When you have made the decision to renovate your home, there are plenty of emotions – excitement, wonder, anticipation and, sometimes, a moment of stress. Like any project, renovations require the balance of time and funds, many of which you need to anticipate and plan for. So, when budgeting for a reno project, have you determined your personal finance plan?
Thankfully, we have been working with clients on project planning and renovation tips and, with more than 30 years of experience, we are sharing them with you here today.
Here are 5 tips on budgeting for a reno project
1. Estimate the value of your home and the work that will be done
When completing a renovation, you will be thinking about the re-sale value. In this case it is often best to consider rooms and the value of these renovations when performing these estimations. For example, renovating a bathroom can be an investment of $12,000 to $25,000, according to the Reno-Assistance Service. The bathroom holds a re-sale value of about 5% to 10% of the property. With this in mind, consider the investment as it relates to the perceived value when listing on the market.
2. Plan, plan plan
You might be well versed in developing a budget. You may have already created a budget document for your mortgage, or perhaps for another project that has been recently completed. You can never plan enough when it comes to budgeting for a reno project. A general rule of thumb is to keep approximately 10% of your renovation budget set aside for unexpected expenses. You may enter unforeseen snags in your journey, or you could find additional areas to add value during the process.
3. Be realistic in your wants and needs
Do you really need to move that wall to open the room? If you leave it, you will save on expenses. Do you really need to expand the shelving, or can you source a beautiful lacquer to bring life to the area? Being realistic with your wants and needs, while consulting with a professional, will help you achieve the dream renovation you are searching for while not blowing your budget.
4. Consider securing financing
Once you have budgeted for your renovation and you have identified your wants and needs, you may consider securing financing. Financing will help you leverage your home equity to finance your renovation. Depending on your unique financial circumstances, this could be an option for you to take advantage of. Here is a great blog on new home construction financing, which is specific to building a new home though provides excellent tips that you can apply to a renovation.
5. Consider government tax credits
Did you know that there are both federal and provincial programs for BC Home Owners to help support a renovation in your home? Here is a resource on identifying a solution that may work for you. There are also potential solutions that provide financial assistance for the replacement of gas, oil or coal fired systems, along with programs that will help you upgrade the airtightness of your home. Energy performance is a key area of focus when it comes to federal and provincial credits.
Embarking on a renovation is no small feat – and neither is budgeting for a reno project. Before you go down the road of envisioning additions and updates to make your home your dream home, consider the tips above to ensure you have everything you need for your renovation planning.