your home-improvement buck can be influenced by many factors, including your local real estate market and the style of home in which you live.

Knowing your neighbourhood before setting out to refurbish your home is critical. This will help you in your decision making and prevent you from making an alteration that may cause your house to stand out like a sore thumb. Also, understanding your neighbourhood will stop you from installing a $75,000 home theatre in a house that’s worth $400,000.

The Appraisal Institute of Canada (AIC) warns homeowners about spending too much for a home renovation:  “If the value of your house exceeds the average market value in your neighbourhood, your renovations will not yield much return. But if your house value is below the average, you can recover a larger part of the renovation costs.”

The AIC recommends choosing renovations that have a long life expectancy such as roofing and new windows, updating your kitchen and bathroom, cheaper upgrades such as paint and landscaping, and energy-efficient improvements.

It’s something of a real-estate mantra that reasonable kitchen and bathroom improvement projects tend to offer the highest rate of return on your investment. But remember not to overdo the remodel. Refurbishing your home to accommodate a separate apartment is also a good idea that will likely increase the value of your house in addition to your earnings thanks to the rental income.

In the end, you need to evaluate your finances and your current and future housing needs. And know that the only sure thing when renovating is having a home improvement project that will be anything but easy, cheap or fast.