It goes without saying that renovations take a lot of planning and budgeting! It’s biblical. You do not want to break ground until you have fully counted all the costs. There are 3 basic categories in home renovations that need to be considered in planning mode: “the bones”, “the cosmetics”, and “the add-ons.” The bones cover renovations that you can’t see, like updating the plumbing, electric, heating & air, foundation, subfloors, etc. Unfortunately, these aren’t usually cheap fixes. In fact they can be total budget busters. That’s why it’s so important to get a house’s bones inspected before purchase. Ideally, you always want a house with good bones, even if the cosmetics need a lot of love.

Basement bones

The cosmetics cover renovations with the most visual gratification… like new paint, cabinets & counters, flooring, staging, etc. Cosmetics are the kind of diy projects that you can learn yourself and save thousands if you’re willing to put in the elbow grease! Last but not least, “the add-ons” are just that… additional rooms or square footage (like cutting into the yard to add a master suite), or more complicated re-configuring of existing spaces (like taking from closet space to add on another bathroom). Unless you are a trained and licensed contractor, add-ons will probably require you hire someone who is. And any time you have to do that, you can expect to spend some serious $$$.

House before

Our house had decent bones, and we knew we couldn’t afford any add-ons at this point. “Decent bones” is my way of saying that half our renovation budget went to not so fun projects we couldn’t really see (like the $5,132 it cost to do a total repipe) and the other half went to fun projects with immediate visual gratification like opening up the living space and refinishing the hardwoods. To be honest, out of our $10,000 budget we really could have put all of it towards the bones. It cost us $5,132 to replace the plumbing and we could have easily spent the rest to update our electrical. However, being as my husband works for Dave Ramsey, we move at the speed of cash and we knew that this was going to be our only opportunity to do the physical labor required for the cosmetic fixes. For one, we had a short window of opportunity from July 1st- August 1st to do all the unlivable renovations while still living for free at our previous home (the tiny barn house provided by my former teaching job). Also, we knew that if I got pregnant again in the next year like we’re planning, we could always hire someone to update the electric at any point once we saved back up. However, this was probably my only real chance to put in the hard labor and sweat equity to do projects like spending 11 hours straight on my hands and knees scraping old linoleum glue off hardwood floors. (Yep. Did that.)

Scraping Floors

…This brings me to the real topic of this post: How to put your money where your priorities are! Here is the 1 question every homebuyer must ask before planning a renovation:

When (if ever) are you planning on selling your home down the road?

  • Never: For those who bought their fixer upper to be a forever home, then you have no rush my friends. All of the return on your investment will be counted in the joy and enhanced lifestyle it brings you and your family. Any increased property value is just icing on the cake for future generations. Advice would be to budget projects at the speed of cash in order of what would make your living experience the most fulfilling.
  • 10+ years: 10 years is a long enough time to build up property value by simple time and growth. As long as the housing market stays healthy, any good investment should accrue a decent return in that amount of time, even if you never did more than maintain it’s quality. Obviously, any renovations you do on top of maintenance will further increase your property’s value and make it more desirable to buyers. So… for the most part, you’re still in a similar boat as the “never gonna sell” crowd. You should still budget your projects at the speed of cash with your main priority being personal enjoyment (do the renovations that will make your years there the most fulfilling), but once those main projects are accomplished, it would be wise to prioritize the remaining budget on projects that yield the most return on investment, especially close to sell time… And that brings me to the 10 year and under crowd…
  • 5 – 10 years: (My husband and I fall under this group) While those who are looking to re-sell somewhere in the next 5-10 years should still keep personal enjoyment in mind as you plan your renovation, you would be wise to prioritize those plans according to which projects will yield the greatest return on your investment. Meaning, budget the renovations with the greatest return first, even if it doesn’t bring you the most immediate gratification. Then, over time and at the speed of cash, you can later get to the projects that bring you the most joy but won’t yield the same level of return on your investment.
  • 5 years and under: Not typically advisable and here’s why. Every time you close on a house, whether you’re buying or selling, you will dish out thousands in closing costs. Buyers and sellers can pay different amounts, but everyone pays something. Then of course there’s the issue of your mortgage interest. Mortgages are structured so that the first few years of payments does more to pay down the interest on your loan than it does to pay off the principle loan itself. So unless you put down a huge downpayment when you bought your house, any less than 5 years of paying down your mortgage and it would more than likely be cheaper to rent each month. Of course, if your home was a good investment, you would expect a rise in property value, even over 5 years. However it is unlikely that the profit value will break even on your closing and interest costs. *Note: Selling your home in 2-5 years also puts you in the danger zone of paying Capital Gains Taxes. Capital gain tax, abbreviated as CGT, is a tax imposed on the profit (capital gains) resulting from the sale of your home.

Knowing the answer to your long or short term goals is the first and most important step in planning your renovation. Next week I’ll be sharing how we applied our long term goals (selling in 5-10 years) to our plans for renovating!


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