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How Much Should You Budget for Home Renovations?
By Mike Holmes
Friday, August 26th, 2022 @ 5:56pm
A Guide to Plan Your Home Renovations Budget
I get hundreds of emails every week from people asking for advice. Two questions I get a lot are: how much should I budget for my home maintenance and repairs, and how much should I budget for home renovations?
Let’s face it; these are loaded questions because there are so many factors, like timeline, budget, materials, and finding the right contractors for the job, to name a few. Also, the age of your home is a significant factor. Generally, the older the house, the more repairs, and upgrades will be required.
Here’s a guide to help you budget for your home maintenance and renovation costs.
Which Renos Add Value To Your Home?
Home renovations can increase the value of your home, and the most popular rooms are kitchens, bathrooms, interior/exterior painting, and creating more livable space in your basement or outdoors. Smaller tasks such as de-cluttering and updating décor also help potential homebuyers see your home as a space they can live in.
When done properly, these renovations tend to add value to your home:
- Adding or improving outdoor structures that create enjoyable spaces outside (for example a deck)
- Full bathroom remodel
- Kitchen remodelling
- Replacing old windows
- Replacing your roof
Mike’s Tip: Watch out for over-improving. All those new features and over-the-top finishes can add up fast. This is especially true when that money should be used on more important things, like fixing the leaky roof or basement or replacing the old furnace.
What Should You Consider When Planning Your Budget?
Consider the age of the house, the size of the project, and the complexity of the project. Is it primarily cosmetic, or do you plan on moving walls and rearranging electrical and plumbing?
I always suggest adding 20% to your budget for the unexpected.
How Much Should You Budget for Home Maintenance and Repairs?
Buying a home will likely be the largest purchase you ever make. Like most things, it will need maintenance and regular check-ups to stay “healthy”. Just like when we go to our family doctor for our annual physical. And as I always say, when it comes to your home take care of the important things first before doing the “lipstick & mascara” finishes —you want to make sure your home is protected so you’re not having to tear everything down and spend more money down the road.
Small things like cleaning your gutters, lawn and garden care, roof care, snow removal, and furnace and fridge filters to name a few can go a long way in maintaining your home. But what about those larger ticket maintenance items like an HVAC inspection and service, replacing an appliance or even worse a leak from a burst pipe?
That’s why before you start thinking about your home renovation, it’s important to make sure you have some budget put aside for your home maintenance tasks.
I recommend investing in a protection plan for the major systems in your house such as heating and cooling and your appliances. Check out Mike Holmes Protection plans that offer different types of coverages in your area.
How Much Should You Expect To Spend On Your Home Maintenance Annually?
Experts suggest you should save anywhere from 1% to 5% of the purchase price per year. If you don’t spend it all then you can carry it over to the next year.
For example, if you spent $1,000,000.00 on your house, you should aim to save around $10,000.00 per year. This makes good sense because the longer you are in your home, the more likely you will need to start replacing those large ticket items, like a furnace, water heater, or roof!
How Much Should You Budget for Home Renovations?
So, how much should you budget for renovations? I’m going to break down a couple of scenarios that will help guide you through your next renovation.
But, before I do this here are 5 things you should do before you start any renovation.
Tip #1 – Educate Yourself
Educate yourself as much as possible on the scope of the project. The more knowledge you have, the better decisions you can make. Talk to multiple experts and don’t be afraid to ask lots of questions.
Tip #2 – Work From The Outside In
I’d make sure that the exterior of your home is in good shape before you start doing any cosmetic jobs inside. To me, it just makes sense to protect your home from the outside-in. That way you can ensure all the updates you make inside are protected. For example, you don’t want to finish your basement only to discover you have a crack in your foundation. Makes sense, right?
I’d also suggest getting a home inspection, even if it’s a specialty one for a particular area. A home inspection report provides you with current documentation on the condition of your home which you can use as reference before you start your renovations.
TO BOOK A MIKE HOLMES INSPECTION CLICK HERE
Tip #3. Don’t Forget To Get Permits.
Remember it is the homeowner’s responsibility to ensure that the proper permits have been issued for the property.
Generally, a permit is required for an area larger than 120 square feet (10′ x 12′) or if there are structural changes. Electrical, plumbing, and HVAC installation will also require separate permits. I always advise homeowners to double-check with their local building authority to find out what is needed before they start the project.
Tip #4. Contact Your Insurance Before Taking On A New Home Reno
Before starting any renovation, homeowners should contact their insurance company to review their current policy. Home insurance covers your home and your belongings from the unexpected but usually not a home renovation.
Depending on the extent of the renovation, particularly with large-scale ones, additional coverage like construction or builder’s risk insurance will probably be required. Also, notify your insurance company upon completion of the renovation. A significant upgrade will add value to your home and a re-evaluation will be required that may change your current policy and rates.
Having additional coverage will also ensure protection from any surprises discovered during the renovation and any liability against injury or theft. Lastly, if the renovation is large enough that it requires you to vacate your property, this may also affect your coverage. Bottom line is, do your research and check with your insurance company and talk to your broker before you start.
Tip #5 – Talk To Multiple Contractors And Document Everything
Let’s be clear on one thing. No professional contractor should be requesting a 50% deposit upon signing.
Here is a basic payment schedule when working with a contractor:
Budgeting For A Bathroom Renovation
Budget For A 3-Piece Bathroom:
A 3-piece bathroom renovation with mid-range finishes should be approximately $20 – $25K. Costs will vary based on the size of the room, materials, finishes and any structural change.
The average timeline for a refresh is 2 – 3 weeks, while it’s 4 – 5 weeks for a full renovation.
Bathroom Renovation Considerations
Bathrooms usually involve a new tub and or shower, toilet, vanity, sinks, faucets, tiles, flooring, countertops, and light fixtures. If you plan on moving plumbing or electrical, this will require permits and licensed professionals.
This estimate may seem a little high, but there is an allowance for high-quality materials, like using moisture and mould-resistant tile underlayment and multifunctional tile substrate board —one brand I recommend using is Schluter Systems.
Also, don’t forget the importance of proper airflow and ventilation, as it is key to removing excess moisture from your indoor air. Excess humidity and lack of adequate airflow will lead to mold and poor indoor air quality.
If your bathroom or powder room is in good shape but you feel the need to give it a fresh look with minimal costs, check out my blog on 6 Tips to Make Your Bathroom Look New!
Budgeting For A Kitchen Renovation
Budget For A Complete Kitchen:
A complete kitchen renovation should run between $30,000.00 – $50,000.00, or $150.00/square feet. Costs will vary based on the size of the room, materials, finishes, cabinetry (low, mid, and high range) and any structural changes.
- Contact your local building authority regarding permits or make sure you discuss this with your general contractor
- New appliances will be an additional cost
- The average timeline for completion is around 6 – 10 weeks
- NOTE: custom kitchens need to be ordered 6 – 8 weeks in advance of construction start date
Kitchen Planning Guide: Create a Budget
When renovating a kitchen you need to budget for:
- Appliances, including exhaust fan
- Countertops and cabinets
- Electrical work (if needed)
- Labor and installation costs
- Kitchen organization
- New sinks and faucets
- New lighting
- New window treatments
- Plumbing & appliance installation
Mike’s Tip: If you’re taking on a full kitchen renovation invest in energy-efficient appliances, durable countertops and a high quality exhaust fan. But remember these can add up!
If you can, consider increasing your budget if you are renovating your forever home and keep mobility and accessibility in mind. Adding features like easy pull-out and close drawers, spice racks, and specialized garbage and recycling compartments, can increase your costs.
Kitchen Cabinetry Updates
Cabinets can vary widely in price. You have your local hardware stores that generally offer low end, semi-custom cabinetry or you can decide to go with a more custom high-end option.
Typically, when it comes to kitchen cabinetry, you have a few options:
- Painting your kitchen cabinets. Painting your existing kitchen cabinets freshens up the existing look of your kitchen cabinetry.
- Refacing your kitchen cabinets. The process means removing your drawer fronts and cabinet doors and applying a new veneer on surfaces of your cabinets.
- Installing new kitchen cabinets (replacing old cabinets). Replacing old cabinets is obviously the most costly option. Wood cabinets can cost anywhere from $5,000 to $25,000. If you are looking at a high-end material, you may be looking at $25,000 to $38,000.
Expected range: $4,000 – $13,000
Remember to think about what you want in your kitchen. Think about design as well as functionality. Check out my Top 10 Kitchen Problems and Solutions.
A full kitchen renovation is going to be expensive and more challenging than smaller improvement projects, but it will also provide the most significant return.
I’ve worked with DV Kitchens and Baths for several years now, and they offer the complete package. Here are examples of the great work they’ve done for some of our homeowners.
Budgeting For A Basement Renovation
Typical Budget For A Basement Renovation
A basement renovation budget should be between $50.00 to $75.00/square feet, but leans more towards $75.00 for basic finishes. Like any other room, final costs all depend on the materials and finishes you choose
A small basement, approximately 500 sq. ft. could cost $37.5K and a larger basement, like 1,200 square feet could be as much as $80-$90K. The average timeline is typically 6 – 8 weeks.
Again, I can’t stress the importance of spending your money on quality building materials. Remember, a basement has the potential for moisture intrusion.Before you do any major renovations, you need to make sure your basement is watertight. I’d also recommend using a coupling sub-floor under any flooring. I would also only recommend tile, laminate vinyl, or carpet for basements.
What Should You Do If You Have Uneven Floors
Are you experiencing uneven floors? Consider using Sika Level-125 Self Leveler to ensure you start with an even floor. You can lay vinyl, tile, hardwood, and even carpet. An even floor will help against cracking, dips, and squeaks.
Renovating Or Finishing A Basement To Be An Income Generating Apartment
If a legal basement apartment is in the plan, then be prepared to have a big budget and a list of zoning and safety requirements. You should budget, between, $100.00 – $150.00 per sq. ft. for a legal basement apartment.
Remember, do your homework, and understand the scope of your renovation. Make sure you don’t make these 5 common mistakes.
Budget For Painting
Painting can completely transform a home. Hire a professional if you intend to paint your entire home. They are organized, have all the necessary tools, and operate quickly and effectively.
For a 2,000 square foot house, the price should fall between $9,000.00 and $14,000.00. However, this is a great DIY project if you are only decorating one room or the entrance door. If paint and labour are included, a single room measuring 10′ by 12′ with a ceiling, walls, trim, and doors should cost between $500.00 and $600.00.
Budget For Building A Deck in Home Renovations
Budget between $25.00 to $40.00/square feet; a small 10’ x 10’ deck will cost approximately $3,500.00, mid-size 14’ x 20’ will cost $10,000.00 and a 20’ x 20’ deck will cost about $14,000.00 and up
Final costs all depend on the design, materials, and finishes you choose. Typically a job like this can take an average of 2 – 5 weeks.
No matter what material you choose for your deck, the maintenance of your deck is the most crucial factor as to how long it will last. Remember to do regular deck inspections, especially after a particularly hard winter. Mother nature and elements will have the most significant effect on your deck. If you look after your deck and keep it well maintained it should last a long time.
Tips When You Do Home Renovations
Take “Free Estimates” With Caution
It takes time to do a site visit and put an estimate together, and the majority of reputable general contractors will charge for a thorough estimate. However, if the job is successful, the majority of contractors will credit the sum against the final charge.
Depending on the size of the job, estimates should cost between $250.00 and $500.00.
Before signing a legally binding contract, even if you just receive a verbal ballpark, be sure to still get a thorough estimate. Don’t forget to ask for a sample payment schedule as well.
Every component of the remodeling should be listed in a detailed estimate, including the specific materials, brands, fixtures, and permits used. That is important because you can compare the brands or materials each contractor is using. This also explains in detail why one contractor might quote $100,000 while another is just asking for $85,000.00.
Dealing With Product Substitutions
Let’s face it, the past two, almost three years have been challenging for all of us. The construction industry has been affected by price increases for building materials and supply chain disruptions, and it’s going to continue for a while.
But the pandemic has also affected the supply and delivery of finishes and fixtures that homeowners have selected with their designer or contractor. What happens when they aren’t available or have 3-6 months delivery that will throw a wrench in your renovation timeline? What if you don’t like the replacement? This can have a big impact on the overall project experience, and it makes complete sense.
I appreciate homeowner’s frustrations when their renovation projects take much longer than anticipated and they don’t get what they were promised.
Renovators, contractors and designers must have a reselection process in place. It’s a good idea to offer one or two alternatives as back up, so the client knows that there is a possibility that there may be delivery delays and availability issues. This will also reassure them that the quality and product are comparable to their first choice. Being prepared for the unexpected will make the process more manageable and less stressful for everyone.
Finding The Right Contractor:
Finding the right contractor is the most significant step of the renovation process. Remember having regular, open, and honest communication with your contractor is always suggested, with weekly or bi-weekly updates and an email or text follow-up. Homeownership is a big responsibility so remember to educate yourself, ask questions, and save for the unexpected and necessary upgrades.
Managing your home maintenance and renovations properly and taking the necessary steps will help ensure your home is well maintained and lasts longer. It also means that when time is right, you can make those upgrades and renovations with confidence. Take your time, do your homework, and breathe – it will all come together.
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