What You Need To Consider When Determining A Home Renovation Budget?

If you think it is time to renovate your home you probably already know that you have a lot in front of you. This can be a huge task!  Still, it should not be a daunting one—and it won’t be, if you take your time and plan it appropriately.  The work may be hard and the cost may be high, but if you plan appropriately, you should be able to get a decent return on these investments.

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But how?  How do you know for sure that you will be able to maximize the time, money, and energy spent on Renovco home renovation projects?  Well, here are a few things to consider when planning a home renovation project:

Compare Room-To-Room Cost-To-Benefit Ratio

Obviously you know that cost-to-benefit ratio is the most important factor in determining the direction to take any project. In terms of home renovation, though, you should examine the cost-to-benefit ratio of each room in the house, separately, and then compare them.  This helps to establish which rooms deserve more money and time.  For example, you will quickly learn that the average national cost of a kitchen renovation is about $15,000. However, you can get nearly 100 percent returns on this investment (in terms of additional home resale value).  A bathroom, on the other hand, is much smaller than the kitchen, but can cost nearly as much, without the promise of such a high return.

Breaking down the Budget

Once you have compared your cost-to-benefit ratio per room (or area) it is time to look at your budget.  You should determine your budget based on your available funds, of course, but also according to this table, which dictates how much of your budget you should allot to each room in the house.   Primarily, though, you should determine your budget according to the value of your home and assign a percentage of that value to each type of renovation:

  • 10-15% on the home’s value on a kitchen remodel
  • 5% on bathroom renovations
  • 10% your home’s value on projects updating the master bathroom suite
  • 10-15% to finish an attic or basement
  • 1-3% on additional bedrooms and other shared spaces (den, dining room, living room)
  • 2-5% on outdoor fixtures and other aesthetics  (aka “curb appeal”)