How to budget for your next renovation project (& what you’ll be forking out for it)

The renovation nation trend is continuing in Australia, with many of us spending our weekends improving our homes. The projects that we’re undertaking are more than just a fresh lick of paint. Aussies are choosing to renovate areas of their homes that’ll increase resale value including the kitchen, the bathroom and outdoor living areas, with the expectation of making a profit out of their investment when they later sell their property.

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Research from finder.com.au, which surveyed 2,017 people, found that 28 per cent of Australians renovate their home to increase its value. Budgeting for your renovation is central to making a profit, so here are some tips for completing your entire renovation project without running out of money.

Budget in a 10% buffer for unexpected costs

The average Aussie will spend $16,883 on their kitchen renos, $12,460 on their bathroom renos and $11,446 on outdoor projects. Knowing what the average cost of your renovation usually is (even if it’s a ballpark figure), can help you set your own budget. However, it’s nearly impossible to predict the exact cost of a renovation project. Often, materials and labour will be more expensive than you anticipated, or you’ll encounter hiccups with the council along the way.

This is why it’s important to expect the unexpected and factor in a contingency buffer for potential additional costs. Although your buffer amount will depend on your specific renovation project, at a minimum, you should account for an extra 10 per cent on top of your total expected costs.

Just like most things these days, there’s an app for that. Downloading an app such as HomeZada allows you to set a budget, set project timelines and monitor your progress. Renovation Budget Tracker is another app that allows you track your costs and it reminds you when payments are due. It even has a clock that will count down how much time you have left until your room should be ready.

Do your market research

Before renovating, it’s important to get a feel for the current value of your home compared to others in your area. This will help you determine what renovation project will add the most value to your property and at what cost.

Chatting with your local real estate agent about trends in the market and your potential future buyer is a good starting point. You can also jump online and look at free property market reports to get a feel for the property values of similar dwellings in your area. Tailoring your renovation to the current market will help you maximise the value added to your property and will help you decide what you can realistically do with your budget. 

You should consider the demographics of your area and think about what features people are willing to pay a premium for. For instance, if there are mainly young families in your area, you may be able to justify spending that extra $2,000 on a pool renovation.

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Get quotes from multiple tradies

Comparing quotes from multiple tradies will give you a good idea of what a reasonable price to pay for the work is. For example, you will need to budget around $80-$100 per hour for a sparkie. Being specific about your expectations and the type of materials that you want to be used will help you get the most accurate quote possible. Providing each contractor with exactly the same information will help you compare them to determine which offers the best deal. You should also check that your tradie charges in 15-minute blocks, so that 15 minutes of work is not rounded up to a full hour of pay.

In addition to the cost of your tradies, you may also want to consider their reputation. Don’t be afraid to ask to see their licences, references or evidence of previous jobs they have completed so that you know they have a strong track record. Asking these sorts of questions will help you avoid future disputes with your tradies.

Be prepared to get your hands dirty

Being prepared to undertake some of the renovation work yourself will keep more of your project budget in your own pocket. Jobs such as painting, landscaping and minor cosmetic changes such as replacing doors and handles don’t usually require a professional tradesperson.

Although DIY can be efficient and cost-effective, try not to attempt tasks that would be unsafe for you to do. It’s best to hire an expert to complete all electrical, plumbing and demolition work for instance. Remember that completing a renovation project yourself but doing a poor job of it might actually bring down the value of your home and may cost you more in the future when you have to get the work done again properly.

Although renovating can be stressful, it’s well worth the effort when you can add value to your home. Understanding how to budget for your project before strapping on your toolbelt can help you get the most value out of your renovation.

Written by:

Bessie Hassan

Bessie Hassan is a Money Expert at finder.com.au, the site that compares virtually everything. She regularly appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. She’s passionate about helping Australians make more informed decisions so they can improve their quality of life.