Renovating your home is a win-win situation. For as long as you live there, you'll get to enjoy your remodeled kitchen, bathroom, and any other space that deserves an upgrade.
At the same time, renovations will increase the value of your home so you'll get a great return on your investment (ROI) when the time comes for you to sell and move on.
Average Home Renovation Costs
According to HomeAdvisor, a typical home renovation costs about $47,000, or between $33,000 and $150,000 or more.
Depending on where you live, it may cost $10 to $60 per square foot. An expensive job might cost around $150 per square foot.
As well as your location, the cost will depend on:
- The age of your house
- What condition it is to start with
- Which rooms you're choosing to remodel
- How many rooms or the whole house
- The size of the rooms or size of the whole house
- Whether there are any existing problems to overcome
- Whether you're making structural changes
- What materials you choose
- What appliances you choose
You should also add about 20% to your budget for unforeseen expenses that come up during the renovation process. These extra costs are known as overage.
Which Rooms Give the Best ROI?
Buying a house is likely the biggest investment you'll ever make so of course you'll want to get a great return. According to Home Guide, you can expect an ROI of 50% to 85% on what you spend renovating.
So if your bathroom costs you $10,000, you might increase the value of your home by anywhere between $4000 and $8000.
You may expect this ROI depending on what you do:
- Kitchen: 54% to 80% of what you spent on remodeling
- Bathroom: 70%
- Basement: 70%
- Attic: 70%
- Exterior remodeling: 80%
Home Renovation Costs by Room
When deciding what parts of your house to update, consider your budget and then put your tasks in order of priority. Think about what needs to be done now vs. what can wait until later.
Here are some more facts and figures from Homeadvisor:
- When budgeting for home renovations, keep in mind that remodeling your kitchen will likely be the most expensive project on your to-do list.
- Once you factor in the cost of new appliances, cabinetry, and counters, you may spend over $100 per square foot.
- On average, a kitchen costs about $25,000, or between $4000 and $60,000. But the cost will depend on how high-end you want to go.
- The National Kitchen and Bath Association (NKBA) suggests setting aside a budget of between 10% and 25% of your home's value for your new kitchen.
- After your kitchen, the bathroom might be the most costly improvement to your home. The sky's the limit for choosing bath, shower, sinks, and tapware.
- On average, a remodeled bathroom costs about $19,000 but it will depend on the size and choice of materials. The average ROI is $13,000.
- The NKBA suggests a new bathroom might cost about 5% to 10% of your home's value.
- An unfinished basement is a great candidate for remodeling. Turn the space into a home office, playroom, or guest bedroom -- all of which will come in at different costs.
- On average, a basement costs about $20,000 but it will depend on what condition the space is in and whether there are any underlying issues, such as dampness.
- There are many improvements you could make to any room in your house, from adding or removing walls ($300 to $10,000) to a fresh wall color or some statement wallpaper.
- A complete bedroom refurbishment might cost between $4000 and $12000 for new flooring, walls, lighting, windows, and furnishings.
- You may even consider renovations to your entire home, whether you're rewiring the electricity ($4,000 to $20,000) or updating the plumbing ($400 to $1900).
- The cost will vary hugely depending on the size of your home, your home type, and how old it is.
- To renovate a whole 2000-foot house might cost between $28,000 and $115,000. To tear it down might cost between $125,000 to $450,000.
How to Estimate Home Renovation Costs
Here's a summary of budgeting for home renovations:
- Your kitchen and bathroom (known as wet rooms) will cost the most, at $100 and $250 per square foot.
- Your bedrooms and living rooms (known as dry rooms) will cost $10 to $25 per square foot. Contractor labor rates will be an additional 10% to 15%.
- Permits may cost $500 to $2000 and your municipality may charge 1% too.
7 Steps for Budgeting Home Renovations
Now that you've seen some numbers, it's time to organize your ideas into a list of priorities -- and hire some outside help.
Follow these easy steps and you'll soon be on your way to an improved home:
- Decide how you'll finance your renovations. A home equity line of credit or home equity loan from Chartway is a great place to start!
- Apply for pre-approval so you'll know how much you have to spend and you'll be ready to go once you've made all your important decisions.
- Decide on what remodeling projects you absolutely need to do now vs. what you would love to do but could wait for the future.
- Price out what you need for the job by counting how many wet vs. dry rooms you'll renovate (or whole house) and picking out some of the major appliances.
- Decide if you can manage the project yourself or if you need a contractor. If you need a contractor, you might like to get multiple contractor quotes.
- Find out if you need permits and what the fees are.
- Finalize your budget and access your home equity to get started!
How to Finance Your Home Renovations
When it comes to budgeting for home renovations, the number one question you'll likely be asking yourself is, how are we going to pay for it?
Of course, you could set aside some of your paycheck and save up. But if your kitchen is going to cost $30,000, how long will it take before you can hit the green light?
A faster financing option is to tap into your home equity, which is the current market value of your home minus your mortgage balance. You can access quick cash through a home equity line of credit (HELOC) or a home equity loan.
A HELOC works like a credit card, where you borrow what you want as you need, and pay the money back with interest on that amount only.
A home equity loan means you get a lump sum of money to spend as you like and pay back in equal installments at a fixed or variable interest rate.
Click below to learn more about both of these convenient financing options from Chartway!