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. Thatโs because youโre 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 itโs 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 arenโt.
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. Thatโs for everything, inside and out. If youโre 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 youโre handy with Excel, I recommend keeping a running sheet of costs.
Research, research, researchโฆ
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 doesnโt 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 youโre getting a fair price for the task at hand โ whether itโs waterproofing and re-tiling a bathroom, or getting the faรงade rendered and painted โ is to get a minimum of three quotes. It might seem like a lot of extra hassle, but youโll be staggered at how much prices can vary: sometimes itโs not hundreds of dollars, but tens of thousands! A ridiculously low quote should ring alarm bells, as should an absurdly high one. If thereโs a massive disparity between your three quotes, then get a couple more. And make sure youโve detailed all the works required, in writing, so youโre comparing apples with apples.
Shop around for materials
Unless youโre a bargain shopper, youโre 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 fittingsโฆ this is where youโll save serious dollars. And letโs face it, thereโs nothing more satisfying than bagging a bargain.
–Cherie Barber is the director ofย Renovating for Profit, a company that teaches everyday people how to buy and renovate properties for a profit.
