Tips for sticking to a renovation budget | finder.com
Stick to a shoestring renovation budget

How to stick to a shoestring renovation budget

We know that everyone's situation is unique and we aim to help you find the right product for you. We may receive compensation when you visit our partners' sites or are approved for their products. You can read more about how we maintain editorial independence and how we make money here.

Give your house some major updates without breaking the bank.

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to make some cosmetic updates to your home to up the selling price, or you’re just tired of looking at the same old outdated appliances and light fixtures that have been in your kitchen since you first bought the place, making renovations to your house can be an exciting time.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.

RoomBudget percentage (%)Budget amount ($)
Bathroom25%$10,625
Kitchen25%$10,625
Master bedroom & ensuite15%$6,375
Guest bedroom15%$6,375
Laundry10%$4,250
Contingency buffer10%$4,250

Value-added

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.

6 tips for mastering time management during your home renovation

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.

Need financing for your renovation? Compare the loans below.

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.

Rates last updated July 22nd, 2018

Reveal your potential loan offers and rates

Answer two quick questions to filter the loan offers and get the best one for you.

Select your credit score range

I don't know my credit score

Finally, select where you live.

To get your credit score:

Experian logo

Experian is a leading provider of personal and business credit reporting. Find out your FICO score now for less than the cost of a cup of coffee.

Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
Name Product Product Description Min. Credit Score Max. Loan Amount APR
Even Financial Personal Loans
Get connected to competitive loan offers instantly from top online consumer lenders.
580
$100,000
4.99%–35.99% (fixed)
Upgrade Personal Loans*
Affordable loans with two simple repayment terms and no prepayment penalties.
620
$50,000
6.87%–35.97% (fixed)
LendingClub Personal Loan
A peer-to-peer lender offering fair rates based on your credit score.
660
$40,000
6.16%–35.89% (fixed)
SoFi Personal Loan Fixed Rate (with Autopay)
No fees. Multiple member perks such as community events and career coaching.
680
$100,000
6.575%–14.865% (fixed)
Credible Personal Loans
Get personalized rates in minutes and then choose a loan offer from several top online lenders.
Good to excellent credit
$50,000
4.99%–36% (fixed)
Best Egg Personal Loans
A prime lender with multiple repayment methods.
640 FICO®
$35,000
5.99%–29.99% (fixed)
Prosper Personal Loans
Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.
640
$40,000
6.95%–35.99% (fixed)
NetCredit Personal Loan
Check eligibility in minutes and get a personalized quote without affecting your credit score.
550
$10,000
34%–155% (Varies by state) (fixed)
OneMain Financial Personal and Auto Loans
An established online and in-store lender with quick turnaround times. Poor credit is OK.
Varies
$30,000
16.05%–35.99%* (fixed)
Monevo Personal Loans
Quickly compare multiple online lenders with competitive rates depending on your credit score.
580
$100,000
3.09%–35.99% (fixed)
FreedomPlus Personal Loans
Consolidate debt and more with these low-interest loans. Cosigners welcome.
640
$35,000
4.99%–29.99% (fixed)

Compare up to 4 providers

Back to top

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.

Back to top
Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Go to site