How to stick to a shoestring renovation budget

Give your house some major updates without breaking the bank.

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Whether you’re thinking of moving, so you want to make some cosmetic updates to your home to up the selling price, or you’re just tired of looking at the same old outdated appliances and light fixtures that have been in your kitchen since you first bought the place, making renovations to your house can be an exciting time. And also an expensive one. What with the cost of materials and products, labor and installation, and other unexpected expenses that always seem to pop up, renovation costs can quickly spiral into the $5,000 to $10,000 range. That’s why estimating your budget, sticking to it, and keeping tabs on your expenditures are essential for effective renovation budgeting and planning.

Making a renovation budget

Typically a realistic renovation budget is around 5% of the purchase price for the property. Although this will vary greatly depending on the scale of your renovation budget — this gives you a starting point. For example, for a $850,000 property, you would need to set aside $42,500 for the project.

While it may be tempting to opt for a heated towel rack or a home theater system, you need to be careful with how you spend your money.

It’s a good idea to break-up each component of your renovation so you know what percentage of your budget you should allocate to different areas.

Below is an example of how you could break up a $42,500 budget.

Room Budget percentage (%) Budget amount ($)
Bathroom 25% $10,625
Kitchen 25% $10,625
Master bedroom & ensuite 15% $6,375
Guest bedroom 15% $6,375
Laundry 10% $4,250
Contingency buffer 10% $4,250


Before you start a renovation, it’s a good idea to discuss your renovation plans with a home appraiser to get an idea of how much value the renovation will add to your property.

The aim of a renovation is to increase the future value of the property. To forecast your return on investment (ROI), you should multiply the total cost of renovating the property by 10%. For instance, if your budget is $42,500 (and you stick to it), then you would expect to make a “profit” of $46,750.

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Project objectives

When setting your renovation objectives, it’s a good idea to start with the end in mind. To ensure your renovation is realistic, you should set smart objectives that are specific, measurable, attainable, realistic and timely.

For instance, if you’re planning a landscape renovation, you need to consider exactly what features you’re spending the money on (e.g. pergola and outdoor BBQ), the amount of money you need to spend on each item (e.g. $15,000), whether or not you can afford it, and the projected timing of your project (e.g. 3 months). This will not only help you gauge your cash flow for the project, but it will also help with your time and project management — if you don’t set a deadline, you’ll never finish!

Be selective about splurging

renovation budgetYour renovation will likely involve some degree of compromise, so be careful about the elements where you decide to splurge, and those where you cut costs. You need to separate “needs” from “wants.”

Consider where it will be worthwhile cutting costs and areas where it makes sense to spend more. For instance, splurge on high-traffic or frequently used areas such as a kitchen floor and opt for cost-effective solutions in areas that won’t be used as frequently, such as a guest bedroom.

You can speak with a local real estate agent to determine where you can save and where you should splurge based on similar properties in the market. This will help you understand what will add value to your property in the long term.

Research costs

Not only should you research material and product costs, but you should also become familiar with the labor and installation costs of different trade services, such as plumbing, electrical work and concreting.

You can use resources such as HomeAdvisor, Angie’s List and Fixr to compare the average labor costs for different states.

For each renovation task (e.g. bathroom tiling), you should source at least three different quotes from suppliers to ensure that you’re getting a fair market price.

During this research stage, it’s a good idea to contact your local permitting office to see whether you need a permit for the type of renovations you’re doing.

Break-down costs

budget renovationYou need to break down the costs of the renovation by each individual task. For instance, rather than labelling one element “tiling,” you need to break down this task into separate cost items such as “area clean up,” “cost of tiles,” “waterproofing,” “labor” (by square foot) and “disposal of waste.”

As well as estimating the separate costs, consider the property value and the risk of over capitalizing with your project.

Understanding the value of your property can help plan the renovation budget. For instance, a kitchen renovation may cost between $5,000 to $50,000 depending on the scale of the renovation as well as the appliances and fixtures you select. Generally, it is recommended that you spend 5% of the value of your property for a major kitchen upgrade.

Home renovations: DIY vs. hiring professionals

Estimate costs

When enlisting a team of professionals, make sure you get itemized, written cost estimates to ensure that there is no ambiguity about what is included or not included in the price.

Consider hiring a building inspector to assess whether any structural work needs fixing, because any major repair expenses will need to be factored into your budget.

Additionally, you should speak to an architect and request detailed drawings of your renovation plans, as well as licensed builders and specialized tradesmen, to get a complete outline of the costs involved for each project element.

Apply for Financing

When you’re renovating you may need a different type of financing to help pay for trades and for supplies as the bills come in. Compare these personal loans and lines of credit to see which one could suit your needs.

Updated January 20th, 2020
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Even Financial Personal Loans
3.84% to 35.99%
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NetCredit Personal Loans
34% to 155% (Varies by state)
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Monevo Personal Loans
3.99% to 35.99%
Quickly compare multiple online lenders with competitive rates depending on your credit.
PenFed Credit Union Personal Loans
6.49% to 17.99%
With over 80 years of lending experience, this credit union offers personal loans for a variety of expenses.
LendingClub Personal Loan
6.95% to 35.89%
A peer-to-peer lender offering fair rates based on your credit score.
SoFi Personal Loan Fixed Rate (with Autopay)
5.99% to 17.88%
A highly-rated lender with competitive rates, high loan amounts and no fees.

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Name Product Max LTV Min. credit score State availability
95% (CLTV)
Not available in: AK, DE, HI, IA, KY, MD, NY, SC, TX, UT, VT, VA, WV
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LendingTree Home Equity
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Axos Bank
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Name Product Purchase APR Balance transfer APR Annual fee Filter values
Citi Simplicity® Card
0% intro for the first 12 months (then 16.24% to 26.24% variable)
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Enjoy one of the longest intro APRs on balance transfers, no late fees, no penalty rate and no annual fee.
Blue Cash Everyday® Card from American Express
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Other things to consider with your renovation budget

Aside from breaking down your project objectives and the specific costs needed to make your renovations, here are some other things to keep in mind when preparing for your home’s next big project.

Beware of hidden or unnecessary costs

It’s worth considering DIY projects, such as painting or creating your own furniture, to cut costs.

Speak with people to highlight any costs that you may not have considered in your budget and planning, such as the cost of waste disposal. However, don’t fall into the trap of thinking that you can minimize budgetcostscosts by purchasing fixtures and materials yourself — remember that professionals buy in bulk, so they’re entitled to a trade discount.

If possible, don’t move plumbing and electrics as this can add significantly to your costs due to the cost of removing and installing new pipes.

Ensure you consider all possible costs involved for the renovation — permit fees, architect or home appraisal fees, or the cost of your mortgage repayments may be easy to overlook at the outset. Make sure you conduct a complete cost analysis to ensure that all expenses are accounted for.

Contingency buffer

One of the most critical components of budget planning is to have a contingency buffer of funds to ensure that you’re financially stable if things don’t go as planned. As a rule of thumb, you should set 10% to 15% of your overall budget aside for any unexpected costs that may arise in the future.

How to renovate a property for profit

Track your expenditures

Keep a record of your receipts and maintain a budget spreadsheet that’s up-to-date. By keeping track of invoices and receipts, you’ll have a clear idea of your cashflow and you’ll be less tempted to splurge on that underfloor heating.

Remember to speak to a tax specialist before you start your renovation or investment project so you understand the tax implications involved.

Make sure you record any variations or unexpected costs for your project, as this may help with future planning and decision making.

Consider a fixed-price contract

Some builders offer fixed-price contracts which may be useful because it will allow you to know your costs upfront which can facilitate your cash flow and budgeting.Street appeal is an important consideration for any home renovation.

Think about street appeal

You should consider the exterior of your property and think of ways that you can boost its appeal to onlookers. This may involve small tasks such as installing a new fence, investing in a modern letterbox, sprucing up your outdoor pathway or altering the front door with fresh paint or a new handle.

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