Home renovations in Canada are big business – in 2008 Canadians spent $20 billion on home renos and the estimate for 2013 is $38 billion. Whether you are planning on selling in the future or not, it’s important to renovate smartly to avoid a renovation nightmare.
Related: Lessons from a First-Time Landlord
When we renovated our condo before renting it out, we used some contractors for some of the work and learnt some important lessons on what to do (and not to do) when planning a renovation.
Do Some Work Yourself
If I could go back and do our first renovation over again, there are some aspects of the work I wish I would have done myself.
For most renovation projects the contractor gets paid for their time. Any way you can cut down that time, while still taking advantage of their expertise, is the easiest way to save money.
We had new doors installed in the condo and I wish I would have taken the old doors out and prepped the area for the new doors. This would have saved us a few hours of their time and about $300.
Leave the complicated tasks like plumbing and electrical to a professional but basic prep work like removing any old appliances, walls, carpeting, painting walls, etc is simple and can be done beforehand to save costs.
I wish we would have shopped for supplies on our own time before doing renos on our condo. Some of the materials are best left to a contractor because they can get a discount at home stores. But it’s best to always ask your contractor what materials they need that they don’t get a discount on.
Rather than pay them to wait in line at Home Depot, you can pick up some of those materials yourself and save some cash.
Make a Realistic Budget
A good starting point on a renovation budget would be to get multiple quotes on a project, and then add 10-20% for any overruns. There is always something unexpected that comes up during a renovation, and a smart budget would account for that to avoid any nasty surprises.
When we renovated our condo with the plan of turning it into a rental unit, we knew our target audience – young working couples who need access to rapid transit to be close to downtown. We knew it wouldn’t make sense to add granite countertops, a wine cooler or built-in speakers because our target market wouldn’t pay an extra $500 per month for these things.
Whether you’re selling or not, there’s no sense in spending thousands of dollars on a renovation unless you know you can recover your costs out of it. Kitchens and bathrooms are obvious top choices but others are family rooms and ensuite bathrooms. It’s great you want to install a home theatre system in your basement, but make sure you’d be able to recover your costs if you were to sell before spending thousands on a reno.
Buy Items at a Discount
Retail stores are a good starting point, but are there any cheaper ways of getting the items? Buying from American retailers and shipping to a US address, buying discontinued items or items that are overstocked are all possibilities.
In some cases if you live in a new neighborhood you may want to contact the local builder directly to see if they have any excess items they will sell at a discount. I have personally seen our local builder throw out perfectly good wood simply because it wasn’t needed for a new build. The key is to keep item costs as low as possible.
Avoid Using a Line of Credit
In 2012, home renovations accounted for the biggest single use of a line of credit for Canadians. Paying 6% interest on a renovation decreases the chances of it becoming profitable. Save cash to pay for your renovation using the budget you have prepared for it and if you don’t have cash – wait until you do before you start the reno.
Conclusion: renovations costs thousands so it’s important to use cash, buy items as cheaply as possible, make a realistic budget (with a 20% cushion for overruns) and do some (not all) of the work yourself. By minimizing costs you’ll increase the odds of maximizing your return