Some homeowners are drawn to the idea of buying a fixer-upper that they can completely renovate. What they save on the home cost, they want to invest in creating the kitchen, family area, and backyard of their dreams. However, it’s not easy to estimate the cost to renovate a house, and many people go over budget with the labor and materials needed to make their home livable. Here’s what you need to keep in mind to budget properly.
The Cost to Renovate a House in 2021The average cost to renovate a house in 2021 is estimated between $18,000 and $75,000. This includes renovations for multiple rooms and varies based on the zip code, home value, and type of remodel. While you may be able to upgrade a room for a few thousand dollars, most major renovations will cost you more than you expect. As a whole, homeowners often misjudge the cost of renovations. When respondents to a personal finance survey were asked how much a kitchen remodel would cost, they estimated around $10,000, when the average price is actually close to $20,000. Nearly 80% of respondents guessed below the budget. This shows how important accurate budgeting is to plan for your renovation. If you are a few thousand dollars off, you could have to take out extra loans and might not get the return on investment that you expect from your renovations.
Determine the Renovation Size You NeedThe first step in setting a budget for your home renovation is to determine how much work needs to be done. Evaluate your home and choose one of these three categories based on what you plan to do:
- A small remodel likely only costs up to $45,000. During this remodel, you can budget for interior and exterior painting, minor repairs, and landscaping.
- A medium remodel falls between $45,000 and $75,000. A remodel of this expense also includes a total kitchen remodel and a bathroom remodel.
- A large remodel costs more than $75,000. This includes any repairs to the roof, sewer lines, electrical wiring, or foundation of the house.
Make a List of Renovations You Expect to TackleWhile getting an idea for the size of your remodel can give you a range for your budget, your list of renovations will guide your expected costs. For example, installing a shower could be done on the low end for $250. However, it could cost almost $10,000 on the high end, with an average cost of about $3,000 for the parts and labor. Listing what you plan to renovate and the cost of each can help you set a budget. You can see what you can accomplish yourself to save money (like painting and landscaping) and what you need to budget labor for (like electrical repair). You also can decide which items you want to be more high-end. You may want nicer marble in the master bathroom but more affordable tiling in the kid’s bathroom.
Consider the Resale Value of Your Renovation EffortsAs you prioritize your various projects and upgrades, consider the resale value of your investments. Bankrate recently shared a few of the top renovations that drive return for home sellers. These include replacing the garage door, adding a deck addition, and doing a minor kitchen remodel. While most renovations will drive up the value of your home, some have higher ROIs and may be a good place to start if you are hoping to renovate your home in order to sell it. For more ideas, check out our post on:
- How to Leverage Current Design Trends to Help Sell Your Home Quicker
- Sustainable Home Improvements That Add Value to a House
- Top 7 Updates to Increase Your Home Value