It sounds like the dream.
DIY home improvement, building and renovation activities have soared in the past few years with before and after shots of newly renovated dwellings all over social media. You purchase a run down home then put some money into it with new floors, a much needed paint job and perhaps the knocking down of a wall or two, and voila, you have your dream home at the quarter of the price. Plus it was fun right?!
Conversely, there’s the horror story. You secure a loan from the bank for your home reno and half way through knocking down your bedroom wall, you run out of money. And the worst part is that the bank’s not willing to lend you any more. So now you’re left broke and sleeping in an unfinished bedroom. Stressful!
Renovating can be great for some and the ultimate demise of others. It all comes down to the question of whether it is cheaper to build or renovate? Some people are comfortable with the risk of spending money on a renovation while others prefer to bypass the up-do and get a brand new home with a house and land package. But before you create the Pinterest inspo board and new Instagram account for your building and renovation journey, it’s important to know whether you’re really cut out for the task. So we’ve put together some key questions you should be able to answer before bringing out the tool belt.
Know if you should tell your lender
If all you’re looking to do is a simple paint job, you might not need to let your lender know. However, in almost every other case, the answer to this question should be “yes”. You’ll want to avoid asking the bank for more money for a half completed project they know nothing about.
Know your renovation budget
According to a Westpac Renovation Report from 2019, the average Australian homeowner spends $47,984 on their renovation. Whether you’re building or renovating to sell and make profit, or to improve your day to day living in your own home, this figure will differ depending on your reason. Understanding how much you’re willing to spend on your renovation, whether it is cheaper to build or renovate, will dictate how you fund the project and your priority list of reno jobs within the home.
Know where the funds are coming from
There are a myriad of ways to fund a reno including personal savings, personal loans, increasing your current home loan or taking out a construction loan. This all comes down to your budget and the scope of the project.
Have a contingency plan
What’s going to happen if you run out of funds? If you’re halfway through a reno and run out of money the bank may not want to lend you more. This means you might have to go to family and friends for a personal loan to get it over the line. Ultimately, you don’t want to have a half finished house that you’ll have to sell as this runs the risk of selling at a lower price than you may have purchased it for.
What will you insure in the reno?
A DIY reno will not be covered for the same things as a paid construction build, so you need to make sure you’re across what your insurance covers for your current situation.
If you’re set on doing your own home renovation, there’s plenty of online resources offering tips to get the most bang for your buck, including:
Find sustainable ways to save on your build or renovate budget
Reuse what you have
According to Belinda from The Happy Home, identifying what can be reused is not only a more sustainable option, it’s generally easier on the budget as well. She notes that there must have been something about the home you bought that drew you to it in the first place, use this feature for design emphasis or as a starting point.
Be patient with time and money
Slow and steady wins the race
If you’re doing your building and renovation yourself, trying to do everything as quickly as possible can cause you to burn out and delay your plans costing you time and money. In this case, It helps to have a plan of tasks to do and when. At some stages it might be a good idea to do two tasks during the same period, other tasks might require full dedication to it for another certain period. Work out if it is cheaper to build or renovate and how much time you’re willing to spend on your project while still being able to live your life. Your mind (and body) will thank you for it!
Keep things proportionate
The amount you spend on a project should reflect how much you use it
This comes as another great tip from Belinda from The Happy Home. She states that the biggest bill for the reno was reflected in the biggest change to the house, and kept that rule throughout. Pick what is most important to your renovation to get the look you’re after and then work backwards from there. A lot of minor details can make a big difference in creating the look you’re going for and they don’t have to come at the biggest expense.
Budget for the hidden costs
Don’t take quotes as the final cost price for a job
Elsie gives the important tip on her blog, A Beautiful Mess, to never take quotes as the final price. Her experience saw 90% of quotes result in hundreds or thousands of dollars added to the original price. When budgeting for your build and looking for quotes, keep this tip in mind to avoid going over budget.
A renovation requires preparation and determination and it’s not for everybody. A good understanding of the funds required and where you’ll source these funds from will pay dividends in the long run.