We all like to take pride in our homes and their appearance. Some families plant roses in their front yards and scatter a few garden gnomes around, many just try to keep their lawns in order and their paintwork from peeling, a few go nuts with decorations before every holiday.
Other homeowners, by contrast, care mostly about their level of comfort or perhaps their house’s resale value. Regardless of whether you think of your dwelling as a refuge, a display piece, or an investment, home renovation is a topic that’s certain to come up around the dinner table at some point. Most likely, there are going to be two sides to the conversation, namely “How cool will it be to have a new kitchen/bathroom/solarium/hot tub!”, and “Do you know how much home renovation costs?”. Hopefully, it will be possible to find a middle ground between these two viewpoints. Reconciling your budget with the natural desire to live in a charming, fully-equipped environment will be that much easier once you have a better understanding of how remodeling a house can be done cheaply without cutting corners.
Table of Contents
- 1 Does Renovating a House Increase Its Value?
- 2 Draw up a House Renovation Budget (and Be Prepared to Stick to It)
- 3 Develop a Piecemeal Project Plan
- 4 Try to Think of More Economical Alternatives to a Complete Remodel
- 5 Learn How to Hire Good Contractors
- 6 Look Around for Cheap and Even Second-Hand Materials
- 7 Put off Home Renovations for Six Months to a Year
- 8 Bonus Section: When Is Remodeling a House Yourself a Good Idea?
- 9 Don’t Be Afraid of the Jobs You Can Do
- 10 Be Rightly Intimidated by Work That’s Beyond Your Skills
- 11 The Joy and Perils of Renovating a House
Does Renovating a House Increase Its Value?
The idea that each house is worth an intrinsic dollar amount is mostly theoretical. How much you can sell a property for depends on numerous factors, including these, in roughly descending order of importance:
- The size and location of the house (duh),
- How hot or slow the property market in your region and immediate neighborhood happens to be,
- How eager banks are to extend credit to homebuyers,
- How long you can wait before selling – if you can entertain more offers, chances are that one of them will be close to the asking price,
- The general state of the property, including fittings, included appliances, decor, and so forth.
That’s right: recently replaced siding or an upgraded guest bathroom doesn’t increase a house’s value nearly as much as most people think. In fact, it’s rare for home renovation costs to simply be tacked onto the sale price; you may get back less than half of your money when you sell.
Is house renovation therefore a bad investment, especially if you choose to finance it using a personal loan, Federal Housing Administration 203(k), or HELOC (Home Equity Line of Credit)? Not necessarily: in particular, an eye-catching home or one with special features (home automation, an attractive garden, etc.) sells much faster. This can be a lifesaver when you have to move across country, as well as a way to generate better offers that are less likely to fall through. In addition, though it’s difficult to assign a dollar amount to this, the increased enjoyment you’ll feel using your home every day can’t be overstated.
In general, the following house renovation projects generate the greatest return on investment, though the number will still usually be negative (you won’t recoup all your home renovation costs):
- Additions that increase your square footage;
- Outdoor installations like a deck or pool (in warm climates),
- Changes that make living there significantly more comfortable, like fixing a wonky kitchen layout or finishing a basement,
- Renovating an outdated bathroom or kitchen,
- Upgrades that save you money in the long run, like low-flow toilets, energy-efficient windows, and solar water heaters,
- Structural repairs you probably need to do anyway: foundation, roof, etc.
Renovating as an Investment Dos:
- Consider fixing any design or structural flaws that will make your house unattractive to buyers.
- Try to finance improvements from savings or a low-interest HELOC – interest payments on these are tax-deductible.
Renovating as an Investment Don’ts:
- Don’t expect your home’s value to rise by 100% of the money you spend on renovating.
- Don’t improve a house to the point where its nominal price gets well above those of neighboring properties. If you have a $100,000 kitchen wedged into a $300,000 house, only professional chefs will want to buy it.
Draw up a House Renovation Budget (and Be Prepared to Stick to It)
It’s no secret that any project, whether we’re talking about remodeling a house or throwing a party, tends to go well when it’s carefully planned and often fails if the person in charge relies on luck and good vibrations to get by. Starting a home renovation task without a written budget, preferably on a spreadsheet where it’s easy to edit, is like setting out on a road trip without a map: there’s a good chance that you’ll end up in the wrong place or run out of gas getting there.
As a first approximation, you can consult surveys covering different types of home renovation projects for a very rough number. If this isn’t by itself enough to discourage you, the real work of drawing up a budget begins. Note that this should include all the expenses associated with remodeling a house, including storage fees and alternative accommodation if you need to vacate the building while work is being carried out.
There are two basic approaches to drafting a house renovation budget: sourcing cheap materials yourself and paying only for installation where necessary, or asking contractors to bid on doing the whole caboodle. In the former case, you may end up saving money, but remember that professionals often have access to suppliers and discounts you may not even know about. It’s also best to ask for a fixed-price contract rather than a cost-plus quote, since this gives you a figure that can’t be exceeded even if unexpected snags occur. Finally, each quotation should include a start and end date – any home renovation leaves part of your house inaccessible for a while, so having a firm, quick schedule is definitely desirable.
Making this part of planning your house renovation project even more complicated is the fact that many contractors use outside specialists for jobs like wiring and high-end cabinetry. You can break up your project into distinct tasks and get bids for each component, but this may do more harm than good and typically saves no more than 15% on your home renovation costs. Most contractors have a small pool of professionals they’re used to working with; trying to run things yourself with a group of strangers can easily lead to missed deadlines and various contractors blaming each other for shoddy work.
Home Renovation Budget Dos:
- Break up your home renovation into small projects and figure out the cost of each individually.
- Include an additional 10% to 20% of headroom for the unexpected – everything ends up costing more than you thought.
Home Renovation Budget Don’ts:
- Accepting a cost-plus quotation is a bad idea if you have a firm limit on what you’re prepared to spend on renovating a house.
- Don’t presume to know more than an experienced contractor; following their advice is often best even if it inflates your budget slightly.
Develop a Piecemeal Project Plan
Aside from some extra inconvenience and a longer timeframe, there’s nothing wrong with remodeling a house in fits and starts. Trying to do everything at once increases a project’s complexity significantly; a lot of things can end up falling through the cracks while you’re not paying attention. When this happens during a whole-house renovation, you may find yourself going way, way over budget.
The alternative is to break your renovating into phases that can be done independently of one another, starting either with those most important to your comfort, those that will add most value compared to their cost, or whichever you can afford to pay for right now. Especially when you have to gut one or more entire rooms, this will probably be more expensive when all is said and done.
This is because your chosen carpenter, electrician, and other contractors will have to make multiple visits instead of completing all their tasks in a day or two. On the other hand, it does allow you to keep a tighter lid on things and avoid going into debt. Living without a working kitchen or bathroom and having all your possessions covered in dust isn’t much fun, though, but may be unavoidable if you schedule work this way.
Renovating in Phases Pros:
- Your cash flow will be much easier to manage.
- Unexpected snags and expenses won’t have as huge an impact.
Renovating in Phases Cons:
- Unless you do a complete room at a time, your living arrangements will be cramped for longer.
- Contractors charge more for multiple small jobs than one big one.
Try to Think of More Economical Alternatives to a Complete Remodel
Very often, homeowners start down the home renovation road because of a desire to live in a more stylish space or simply a vague dissatisfaction with the way some rooms look. If this describes your motivation (i. e. you’re more interested in the aesthetic than the functional aspects of renovating), you may be able to save thousands of dollars by making cosmetic changes rather than going the whole hog on remodeling a house.
Stripping, sanding, and re-varnishing your kitchen cabinets costs a lot less than ripping everything out and starting over, plus you can do it yourself and save on labor costs. If your surfaces are looking a little faded, you may be able to replace the veneer instead of the whole countertop. It may be possible to re-glaze worn tiles instead of replacing them. Self-activating interior closet lights cost almost nothing and make your storage space seem larger as well as more efficient.
If improving your house’s curb appeal is the goal, you can choose to add a stone veneer to the exterior for around $10,000, but you may get a similar result for the price of a couple of gallons of paint and a few sweaty hours over the weekend. Similarly, completely remodeling your bathroom or kitchen may be out of the question for now, but replacing fittings like taps, drawer knobs, and other fixtures can already improve the room’s appearance considerably.
Sometimes, people’s minds go to a whole-home renovation when they really just want their place to look better. Brainstorm a couple of low-cost ideas for redecorating before making such a major commitment. Simply sprucing up your existing furniture, for instance, may work wonders.
Redecorating Instead of Remodeling Dos:
- Nail down the final result you want before deciding on a process to get there. It may be possible to achieve a similar outcome for a fraction of what you were planning on spending.
Redecorating Instead of Remodeling Don’ts:
- If you have a deep-seated problem like a mold infestation or a roof that needs to be replaced, you’ll have to bite the bullet instead of trying a band-aid approach.
Learn How to Hire Good Contractors
Your choice of who will do the actual work of renovating a house can by itself make the difference between success and months of frustration. Planning and budgeting a home renovation is time-consuming, certainly, but it can’t be rushed; neither can checking a contractor’s credentials.
You can start by contacting up to a dozen by phone or email to ask about their availability, references, and what kind of similar work they’ve done in the past. Then, select three to five of these to meet you at your home to prepare a detailed assessment of what needs to be done. For this, you’ll need a full description of your plans, possibly including a set of blueprints prepared by an architect or interior designer – yes, this is another way in which renovating a house costs you money, but it’s usually worth it. In any case, most contractors won’t commit to a hard figure for home renovation costs unless the scope of work is clearly and unambiguously defined. Even if they do, this makes it difficult to make an apples-to-apples comparison of different quotations.
This is one business in which referrals and reputations are worth their weight in gold. If possible, ask to physically visit a job site the contractor is currently working on as well as see examples of their completed work. Ask plenty of questions, including how long they’ve been in business, and insist on seeing proof that they’re insured as well as licensed to work in your area.
Choosing a Contractor for a Home Renovation Project Dos:
- Actually phone a few references (former clients but also architects and designers) before signing a contract instead of relying on online reviews.
Choosing a Contractor for a Home Renovation Project Don’ts:
- Accepting the lowest bid for only that reason is an invitation to disappointment.
- The best contractors will spend time understanding your priorities and vision before offering advice. Steer clear of anyone who tries to tell you what you want.
Look Around for Cheap and Even Second-Hand Materials
Shopping for fittings, tiles, flooring, finishes, and all the hundred-and-one things that go into renovating a house can be a delight. This makes it easy to give in to temptation and spend a few bucks extra here, there, and everywhere, eventually adding a hefty sum to your home renovation costs.
Once you start looking outside the showroom, however, you’ll soon see that price, quality, and style don’t always go hand in hand. In particular, you can use the following marketplaces to get great deals on recycled building materials:
Also hit up any salvage yards, building supply auctions, and Habitat for Humanity ReStores located in your area. Often enough, you can find a ton of stuff for free as long as you go and collect it; contractors normally have to pay to dispose of construction waste, so this is a good deal for them too. Once you’re done renovating, you can use these same channels to donate or sell your old fittings and appliances.
There are a couple of caveats you should be aware of when renovating a house using low-cost and recycled fittings, though. Warranty issues often arise with online orders from suppliers you’ve never heard of. You should inspect everything before accepting delivery.
You’ll also have to check with your contractor that whatever materials you have your eye on will be suitable and meet current building codes. You might get a huge roll of carpeting from a hotel that’s undergoing refurbishment, for instance, but this isn’t such a great saving if it contains outlawed, poisonous flame retardants.
Another great tip for elegant home renovation on a budget is to spend extra on essential items. Put your money where it will do the most good: if you drop a few hundred dollars on an awesome chandelier, nobody will even notice if you installed a molded ceiling at the same time. If you need to put up some shelving in your kid’s room, on the other hand, basic pine boards will serve just as well as mahogany.
Finding Cheap Home Renovation Materials Dos:
- Be stingy wherever you can, but spend more on trimmings that make a major visual statement.
- Re-used lumber, insulation, glass, and other essentials cost next to nothing and are often just as good as newly bought items.
Finding Cheap Home Renovation Materials Don’ts:
- Don’t neglect talking to your contractor about which repurposed items he’s willing to work with.
Put off Home Renovations for Six Months to a Year
Conventional wisdom tells us that, once you’ve decided to do something, it’s best to go through with it as soon as possible. When remodeling a house, this may not be the best policy. If you’re committed to renovating but can afford to wait a while, all the following advantages fall into your lap:
- You can buy big-ticket items like windows and granite countertops when they’re on sale – just keep them in your garage until needed.
- It becomes easier to save up some money and pay contractors and suppliers in cash, thereby avoiding interest payments on debt and potentially getting a discount.
- You’ll have plenty of time to refine your plans, avoiding costly changes once work has already started.
- Most contractors have no shortage of work in the spring and summer months but are willing to take on jobs for less money when business is slow.
- Doing only the most urgent home renovations now helps to familiarize you with the process and can prevent mistakes in later, larger projects.
Postponing House Renovation Dos:
- Having all major materials you need for remodeling a house already bought before starting work can make things go a lot more smoothly.
Postponing House Renovation Don’ts:
- Certain problems, like a leaky roof or mildewy basement, will only get worse or lead to other headaches if they’re not addressed immediately.
Bonus Section: When Is Remodeling a House Yourself a Good Idea?
Did you know how many high school kids have built actual, working nuclear reactors? And yet here you are, wondering if you can install Venetian blinds yourself without breaking anything.
Deciding whether you want to dedicate your weekends and evenings to renovating a house isn’t always straightforward. While saving some money is probably a priority for you, there’s also the sense of achievement you’ll feel whenever you look at your completed renovation. However, there is the risk that things will go wrong: you may end up frustrated as well as over budget.
Don’t Be Afraid of the Jobs You Can Do
As a very rough ballpark figure, labor costs make up about one-third of most house renovation budgets. When it comes to simple jobs, including stuff like sweeping up sawdust at the end of the day, you can achieve just as good a result as any contractor. You can indeed tell whether a room was painted by professionals or ordinary folk, but you have to look far more closely than most residents or guests ever will.
It’s therefore a good idea, during the budgeting stage, to divide your renovation into smaller tasks. Include a column next to each called something like “DIY: Yes/No” and ask contractors to bid only on those tasks you’re not inclined to do yourself. Remember, however, that independent professionals like carpenters and electricians are usually paid only when they’re working and therefore guard their schedules jealously. If possible, you should group the tasks you assign to yourself (and hapless family members) at the beginning or end of your timetable to avoid causing delays.
Should you and your spouse decide that you really want to try remodeling a house from the bare studs, you can still do the demolition yourself: going to town with a sledgehammer and crowbar is a lot of fun and will already place a dent in your home renovation costs. This, of course, assumes that you don’t actually put a dent in something that you don’t want to: cutting through pipes, structural supports, or electrical wiring may blow your whole home renovation budget in seconds.
Plenty of jobs are easier than they appear at first glance. Remember that nothing worthwhile is ever easy on the first attempt and that there are plenty of online resources out there to help. Especially if you’re not pressed for time, stubborn, goat-like persistence can often be a substitute for experience, even if you have to live without a shower for a week while you’re redoing the grouting.
Be Rightly Intimidated by Work That’s Beyond Your Skills
It’s good to have goals; it’s just not always possible to tell whether they’re on the other side of a puddle or an ocean away. Screwing up something you can’t repair yourself will generally end up costing much more than getting a contractor in the first place. Unless you’re already something of a handyman with a well-equipped workshop, you’ll also have to include the cost of hiring or buying tools in your home renovation budget.
In general, you’ll probably want to steer clear of any task that’s:
- Potentially dangerous to you or others. The number-one example of this is removing asbestos from older buildings.
- Liable to cause damage beyond simply screwing up the job at hand. Making a mistake while moving a utility line or repairing a roof can cost you dearly.
- Subject to electrical, building, fire, and other codes and regulations. Sure, you probably can replace that support beam or shore up a house’s foundation yourself. Probably is not good enough, however, if a danger to life and limb is involved. Get someone whose work will pass inspection.
- Complicated improvements to rental properties. You may be willing to live with imperfect work and take some satisfaction in having done something yourself, but renters will be more demanding. A job that goes over schedule can also cause a loss of rental income. Existing tenants may even move out over a botched or slow repair job.
There is also a kind of middle ground for jobs you think may be possible to do yourself with a little help. Believe it or not, some contractors actually offer coaching to allow skilled laymen to attempt common tasks like hanging drywall. This can cost as little as $100 an hour; be aware, however, that you’ll still have to get a permit and all liability for your mistakes continues to rest on your own shoulders.
The Joy and Perils of Renovating a House
Americans typically spend around $400 billion each year on home renovation, whether fixing up a neglected property in order to make it generate a rental income, improving their own home before a sale, or just making their living space more comfortable to be in. The vast majority are happy with the result – but perhaps half of homeowners end up being surprised at how much home renovation costs.
The best advice is probably to approach the whole process of remodeling a house strategically: first, define your goals, then get a rough plan in place that an architect can refine if necessary, then create a budget you can bank on. All of this requires a lot of thought and research and has to be done before you hammer a single nail or pick up a paintbrush.
This kind of preparation will prevent a lot of costly mistakes, though, as well as give you a clear idea of how much home renovation your budget will bear. You may have to scale back your more ambitious plans or delay them for a few months. Don’t think of this as a failure, though: it’s far better to execute a realistic design well than see your fantasy renovation come to nothing due to lack of planning.
Thank you for reading, and please feel free to share your own experiences with home remodeling in the comments.