Want to move into the house of your dreams without having to hire a realtor or pack a moving truck? A home renovation might be your path to doing just this. A complete home renovation can add more liveable space, modernize all your electric and plumbing components, make your home more comfortable and, basically, give you a whole new home without having to move.
However, while a home renovation can be a worthwhile and beneficial undertaking, it is not without cost. While many homeowners are well aware that a home renovation is not cheap, many will underestimate just how expensive things can get. In fact, according to a 2019 poll conducted by the Canadian Imperial Bank of Commerce, nearly 40% of the 1,515 homeowners surveyed said they had gone over budget on their recent renovation project.
Here we will look at the cost of complete home renovations in Ontario, reasons home reno projects go over budget and how you can plan for renovation success.
Synopsis and Main Takeaway: Home renovations add resale value to your home and also help your home suit your current needs without having to move. As a general rule, you can expect to pay around $100 to $200 per square foot of home that is being remodeled. However, this number can change depending on a wide variety of factors. Consider leaving at least 20% of your budget available for unexpected costs.
In this Article:
Getting Started: Prioritizing Your Renovation Projects
What Affects the Cost of Home Renovations?
Tips for Renovating for Resale Value
The Importance of Planning: How Can You Avoid Going Over Budget?
Ways to Budget and Finance
Getting Started: Prioritizing Your Renovation Projects
Complete home renovation projects start in two main ways: 1) the entire interior of the home is taken down to make room for a new floor plan. This option is used if you want to divide rooms differently or create an open floor plan or 2) Individual rooms and sections are renovated.
If you plan to restructure your home by removing the interior, your renovation project will likely need to be done as a single, continuous project. However, if you are renovating individual rooms, you can choose to renovate one at a time. While there is a possibility that prices will go up in between projects, this can still be cheaper and less overwhelming than taking out one large loan.
So, what area of your home should you start with?
Start with Your Pain Point: If any area of your home is affecting your quality of life, i.e. the kitchen is extremely outdated and difficult to cook in, this is an obvious place to start. This also makes sense in terms of your return on investment. Kitchen and bathroom renovations tend to have the highest ROI at 75-100%.
Start With Low Risk/High Return Projects: Aside from kitchen and bath remodels, HVAC system upgrades, painting and windows/doors have some of the highest ROI of home projects. These projects are relatively quick compared to a full home renovation and they will improve the look and feel of your home.
Start Where it Is Convenient: Sometimes the best place to start a renovation is in a room(s) that you do not use frequently. Often, this means the basement, landscaping/outside buildings, garage, or guest bathroom. If you want to get started with the home renovation but are concerned that it will be too disruptive to your living space, these areas can be completed with minimal invasion into the main part of your home.
What Affects the Cost of Home Renovations?
Many factors can affect the cost of your home renovation. These are some of the most important:
DIY vs Professional: Doing projects yourself can be less expensive but keep in mind that they can also become much more costly if done wrong. Unless you have renovation experience yourself, keep DIY projects to things like painting where risk is minimal.
Fixtures/Appliances/Finishing Pieces: Nearly every material and fixture you can put in a home will come in different grades of quality. Be mindful of what you are picking and what you are prioritizing. For example, the most basic toilet can be as low as $100 but a high end toilet can be $1,500 and beyond.
Permits and Fees: Some home projects will require special permits that can add on to cost. Additionally, if you choose to hire a professional designer or require an architect, this will also increase costs.
Condition of Home: Unsurprisingly, an older home is likely to have more unpleasant surprises behind its walls. Leaky pipes and unsafe building materials are often found after renovation begins. While it is frustrating to find these things, it is still better to catch them before they cause bigger problems on their own.
As we looked at in the previous section, both kitchen and bath remodeling tend to have the best ROI if you plan to sell your home. These areas along with painting and carpet replacement are often the best uses of your renovation money if you plan to sell soon. Keep these tips and ideas in mind if you are renovating for resale:
Start with the Necessities: While a gorgeous kitchen with all new cabinetry will be enticing to many buyers, it will not make up for a leaking roof or busted hot water heater. Take care of these necessities first before attempting cosmetic changes.
Don’t Break the Bank on Resale Renos: Though renovations can fetch you a better price on your home, you should not overextend yourself if you do not have the budget. For example, instead of replacing cabinets, simply repaint them. A fresh coat of paint in rooms will also go a long way to making your home more attractive. Neat and tidy landscaping will also improve curb appeal.
Be Aware Some Reno Projects Will not Have Good ROI: Maybe it has always been your dream to have a pool, but the next person looking at your home may only see that pool as a dangerous and expensive liability. If you do not plan to stay in your home for more than 5 years, it may not be worthwhile to install a pool as pools have one of the lowest ROIs of all home projects.
Check Home Prices in Your Area: Having the nicest home in your neighborhood may be great while you are living there, but it can often have little benefit when you are reselling. Typically, buyers will be looking in your area because the home prices are in line with their budget. Before committing to a massive renovation that could dramatically increase your home value, see if it will still be in line with what is in your area.
The Importance of Planning: How Can You Avoid Going Over Budget?
Going over budget can happen for many reasons such as unexpected water damage found behind walls, the rising cost of materials and even delays caused by weather. However, a lack of planning is one of the most common reasons.
Only about a third of homeowners surveyed in the CIBC Home Renovation Poll had any kind of detailed budget from the start. Beginning without a plan means you are more likely to make poor last-minute decisions and not have room in the budget for the unexpected. To help avoid going over budget, make a plan that keeps the following in mind:
Prioritize: As we discussed in previous sections, you will be best served by renovating critical areas of your home first that affect the comfort and safety of your home. This includes things like a leaking roof and broken furnace. After this, you will want to consider your personal pain points such as, do you need a space for a home office? Do you need the basement converted into a living space? Take care of these most important items first before focusing on purely cosmetic items.
Keep Resale Value in Mind: If you plan to stay in your home for many years, you only need to concern yourself with renovations that matter to you. However, if you plan to sell, prioritize renovations that will net you the best return on investment. Usually, this means basics like painting, upgrading an old HVAC system, kitchen remodel and/or bathroom remodel.
Leave Room for Unexpected Expenses: Rarely will a renovation project come out to the exact amount you have estimated in the beginning. Any number of changes or issues can dramatically affect the final cost. Consider skipping unnecessary projects or choosing less expensive options for decorative elements until all the important pieces are in place. As a general rule, you should try to save around 20% of your budget for potential changes and add-ons.
Ways to Budget and Finance
The best way to afford home renovations is to save and plan over time. Ideally, homeowners should consistently put away money in a savings account that is set aside for home repairs. However, most homeowners are not able to do this or sudden renovation needs will overwhelm the average savings account.
Fortunately, there are still many options for financing including mortgage refinancing and a home equity line of credit. If you do have considerable equity in your home, these options may be best for you. Loans and credit cards may also work for some homeowners. However, with each financing method, discuss terms and what your monthly payments will be with your lending institution.
Getting Started with Home Renovations that Fit Your Budget
Ready to learn more about financing your home renovation project? Basement Finishing Company proudly serves the Greater Toronto Area with everything you need to renovate your home. Our commitment to transparent pricing and efficient renovation services means you get the best renovations that work with your budget. For a quote, contact us at 1-647-370-9448.
