How much should my renovation cost?

We often get asked this question in our very first meeting. Understandably, clients need a starting point on which to base their renovation budget, and which rooms/spaces to spend it on to maximise functionality and their property value.

A good first step is to do an online search of properties for sale that are similar to yours and in your neighbouring suburbs. Make a note of 2 things - their average asking price, and the fittings and finishes used – are they basic, mid-range or luxury/high end? This is a useful exercise as it will give you a very clear idea of the features that buyers in your area will pay a premium for, and therefore how and where you should spend your renovation budget to get maximum bang for your buck.

The next step is to do a search of your own property on real estate websites to find it’s estimated market value. A good rule of thumb is to limit your renovation budget to 10% of the estimated market value (this would only apply if you are updating the property without making significant structural changes like adding new room/s).

For example, if your 3 bedroom-2 bathroom property is now worth $1.2m, then you should aim to spend no more than $120k in total, and split across each area as follows:

Kitchen	20%	$ 24,000
Bathroom	20%	$ 24,000
External	20%	$ 24,000
Lounge, living, dining	10%	$ 12,000
Bedroom	10%	$ 12,000
Contingency	10%	$ 12,000
Hallway	4%	$ 4,800
Second bathroom	3%	$ 3,600
Laundry	3%	$ 3,600
Total		$120,000

The aim of this rule of thumb is to act as a guide for first time renovators. It helps ensure that you don’t over-capitalise your property, which basically means spending more on the renovation than what a buyer would pay for a similar property in the same area. For example, if your property is worth $1m and you spend $100k on your main bathroom with marble tiles and other high-end fixtures, buyers will not pay your asking price of $1.1m – they will be satisfied to see a $20k bathroom with mid-range tiles, taps and fixtures.

Of course, this rule of thumb is just that – the final project budget will come down to the amount you can afford, and the type of materials, finishes and fittings. This is because labour costs or what tradespeople charge for their time and effort is largely “fixed” - a tiler will charge the same rate whether he is using $19 or $90 tiles in your bathroom.

At 360 Renovation Consulting, we provide services to deliver on all 3 components of a successful renovation – form (how well the renovated space looks), functionality (how well it meets your needs), and financial management (keeping the project within your budget).

We can work within any budget, so call us to discuss your next project.