Calculating the Cost of Your Renovation photo

Calculating the Cost of Your Renovation

You're dreaming of renovating your home.

The bathroom, the ensuite, a new laundry or kitchen. Maybe extending and opening up to get more use out of your back yard.

There's hundreds of reasons to renovate! And why not!? Now is the perfect time with the HomeBuilder Grant.

Working out how to calculate the starting point for your home renovation can be a daunting task.

Here's a few ideas where to start.

When it comes to renovating your home the biggest question, we all ask is, how exactly do we calculate how much your home renovation will cost? This question can be remarkably similar to “how long is a piece of string?” The big question should be, “Where does the renovation start and end?”

 

Having a clear idea of how much your home renovation can cost will have a drastic impact on the scope and possibilities available to you during the renovation process.

 

While there are plenty of areas in which you should focus on spending and saving on, it’s important to consider all the different elements that will affect your budget and the end capital value that the bank looks at.

 

Before you call the bank, here are some key tips to keep in mind that will help you calculate your budget. What the Builders and Renovation Magazines advise and what the Renovation Builder prefers.

 

 

 

Prepare a Scope of Works  

Essentially, this means writing a to-do list of everything that needs to be done in order to complete your renovation.

Do not ignore anything, even if you think it's a low-cost item.

If you need help, hire a renovation builder for advice.

Do not expect them to work for free.

Pay the designated fee and engage a builder to help you put a package together for your bank.

 

Now, be realistic with your scope. Remember, renovations cost more per square metre than new homes. So, there is no point dreaming about adding the Taj Mahal onto the back of your home unless you truly believe you can source the funding.  

Rule No 1, do not over-capitalise.  Is it really necessary to change the roof pitch because you don’t like it anymore?  Everyone expects a roof on a house they want to purchase, and very few people would pay you extra because you changed the roof pitch from 15 degrees to 22.5 degrees.

 

At Kareela Constructions, we have been asked to design some realistic and some totally unrealistic homes.  Yes, a Grand Ballroom for a 3-bedroom fibro house has been requested but it didn’t get past the reality test.

Another client was surprised, when told a massive kitchen with marble benchtops would cost a small fortune and was advised that it would overcapitalise the property.

 

So, please be realistic.

 

Your local Tamworth builder, Kareela Constructions can assist you with designs and costings. We have a number of experienced Building Designers in our team of consultants.

 

If your budget is modest, so be it. We can work around that by designing your renovations to be built in affordable and flowing stages.

 

Add on Moving Out and Rental Costs

 

You might think you can live at home during major renovations and save money.  This is not always the case.

Things to take into consideration here are

1.  Dust,

2.  No working kitchen,

3.  Bathrooms pulled to pieces,

4. No back walls on your house,

5.  Windows and doors out,

6.  Potentially the roof off....

The possible disruptions are many, so factor in time you may need to move out – and because renovation times can blow out, allow a few weeks longer than you think you'll need to move out for.

 

We have seen many  people regret that they have chosen to stay in the home during the  renovation. See the picture attached of the makeshift kitchen and port-a-loo at one of the renovations we have done. 

 

Seriously consider moving out during the large renovation.

 

Don’t consider paying rent is dead money, because we can renovate faster by working in multiple areas at once. This allows us to cut time and costs, thereby reducing the contract price.

 

Get Tradie Quotes

 

Once you have your scope of works you can break it down and determine which trades are required to do which bits. If you're sourcing your own materials for any part of the job, make sure you mention that to the Tradesman doing the quote.

Your tradies will probably also add items and requirements to the scope that you hadn't considered.

 

Sounds great, doesn't it? That's if you want to be an owner builder. You will be responsible for the co-ordination of materials and trades. Not to mention a huge learning curve of building regulations.

By the way, banks love owner builders.

Actually to be honest with you, No, they don’t. Owner builders are deemed to be risky. They want a contract, a HIA or MBA contract, with a good builder before they lend. But if you have saved the cash and can do it without the bank, go for it!

 

If you have already engaged Kareela Constructions in a Preliminary Agreement, by now, we have already designed your renovation and given you an accurate estimate, subject to structural design. You have already met with the bank long before you would have completed the previous paragraph on your own.

 

Lets Talk Variations

This means costs for things that sometimes aren't included, such as skip bins, unforeseen structural surprises, and labour costs that may suddenly be required.

 

Variations also include you upgrading or increasing things like lights, tiles, toilets, vanities, or kitchens. Add these onto your costings, even if you do not think you'll be requesting them.

 

So, always, add a 10-15 per cent buffer on top of whatever your renovation cost comes to as a contingency plan. If you don’t use this contingency, great, put it on, or leave it in your mortgage.

 

More Renovation Considerations

 

Remember renovation building is more expensive per square metre than building a new home for several reasons.

  1. The Trades don’t always have a full day’s work on a renovation site, like they would on a large home site.
  2. The Trades sometimes have to come and go, instead of moving to another part of the house to work while waiting for another Trade to finish ie lost time traveling, setting up for a short while and packing up again.
  3. Some Trades spend almost as long on a renovation site as they would on a new build, due to smaller fiddly work or fixing old work to make it look new.
  4. Regularly Trades have to work out how to resolve issues with old work to make sure that it complies with current building codes, or try to  make that bent wall look straight.

Throwing your arms in the air in confusion you say “Okay, I am now thinking of selling and buying another home”. Before you scrap your renovation plans, sit and think about the selling and purchasing costs. You could quite easily kiss goodbye to $50k in real estate, legal, mortgage and stamp duty fees.

Now wouldn’t that money be better spent on improving your house, rather than others taking it?

 

OK, now take a deep breath and keep moving forward.

 

Add all your Costings Together

 

…and try not to have a heart attack. Can you still afford to renovate? Is there anywhere you can cut back or stage for a bit later?

 

Hey! On the bright side. If your renovations are over $150k, the Federal Government will chip in and give you $25k to contract your builder.  You have until the end of December 2020 to sign a contract though.

 

After all the work and energy you have put into this dream, The magazines say, now's  the time to talk to your lender about your savings, and how your mortgage may be able to help finance the cost or make up the shortfall. If you follow that plan, you are back at square one. You may as well have used the old rule of thumb – come up with a figure and then double it, to be reasonably close.

 

In reality, if you want to go to the bank with a professional design and costings how much the bank will need to lend you, then contact Kareela Constructions and we will make your renovation happen.