Last year my husband and I set out to purchase our first home which could either be move in ready or require some home renovations. Our budget was set at $240k and our goal was to find a 3bed/2bath home. Given that prices had come down quite a bit in our area this was completely doable.
We had built a healthy nest egg and had been preparing for this purchase for a while. We originally planned on purchasing a home back in 2009 but given the housing bust, economic turmoil and both of us losing our jobs we put that on hold. Fast forward three years later and in the summer of 2012 we became first time homeowners.
Searching for the right home
We started house hunting casually online and by visiting open houses. My sister had also been looking for a home in the area but in the $300k range so I was able to see many houses with her in a higher bracket. I learned quite a bit but still you never really learn until you are in the trenches.
We found a nice fixer upper 2bed/2bath ranch style home with a finished basement that checked off most of our boxes and the price was right at $209K ($31k under budget, wow, nice). After viewing it in person we really liked it so we went back for a second viewing with some trusted advisors. Everyone agreed that it had good bones so we made an offer the next day and got the house at asking price.
Setting the home renovation budget
Since we came in under our home buying budget we decided that we would use the extra $31k towards our home renovations. The house is fairly small with 900 sqft. on the main level and 900 sqft. in the basement. We had agreed that we needed all new floors, a brand new kitchen, finish a small laundry room and add a wall in the basement to create a mancave for my husband. So, $31k should cover that right? Well, this is where we really learned some hard lessons.
My husband and I know nothing about home renovations so we knew we had to hire professionals to do the work for us. We hired a contractor to do all of the demolition and rebuilding of sheetrock. We also brought in a friend to install the floors, an electrician, and an HVAC pro to perform small projects that were needed in those areas. All of these workers were charging us reduced rates for their labor since they were either family, friends, or someone referred to us by family. It was a plus to have trusted professionals at our side.
Surprises along the way
We had some surprises which is to be expected when you start breaking down walls. But our biggest surprise was the cost of labor. Our contractors were very good and helped us understand many things about our new home but we really underestimated this part of the budget. Though they were charging us reduced rates the total cost of labor was $20k. Another surprise was the unexpected expense of renovating our main bathroom. We had not planned on renovating it and definitely not after we saw how quickly our funds were dwindling. We were just going to give it a little face lift but after installing brand new floors and a new kitchen the bathroom just didn’t look right and it needed more than a simple face lift.
We knew it was out of the realm of our budget, however, the other option was to wait to do it a couple years later which would have us dealing with construction while we were living in the house surrounded by our beautiful new hardwood floors and lovely new kitchen. The thought of dust and debris everywhere was a complete nightmare to me plus my husband suffers from asthma and this would not be good for him at all.
Given these facts, we decided to pull the trigger on that project and good thing we did. We found out that the toilet had been leaking through a pipe that had cracked so if we had not renovated the bathroom we would have never known this. We also found that the bathroom was actually larger than we thought. The previous owner had blocked off a 5×4 inch area to install a tub so this gave us an additional 20 sq ft to install a big shower that we now love.
Another surprise was the cost of small fixtures around the house such as door knobs, faucets, sinks, ceiling lamps, new door locks, and electrical plugs. When you gut rooms all these small items must be replaced and the costs add up quickly. We really did not know how expensive these items would be.
What we learned
We learned that we were naïve about how quickly things add up. You really need to make a detailed list of all the items big and small that you will need to replace to figure out the true cost of home renovations. You can’t just say, I have $30k and here is what I want. Looking back, we should have asked our trusted advisors specific questions on prices since they had performed home renovations many times over. We should have done more research on the subject and we should have included the bathroom in our initial plans. As the main project manager of this home renovation it was tough, frustrating and a huge learning curve for me but it was a great learning experience. I learned so much about the whole process and whenever I go to a house now I can quickly evaluate the cost of items and determine the value the house offers. This experience has given me a great eye for detail when it comes to homes.
The actual cost
In the end, we are happy with the final results and relieved that all of the major home renovations are completed. Personally, I feel more confident about evaluating the true costs of home renovations. However, the huge learning curve caused our budget to be completely blown. Our final cost added up to $63K.
The breakdown goes like this:
Building Materials: $17k
New Custom Kitchen: $12k
New Bathroom: $5k
Kitchen and Laundry Room Appliances: $6k
Home Décor: $3k
What are your lessons learned in home renovation projects? What advice do you have for first time home renovators?