DIY projects

Renovation Guide Part 1: Costs and Budgeting

We’ve consulted the experts for our three-part guide on how to renovate like a professional

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Most of us think our homes could benefit from a renovation, either modest in scale or monumental. No matter the scope, success lies in smart planning. Our three-part renovation guide will arm you with all the information you need to master a successful renovation of any size.

COSTS AND BUDGETING

Unless you’re rolling in cash, don’t spend more than the property’s resale value. Simple. (Theoretically, anyway!) Figure out what you can afford. Here’s how:

Work out your maximum spend. Overcapitalising is an easy mistake. Your investment will depend on a few factors:

  1. The condition of your home.
  2. The potential resale value of your property – even if you’re not planning to sell, it gives you an understanding of the local market and prevents overcapitalising.
  3. What you paid for the property. Consider its value. What are comparative homes in your area going for? This will give you an indication of how much you can spend and reclaim when you sell. Different rules of thumb are applied to the percentage you should spend on renovating: some say 5 percent, others 10 percent, and others up to 20 percent. But it should be based on what you paid for the property and its current condition – if you paid $300,000, but other houses in your street of a similar size are selling for $600,000, you could spend $200,000 or more (depending on the profit you want to make on resale). But if you paid $590,000 for it, you’d probably be wise not to spend even $30,000.

Renovate to the standard of your future target market. If your lovely home will likely be sold to a couple getting their first step onto the property ladder, you don’t need everything to be top of the line – because they won’t be able to afford to cover it in their offer. Instead, a renovation of a moderate level would be more practical. Think kit-set rather than custom-made.

Decide what you want to achieve. Sit down and write a list of all the things you could do in your renovation. Next to them, note whether you think they are Important to Have, Nice to Have or Unnecessary. This will help you prioritise.

HAVE A REALISTIC IDEA OF COSTS

Bathrooms: Generally, an overhaul of a small bathroom (five square metres) will cost $7000-$10,000, a medium-size bathroom (10 square metres) will cost $10,000-$15,000, and a large bathroom (15 square metres), $15,000-$20,000. If you’re going top of the line (think marble and high-end fittings), it’ll be $25,000 plus. If you’re doing a simple spruce-up with a new vanity, toilet suite and a paint job, it’ll set you back around $2500-$3500.

Gillian Gilfillan from Athena and Clearlite Bathrooms says the position of existing pipework and plumbing is important to consider because moving pipework can significantly increase the overall cost. “However the value of moving bathroom fixtures to achieve a considerably more functional space may outweigh the cost associated with moving plumbing,”she says.

Kitchens: A flat-pack kit-set for a small to medium-size kitchen can cost around $4000-$6000, excluding installation. Installation costs vary depending on the plumbing, wiring, appliances and builder’s fees. A custom-made kitchen starts at $10,000-$12,000 for a basic design, $20,000 for mid-range and $30,000 and beyond for top-of-the-line. Custom kitchens tend to offer better use of space than a kit set.

Building: Call local builders, architects or quantity surveyors to find out the average building cost per square metre in your area. This will help with budgeting. You can expect to pay around $2600 per square metre in Auckland. Visit the government site dbh.govt.nz/bofficials-estimated-building-costs for an indication of costs by region and property size (figures are from July 2013).

Check the coffers. Now you have a better idea of costs, how much are you willing to invest in this renovation? How much can you afford to spend? Do you have enough to do a good job?

Think about staging it. Rome wasn’t built overnight and your home doesn’t need to be either. If it looks like you are stretching your budget too far, consider renovating in stages. Make a priority list and work your way through it. Anything that improves your quality of life – such as air conditioning, heating and insulation – should take priority over changes done purely for aesthetics.

Break it down. Once you’ve determined your spend, Lizzi suggests designating funds to various parts of the renovation, such as bathroom, kitchen, bedrooms and exterior. “Coming up with individual budgets for each space helps you keep a handle on finances and stops you from blowing your budget,” she says.

Plan a contingency fund. Most renovations reveal hidden surprises, such as rotten beams or wonky floors.

Write it down. Record overall and individual budgets from the beginning – even down to the nails. Create a running tally so there are no nasty surprises when the bills start rolling in.

Read related articles:
Renovation Guide Part 1: Planning
Renovation Guide Part 1: Professional help
Renovation Guide Part 1: Decisions Decisions!

Words by: Debbi Harrison and Lizzi Hines of Spaceworks and Room by Room
Illustrations by: Samantha Totty

 

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