Like a runaway train, a renovation budget can quickly derail once you lose control. It can happen to the unlucky, the unsuspecting and even to the most experienced renovator. That’s because you’re nearly always dealing with older properties where tricky problems arise and one can of worms can quickly lift the lid on another.
It underlines why it’s so important to be highly disciplined about all the aspects of a budget that are completely within your control and allow a 10% contingency for the inevitable ones that aren’t.
Here are four ways to help you budget for your next renovation:
Set your budget limit
For any cosmetic renovation, I recommend you cap your renovation budget at 10% of the total value of the property. So that means if you purchased your property for $600,000 you should spend no more than $60,000 on your total renovation. That’s for everything, inside and out. If you’re doing every room in the house, then you might want to break it down room by room, keeping in mind the kitchen and bathroom will generally always be the most expensive and trade-intensive rooms to renovate. If you’re handy with Excel, I recommend keeping a running sheet of costs.
Research, research, research…
Nearly all professional renovators and developers work to a set formula: they know roughly what repairs cost, what the various trades charge and when to walk away from a project because the cost of repairs or improvements simply doesn’t make the numbers stack up. Things like replacing an old roof, re-stumping or doing a complete rewire of a property could prove cost-prohibitive if you were looking to make a profit on the renovation. The internet is full of information, so educate yourself as much as possible about what things typically cost, especially remedial works. Knowledge is power in the renovation game.
Always get three quotes
The only real way to know if you’re getting a fair price for the task at hand – whether it’s waterproofing and re-tiling a bathroom, or getting the façade rendered and painted – is to get a minimum of three quotes. It might seem like a lot of extra hassle, but you’ll be staggered at how much prices can vary: sometimes it’s not hundreds of dollars, but tens of thousands! A ridiculously low quote should ring alarm bells, as should an absurdly high one. If there’s a massive disparity between your three quotes, then get a couple more. And make sure you’ve detailed all the works required, in writing, so you’re comparing apples with apples.
Shop around for materials
Unless you’re a bargain shopper, you’re not stretching that budget as far as it can go. Finding a floor stock vanity for 50% off, end-of-line tiles, a heavily discounted kitchen on an auction site like GraysOnline, and comparing prices online for all your major fixtures and fittings… this is where you’ll save serious dollars. And let’s face it, there’s nothing more satisfying than bagging a bargain.
–Cherie Barber is the director of Renovating for Profit, a company that teaches everyday people how to buy and renovate properties for a profit.