How Much to Invest In a Home Renovation

Factors in Calculating Home Renovation Costs

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The complexity of the room being renovated affects the price range. Repairs and updates to kitchens, bathrooms, or mechanical equipment are costlier home renovations. A kitchen renovation averages $25,000, but a bathroom is $10,000. Basements usually cost around $20,000. Other factors like permits and labor, site preparation, and materials also influence the price.

Permits and Labor

Almost any renovation project that includes additions, electrical or plumbing work, or a major overhaul will require permits, so be sure to check with local authorities. Permits cost $400 to $1,800, on average.

Depending on the scope, a renovation requires multiple different subcontractors. The average hourly cost of any laborer on a construction project ranges between $20 and $150—sometimes more. General contractor fees usually account for 10 to 20 percent of the total budget.

Location

Costs can vary up to 40 percent between regions. Current construction markets differ from state to state, which affects the total price. Urban areas typically have the highest construction costs.

Home Size and Number and Types of Rooms

As with most projects, the larger the space, the higher the cost. According to HomeAdvisor, a 1,000-square-foot home could be renovated for around $19,000, but a 3,000- to 4,000-square- foot home costs between $75,000 and $100,000. More bedrooms do not always correlate to a higher price, though. A bedroom costs less to renovate ($10 to $25 per square foot) than a kitchen ($100 to $250 per square foot).

Type of Build

Not all living spaces are created equal. The cost to renovate a condo averages $40 to $125 per square foot, but an apartment averages $25 to $60. Historic homes always cost more to renovate due to the extra care needed to preserve original materials or re-create the original appearance with updated materials. A historical renovation typically costs $100 to $400 per square foot.

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Site Preparation

Depending on the scope of the project, it may be necessary to prepare the site for construction whether it be removing landscaping or clearing space to access the house. If significant work is required to prepare the site, expect to pay between $1,200 and $4,000.

Materials

The range of material prices for a home renovation has almost no bounds. From nails to paint to countertops to appliances, materials make up the bulk of home renovation costs. The finish and quality of materials can also influence the cost to renovate any space.

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Remodel House Into An Entryway

A grand entrance is a high-end upgrade for any home, averaging just over $9,000. While you may feel sticker shock with the price tag, consider the labor associated. This renovation calls for moving electrical elements, updating the trim, installing a wider casing and a painting.

High-end grand entry door average cost: $10,044

Additional home value: $6,116

Return on investment: 61%

Mid-Range entry door average cost: $2,082

Additional home value: $1,353

Return on investment: 65%

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The Front Yard

Fact: First impressions matter, even when it comes to houses. Projects that spruce up your exterior can really run the gamut in pricing. Common upgrades include landscaping, lawn care, replacing the garage door or front door, and cutting back shrubs—and those enhancements are worth it. Roughly 94 percent of Realtors encourage sellers to improve their curb people before listing their home. NAR says projects such as landscape maintenance, which includes pruning shrubs and planting 60 perennials or annuals, costs $3,000 — and homeowners recover every penny when they sell.

Remodeling magazine’s report says manufactured stone veneer returns 95.5 percent the job cost, while a garage door replacement pays back 94.5 percent of the cost. "Beautifying the outdoor space is going to do more for your home than almost any other project," Beaudry says. "This is what people look at when buying a home. They want attractive outdoor space. They might want to personalize their kitchen or bath, but nice-looking outdoor living space is something everyone can agree on."

Curb appeal pays off: You’ll make back 94.5% of the cost of a new garage door.

Garden/decking

Research shows that attractive landscaping can add up to 11% to a property’s perceived value, so it’s worthwhile considering an outdoor overhaul if you’re gearing up to sell your property.

Depending on how much work you need done, installing a deck and landscaping the garden can cost between $2,000 and $10,000. If you’re planning a budget outdoor renovation, you can save money by weeding, planting and mulching yourself.

  • Average cost: $2,000 to $10,000+
  • Timeline: 1-2 weeks
  • Biggest cost: Wood/decking materials
  • DIY options: Weeding, planting, garden beds

My own home renovation example + what I spent

The money I spent on my little fixer upper can be split into two categories. The first is how much I spent from the 203k renovation budget during the initial renovation phase (from August to November 2013). The second remodeling budget is how much I spent in the five years I spent living in the home before I sold it in September 2018.

When I first walked through the home during the inspection, there were a lot of things that, as a novice, I didn’t think needed fixing.

But when you live in a home every day, especially when you start working there…it’s really easy to get into the fixer-upper mindset and keep making mental lists of everything that isn’t just-so.

I’ve included all the expenses because (as with any investment) the money you spend impacts your investment’s bottom line.

If you’re wondering how much does an exterior home remodel cost or an interior, this might help you to judge even though your situation will be different.

Bathroom

A bathroom can range from $7,000 for a simple powder room all the way up to $30,000 or even more for a luxe, spa-like master bathroom with a rain/steam shower, oversized soaking tub, high end marble and radiant floors.

Cash

Paying with cash or savings is the best way to pay

Paying with cash or savings is the best way to pay for renovations because it doesn’t cost you any interest. Still, very few people have $20,000+ lying around for upgrades. The more you can pay for renovations in cash, however, the better because it will keep you out of debt.

Here are a few things LendingHome recommends keeping in mind if you’re deciding whether or not to use cash.

  • Cash is typically best for smaller projects (think $2,000-$5,000 or less).
  • It’s great for home improvement projects you’re thinking of tackling bit by bit that do not affect your ability to live in the home. For example, if you’re upgrading the trim in the bedroom but then discover a leak in your bathroom, it’s much more important to fix the leak and leave the trim incomplete for a little bit longer.
  • Cash can also be used to fund part of a home improvement project while you finance the rest. It’s also the most popular option among homeowners.

91% of homeowners in a 2017 Houzz study used cash for all or part of their home improvement projects.

Save up for your renovations with CIT Bank, which offers one of the highest interest rates in the business. There are zero fees, and it only takes $100 to open an account.

Tips for Saving on Home Renovation Costs

When creating your remodeling budget, use these tips to further reduce your costs:

  • Complete demolition yourself: If you’re removing cabinets or pulling up tile as part of your renovation, consider doing the work yourself. As long as there is no expertise required, this is a good way to reduce labor costs and save a few dollars.
  • Order fixtures and finishes yourself: Your contractor will probably charge you an hourly fee to do your shopping for you and may even charge a markup. Be clear about your plans so your contractor knows you’re taking on that responsibility yourself.
  • Be your own project manager: If you need to hire additional subcontractors for your project, interview and select them yourself instead of having your general contractor do it.
  • Do your own painting: Having a room painted by a professional can cost $300 or more. Plan to complete any required painting yourself and you can remove that cost from your remodeling budget.
  • Shop used: Instead of purchasing everything brand-new, pick up used or refurbished items when possible. This can greatly reduce your spend on appliances and finishes.

How Much Should You Spend Remodeling A House ?

Decide whether your house is high-end, mid-end, or low-end. Once you make this decision, then you can better answer how much you should spend remodeling a house.

You can make the call based on the value of your house compared to the median home value in your city and neighborhood. If the value of your home is within +/- 25%, it should be considered mid-end. Once you’ve decided what level your house is, remodel based on that level.

There’s a wise saying, “don’t buy the most expensive home on the block.” Instead, buy the cheapest home on the block with the most amount of expansion potential. After all, if the price per square foot to build is cheaper than the current selling price per square foot, you’ve got yourself an easy arbitrage.

For example, in San Francisco, you can build for less than $500/sqft and sell for $1,000/sqft in many neighborhoods for a nice 100% gain.

Homeowners tend to overspend on remodeling because they think, “While we’re at it, why don’t we do this too.” This kind of thinking makes the project cost way more than the original plan. Contractors can influence homeowners to do more as well. “The wall is open, might as well install a Tesla charger while we’re at it,” said my contractor once. No thanks.

In general, you want to remodel based on your neighborhood comps. If you live in a median-priced home for your city, you should go with a medium remodel. If you live in a top 25%-priced home in the city, then you should remodel on the high end. And if you live in a bottom 25%-priced home, you should remodel on the low end.

Our master bedroom gut job
Our master bedroom gut job

Home renovation cost estimator

When estimating home renovation costs, the main factors are the square footage, age, location, property’s condition, which rooms are being remodeled, structural changes, and the quality of materials and appliances.

Home renovation cost estimator
Type Average cost Renovations
Low-end $15,000 – $40,000 Cosmetic work like painting, landscaping, trim, molding, and flooring, stock cabinetry, inexpensive appliances and countertops.
Mid-range $40,000 – $75,000 Low-end options + above-average materials and appliances, full bathroom and kitchen remodel, new light fixtures, exterior siding, hardwood flooring.
High-end $75,000 – $200,000 Mid-range options + high-end materials and appliances, custom cabinetry with built-ins, custom closets, structural and foundation repair, layout changes, HVAC and roof replacement, basement or attic conversion to living space, professional interior design.

Average remodel cost per square foot

The average remodel costs $15 to $60 per square foot, depending on which rooms need renovating. Kitchen and bathroom renovation costs $100 to $250 per square foot based on the size and quality of materials. A complete gut renovation costs $60 to $150 per square foot.

 Remodel cost per square foot   Type Cost per squa

Remodel cost per square foot
Type Cost per square foot
Whole house remodel $15 – $60
Full house gut to studs & remodel $60 – $150
Tear down house and rebuild $104 – $165
Remodel kitchen and bathrooms $100 – $250

Dry rooms such as living rooms and bedrooms typically fall on the lower-end of the range. Costs increase significantly for urban areas with higher costs of living and historic homes more than 100 years old.

Get free estimates from home remodelers near you. View Pros

Whole house renovation cost

The average cost to renovate a whole 1,200 sq. ft. house is $18,000 to $72,000, while remodeling a 2,000 sq. ft. home ranges between $28,000 and $115,000. Prices depend on the extent of the remodel, quality of materials, and if structural changes are made to the layout.

 Whole house renovation cost by size   Square feet

Whole house renovation cost by size
Square feet Typical range Average cost
1,000 $15,000 – $60,000 $20,000
1,200 $18,000 – $72,000 $24,000
1,500 $20,000 – $85,000 $30,000
1,800 $25,000 – $100,000 $45,000
2,000 $28,000 – $115,000 $50,000
2,500 $35,000 – $135,000 $62,000
3,000 $40,000 – $160,000 $75,000
3,500 $45,000 – $180,000 $87,000
4,000 $50,000 – $210,000 $100,000

If the home is beyond repair, the average cost to tear down and rebuild a house is $125,000 to $450,000 or $104 to $165 per square foot.

House refurbishment cost by bedrooms

The average cost to fully renovate a 3-bedroom house is $25,000 to $100,000, and between $40,000 to $180,000 to remodel a 4-bedroom home. These renovation costs range from standard upgrades up to a complete gut and remodel.

 Cost to renovate a house by bedrooms   Type Cost

Cost to renovate a house by bedrooms
Type Cost range
2 bedroom house $15,000 – $75,000
3 bedroom house $20,000 – $100,000
4 bedroom house $40,000 – $180,000

Full house renovation costs by home type

Homeowners typically spend between $20 to $200 per square foot on a full house remodel, depending on the type of property. However, the largest factors are the scope of the renovation, location, and quality of materials used.

Renovation cost calculator by home type
Home type Cost per square foot
Condo $40 – $125
Apartment $25 – $60
Row house $25 – $75
Bungalow $35 – $80
Farmhouse $20 – $100
Townhouse $25 – $150
Victorian $50 – $200
Historical $100 – $400

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4. Stick to the home remodeling plan

As the renovation moves along, you might be tempted to add on another “small” project or incorporate the newest design trend at the last minute. But know that every time you change your mind, there’s a change order, and even minor changes can be costly. Strive to stick to the original agreement, if possible.

Return On Investment For Top Renovations

When embarking on any major remodeling project in your house its important to think about the prospective return on investment.

Some remodels are done right before the sale of the house in order to boost its value, while others are done for personal enjoyment with the goal of adding long terms value to the home.

Here are the National Average ROI figures for the most popular remodeling projects.

Project Type Remodel Cost Average ROI Your Return
Minor kitchen remodel $21,198 81.10% $17,191
Mid-range full kitchen remodel $63,829 59% $37,637
High-end full kitchen remodel $125,721 53.50% $67,212
Mid-range full bathroom remodel $19,134 70.10% $13,422
High-end full bathroom remodel $61,662 56.20% $34,644
Interior Painting $3,185 107.00% $3,408
Floor replacement (hardwood) $18,500 75.00% $13,875
Finishing the attic (with bathroom) $47,240 62.00% $29,289
Finishing the basement (with bathroom) $56,850 73.00% $41,501
Window Replacement (wood) $19,391 69.50% $27,901
Window Replacement (vinyl) $15,995 74.30% $11,884

Keep in mind that the actual return on investment on any remodel will largely depend on local real estate market trends as well as the level of renovation you are doing.

If you are not sure whether a specific remodel is a smart investment, its best to contact a local experienced real estate agent for advice.

How Much Should I Spend on a Home Renovation?

To get an approximate idea of what your remodeling budget should be, consider the value of your home as a whole. You don’t want to spend more than 10 to 15 percent of your home’s value on a single room. If you spend more, the value of the renovation will not proportionally add to the value of your home.

For example, if your home is worth $100,000, the maximum you should spend on a kitchen or bathroom renovation is $15,000. If your house is worth more, the spend on a renovation could be higher.

“Most of the time, it’s really hard for a homeowner to know where to start. I recommend bringing in a design build contractor early on in the process. In their initial consultation they can talk about your needs and priorities and help guide you through a project that is realistic for your budget.”

Danny Niemela | ArDan LLC

Determine Financing Before Finalizing Your Budget

Before setting the budget for your home renovation, you need to determine how you are financing it. If you are paying in cash, taking out a loan or applying for credit, the budget of your renovation will need to fit within the limit of your available funds.

Once you know how much you can afford to spend, set aside 10 to 20 percent of your available funds for unexpected expenses. This is important. Something will go wrong or cost more than originally projected. By setting aside a percentage before beginning, you know you will have the funds available to finish your project no matter what happens.

“I recommend setting aside between 10 to 20 percent for a cushion. If you hire the right contractor to do some exploratory demolition or investigative work early on there should be very little unforeseen work that needs to happen. However, in our experience once a project starts many of our clients pull out the ‘While you are here, can you also do…’ list and if client has the money set aside, we can easily accommodate it in duration of the project.”

Danny Niemela | ArDan LLC

Once you’ve decided how much to spend, use the following steps to create a detailed plan and budget.

Questions to Ask About Home Renovation Costs

The steps involved in a home renovation are complex and confusing for first-time renovators. Talking openly with your general contractor can help clear up questions and avoid miscommunication on home renovation costs.

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  • How much does a house cost compared to a whole-house renovation?
  • Is it cheaper to renovate or gut and remodel?
  • How long will my project take to complete?
  • Will you obtain all building permits?
  • Do you hire and pay for subcontractors?
  • Will they come to my house to inspect the job and provide an estimate?
  • Are your crews licensed and insured?
  • Have you completed many home renovations like this before?
  • Do you typically have cost overruns?
  • Are we on the same page about this idea?
  • Can we review the estimate line by line?
  • My house was built in the 80s. What kind of problems do you expect we might find?
  • What if I change my mind about a design partway through the project? What will that cost me?
  • What kind of payment structure do you require?
  • How do you handle challenges or material delays?
  • What kind of warranties do you provide?

When Remodeling A House, Always Think In Percentages

The key is to always think in terms of spending a set remodeling amount based on the percentage value of your property. If you overspend on remodeling, you will never recoup the cost, let alone make a return. After a couple decades, you will probably want to remodel again.

Therefore, here’s a general guideline for how much to spend on remodeling based on the value of your house.

How Much To Spend On Remodel Based On The Value Of Your House

The greater you spend on remodeling as a percentage of your house’s value, the greater your risk of not getting back your remodeling dollars. Therefore, in general, the lower the percentage of the value of you can spend on remodeling, the better.

The amount of money you spend on your house for remodeling also depends on the purchase price of your house and the comparable properties in the neighborhood.

Fixer-Upper: Spend up to 50% of the value of your house on remodeling. If you bought your fixer for $500,000, you can spend up to $250,000 remodeling if comparable properties are selling for at least $750,000.

Normal Condition: If your home is in fine useable condition with 20-40-year-old bathrooms, aim to spend no more than 20% of the value of your house. In other words, if your house is worth $1,000,000, I would spend more than $200,000 remodeling your house, if comparable properties are selling for at least $1,200,000.

Great Condition: If your home is recently remodeled, but you’re trying to make it nicer, I would spend more than 5% of the value of your house on further remodeling. If your house is worth $2 million, spending up to $100,000 on building a deck, installing a hot tub, getting Toto Washlets, changing fixtures and appliances, and painting the house is fine. But you aren’t getting a lot of bang for your buck if your house has been recently remodeled.

The Bathroom

Thinking of replacing the tub with a traditional shower? Hold up. You don’t want to take a bath on your investment. Large bathroom projects like countertops and cabinets, and labor-intensive upgrades like tilework, are more popular with high-end projects, according to NKBA’s report. Master bath projects costing over $4,500 had 90 percent more countertop upgrades and 70 percent more tile than projects costing less.

In some cases, it’s less expensive to add a new bath than to remodel your current one. Remodeling magazine’s report says a midrange bathroom addition costs $49,598, with a 54 percent ROI. An upscale remodel costs $67,106 — but you’ll get a slightly better return for going all out: 56.6 percent is the average. If you’re looking to flip your house, stick to midrange materials. That kind of remodel typically costs $21,377, but it nets a higher return at 64 percent.

Pay attention to the particular features people go wide-eyed over: "Gone are the days of small showers and tubs with jet streams. Now, it’s luxury and streamlined designs, like a wider shower, additional body sprayers, customized tile on the floor with inlays for specialized details," H-Millard says. "You get the spa-like experience in your home."

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