What You Should Know About Home Renovation Budgets

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It is no big secret that home renovation projects can be a very smart investment. As a matter of fact, home renovation projects are the most accessible investment for more people across North America—because they require very little investment knowledge or skill and many can be done without professional assistance.  More importantly, though, with that limited knowledge and DIY attitude, you can actually find a decent return on that investment.

Of course, you will need to know a few things first. For example, you will need to learn how to choose your Renovco projects so that you aren’t wasting time and money on things that you don’t need or won’t see that great a return on.

The Per-Room Cost-To-Benefit Ratio

The Cost-to-Benefit ratio is, of course, the most important factor when weighing your home renovation decision. Actually, this metric is pretty much the best way to determine many of life’s priorities. But when it comes to home renovation projects you want to weight the metric of each room against each other. This will help you determine which rooms will provide a more immediate (or long term, if that is what you are after) benefit.

As an example, a quick look at home remodeling data will show you that the average national cost of remodeling a kitchen, in the United States, is about $15,000.  However, many contractors and real estate experts will tell you that you can get between a 60 and 100 percent return on this investment when it comes to sell the home.  At the same time, the bathroom—a significantly smaller room—can cost the same amount, yet its yield may not be as good.

Measuring the Budget

Of course, you need to know your budget. This may actually be the first thing you want to determine. Either way, you need to determine this metric based on the funds you are willing to invest. Once you have this number, then you can apply these ratios to determine exactly how much you should spend on each subsequent project.  Home renovation budgets should typically break down like this:

  • spend 10-15% of your home’s value on remodeling the kitchen
  • spend about 5% on your home’s value on the bathroom
  • 10% on the master bathroom suite
  • 10-15% to finish an attic or a basement
  • up to 3% on additional living spaces and/or bedrooms
  • up to 5% on outdoor fixtures (a la “curb appeal”)