How to Stick to Your Renovation Budget
With international travel halted and big-ticket events postponed due to COVID-19, a home renovation boom has erupted in the Sunshine State.
Data obtained from Suncorp has revealed the average renovation in Queensland comes to $60,560 – a significant cost, but when done correctly, can prove to be a worthwhile investment.
Before you pick up the tools or begin scrolling on Pinterest, it’s worth plotting out a renovation budget that’s realistic for you and your financial goals. If you don’t set a budget prior to commencing works, you may find yourself spending money you weren’t prepared to part with.
So, how do you set a renovation budget? And how do you stick to it? The REIQ sat down with Tamara Wrigley – fashionista, TV presenter and property mogul – about how she sets renovation budgets and sticks to them.
REIQ: How many renovations have you completed?
Tamara Wrigley: I’ve been a property developer for over 23 years and have always loved the design process of any project. I also have a property portfolio of 27 properties, usually ones that don’t need any renovations or ones that I can develop down the track. It was only this year that I decided to purchase a property that needed extensive renovations to add to my property portfolio.
REIQ: How did you determine an appropriate budget for each renovation?
TW: I’m a big believer in planning, and a budget is not only essential, but it helps eliminate the uncertainty around how much my renovation is going to cost.
At the start of my budget process, I only talk ballpark figures because there are too many variables to consider, like your level of fit-out, design, site conditions, or what’s lurking under those floorboards and behind those walls. This can all affect the budget.
The way I come to an accurate budget for my reno is to go through the quoting process and get three quotes for everything I want to do to my home.
REIQ: Have you ever gone over budget? If so, do you regret it?
TW: Yes! A renovation I’m currently doing saw me go about $30,000 over budget. Fortunately for me, I had contingency cash for “unexpected” finds, which there was a lot of. I didn’t regret going over budget on this project because it needed to be done and I’m still making good money on the property at the end of the day. It was purchased for land value because of all the issues it had. Spending $150,000 on renovations ($30,000 over budget), I am still making $300,000 profit on the home.
SEE ALSO: How to nail your next renovation
reiq: How can people cut costs without cutting corners?
TW: If you’re hands-on like me, you could save yourself thousands of dollars just by rolling up your sleeves, putting on your Blundstones and doing the work yourself, or at least helping with the workload. My first quarter quote from a chippie (carpenter) was for $21,000. By getting in and contributing, the final invoice came through for $14,000. I also painted the internals of the property myself, which again saved me $15,000.
Don’t be afraid to ask for discounts or best prices, it’s a competitive market out there and you’ll find businesses will discount their prices to get the work.
REIQ: What’s the one piece of advice you’d give people before they begin renovating?
TW: Start with a master plan and define your renovation vision. Start with the end in mind and that way things will run smoother. A great way to nut out how you want your home to look and feel is to create a vision board. This will help you get clear on your end game. Pinterest is great for creating your vision.
REIQ: Do you have any tips on renovating purely for profit?
TW: Know your numbers. When it comes to flipping houses, you want to get a maximum return when it comes time to sell. You don’t want all your profit eaten up in the renovation process. Knowledge is power, so know the area you are flipping in. What’s the growth like in the area, what is the five-year plan for the region, what are properties similar to yours selling for? Knowing all this before you purchase a house is crucial to your end result.
For homeowners looking to add value to their property to get the maximum sale price, be careful not to overcapitalise. If you’re going to spend $50,000-$100,000 on renovations, are you going to get your money back plus profit when it’s time to sell? Keep it simple -what you like might not necessarily be what buyers like. Fresh white painted walls and new flooring may be the only thing you need to do.