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How to Plan a Budget for Property Renovation

In budgeting for your first Investment Property Renovation, you have to be sure that you have acquired the right one. For budgeting, what type of renovation is needed, and how much? This will be the first thing that will decide on the return of your investment. After that, you must ensure that the risks are minimized and the maximum return on investment is achieved. There is an array of renovations or improvements that a property may require. That is why it is important to figure out which renovations are genuine and which are nothing but a waste of money.

Understanding what level of upgrade is required for an Investment Property Renovation refers to gaining an in-depth knowledge of the property. Along with what is essential from a buyer’s point of view.

What Budgeting Steps Are a Must to Follow?

Here’s a comprehensive budgeting guide for investment property renovation:

1) Know what you want

Before commencing any renovation project, define what goals you want to achieve. What is your aim? 

  • Do you want to increase your rental income?
  • Are you aiming to enhance your property value?
  • Do you want to give your property a modernized look?

Doing this will help you plan your budget efficiently. This is because you will know what you want and structure your budget accordingly. 

2) A Cost Survey

Once you have identified the goals for your renovation budget, it is time to know how much your set goals will cost. For this, you have to get cost estimation services. Hire experts for your Residential Construction Estimating Services to evaluate the complete renovation costs. Doing this will provide you with an extensive outlook about the overall costs.

3) Be as Realistic as possible

You have to set a realistic budget for your property renovation. According to the experts a 10% – 15% of your property value is allocated for renovations. This will keep you on the safe side. It will also ensure that a renovation budget is aligned with your investment strategy. Apart from that, also include a contingency fund to handle any unexpected costs that may occur.

4) Budget Categorization

You must break down your budget into specific items. This will help you in allocating costs more easily, and you will know how much you have in the bank for many specific categories. Start by itemizing the major categories, such as materials, labour, equipment, site preparation, permits, inspections, etc. This will greatly help you in making a budget for an investment property renovation. 

5) Where Possible, DIY

To save money, within your skill level, DIY where possible. Smaller tasks like painting can be done easily, thus saving labour costs. But for cost estimation and physical work for HVAC, electrical, and plumbing, leave that for the experts. 

That is why you hire the Best Estimating Firm for your renovation project. It will not only provide you with an accurate number but will also help you in getting the right personnel for your other tasks as well. 

An overview of average renovation costs

Providing you with the average renovation costs for common renovation projects:

  • A kitchen renovation may cost around $11000 – $50550, depending on the size of the kitchen
  • In case of a bathroom remodel, it may fall in the range of $7000 – $26000. Also, this range can increase if luxurious remodels are done
  • For a Living Room renovation, a range of $4000 – $11500 must be kept in mind. This range will cover flooring, painting, and lighting
  • In investment property renovation, a roof will cost around $5625 – $12750

It is important to note that these figures can vary as each renovation project is different. These numbers are provided for your information in helping you make a realistic budget.

Key Factors Impacting Renovation Costs

The following are some of the most important key factors that can influence the cost of renovation:

1) How much renovation is needed?

The extent of your renovation will have a notable impact on your budget. Minor renovations will cost less, but if major overhauls are required, then they will easily cost thousands.

2) What is the area to be renovated?

In an investment property renovation, if a larger area needs to be renovated, then the costs will be higher. This is simply because a larger area will need more materials, labour, and equipment.

3) What is the location of your property?

Where your property is located will greatly affect how much you are going to spend. In cities like NewYork and Los Angeles, the cost of living is greater as compared to other cities. Renovation costs per square foot can start from $80 and can reach up to $195.

Bottom Line

In the end, budgeting for an Investment Property Renovation can be a tricky process. But with proper knowledge, you can plan each aspect of your budget easily. Read this article to gain useful information on how you can construct a realistic budget that meets all your objectives. This article discusses some essential steps that must be followed in developing a budget. It also mentions what key factors must be considered while budgeting. Lastly, it also points out average renovation costs for your knowledge, so that you have an idea about the costs for your budget planning.

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