Top Financial Considerations To Make When Planning A Home Renovation Project
Whether you’re planning to create your dream home, or you’re planning to increase the value of your house, renovations can be the best way to do it. Even just a fresh coat of paint makes a house feel new, and it tends to add an easy $4,000 to your house's valuation.
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But when you sit down to plan out your renovation work, you’ll realize that there’s more than a couple extra considerations to be made. Things like planning your budget, figuring out the return on investment, and whether you will need to amend your home insurance policy to make sure that the new additions to your home have adequate cover.
To help, we’ll be outlining some of the top financial considerations to make when planning out your next home renovation project.
How long will it take?
If you’re new to renovation work, you might be surprised by how much time a ‘simple’ job like tiling a bathroom takes. The biggest time sink for renovations tends not to be the work itself, but the preparation and clean up. Even if you’re not chiselling off an old tiling job, you'll spend your first day buying everything, clearing the space, mixing the primer and applying it. Once the primer is dry you can do the tiling then it’ll take another day to do the grouting. So when planning out your timeline, have a look online for some ballpark estimates and give yourself an extra 10 or 20 percent on top of that – especially if you don’t have a professional toolset.
How much will it cost?
Every house is different, so trying to figure out the cost of anything more than painting a room can be like guessing how long a piece of string is. A kitchen in Paris might cost 7,000 euros, but one in Australia may cost $30,000. It comes down to size, complexity, necessary preparation and
- A kitchen ranges from $10,000 and $45,000 depending on size and fittings.
- Bathroom renovations tend to cost less, but the range is still $10,000 to $35,000.
- Bedroom renovations are all about size. A plain, square bedroom might be only $2,000, while a master bedroom with an ensuite and walk-in-wardrobe could be $35,000.
- Roof repairs typically range from $5,000 to $15,000, depending on the extent of the damage and materials used.
- Living rooms are often the cheapest option, costing between $10,000 and $15,000.
- Lastly, a new garden can cost only a couple thousand but a new exterior runs upward of $15,000.
Will there be unexpected costs?
Often the designs for a house are incomplete or missing. Because of this, pipes may be in unexpected places, or obstructions may appear during the work. Some may be predictable, while others have you drawing up a new plan entirely– like when a man found a 300-year old well under his kitchen floor. So to be on the safe side, budget in a 10-15% allowance for the unexpected to happen.
How can you fund your home renovation?
When the bill runs up to tens of thousands of dollars, paying cash isn’t usually the most attractive option.
When planning a home renovation, it's essential to consider various funding options to avoid overextending your budget. Consulting a contractor can provide an overview of costs and highlight available financing opportunities. It's worth noting the diversity of contractor financing tips that could assist in making informed decisions and ensuring financial stability during your project.
Instead, consider a construction loan, which will take your house's future value into account, and is paid out incrementally during the work. This tends to be the most cost-effective way of loaning money for a renovation, but if you’re planning smaller work, a credit card or personal loan may work just as well.
Why should you renovate for longevity?
Changing the style of a space can be a roll of the dice. If you’re planning to sell soon, the latest design trends will sell faster, but who knows when it will fall out of favour? Because of this, most renovators tend to keep the majority of the work plain and neutral. A cream coat for the walls, flat ceilings, and generic flooring. This way, the desired style can shine through the fixtures– which can easily be replaced for a refresh when needed. Golden door knobs can later be switched out for oak handles, or venetian blinds can become a curtain rail. It also gives tenants the chance to make the space their own with their furniture and decor.
Return on investment
All renovation works add to your home’s resale value, but the amount you get back isn’t the amount you put in. Generally, you can expect at least a 50% return for your hard work, but depending on the work, that number can be as high as 103%. So if you’re not sure which work you should undertake first, take a look at each job’s Return on Investment (ROI). The highest returns will not only be the best investment, but are the most efficient way to improve your quality of living.
Conclusion
At the end of the day, a renovation project is all about planning. Planning the budget, materials, contractors, and preventing future issues are all considerations you’ll need to make before you start your home renovation project.
And remember that the timeline for your project depends on the scope of the works your house will require. Renovating some houses can be like mining for gold while others are a total rollercoaster, but so long as you’ve done your due diligence, you’ll have a lovely new living space at the end of it.
