Basement Renovation Quote + Return on Investment (ROI)
Renovation Decision Making
I’m sure many of you can relate to this… I’m the type of person that never feels like my house is fully “complete”. I’ve tackled a handful of renovation projects over the last year and a half, and the list never seems to get any smaller. Don’t get me wrong. I love my house and all of the spaces I’ve created within my home. I just have SO much more that I want to accomplish to bring my full vision to life.
Unfortunately, the reality is that if I did EVERYTHING I wanted to do to my home, I would most definitely put more money into it than I would get out. And if you know me, you know that with every business or investment decision I make, I always think through my return on investment. It’s an annoying dance my brain is constantly battling internally - excitement, trendy and joy or fiscally responsible. It’s kind of funny to think about an ROI on a personal home though. From one perspective, I want to make smart financial decisions, and from another perspective, I would love to release the pressure of calculating every decision I’m looking to make, and just enjoy the process + updates I decide to take on.
At the end of the day, I rely on the numbers to lead the way. They hold me accountable to making smart decisions and investments into my home, while pulling me back to the reality that I can’t have it all (yet)!
Home Market Value
So, the first thing I do when I’m thinking about tackling another big home renovation is determine my home’s CURRENT market value. You can leverage your Real Estate Agent to pull a comp analysis report for you, to get an accurate gauge of the value of your home.
A general rule of thumb is to use comparable home values that have sold within the last three months. Your Realtor will look at lot sizes, finishes, size of home, bed/bath count, etc. A lot can shift in the real estate market on a daily basis, so if you had your home evaluated within the last year or two, it’s value has most likely changed since it was last reviewed.
It is also helpful to ask your preferred Real Estate Agent to get an understanding if your renovation updates will add to your market resale value. Not every project will equate to a one for one -> return on investment.
Example: My home’s current value is approximately $725,000. If I update the basement bathroom from a half bath to a full bath + add a 4th bedroom, my home’s market value will increase to approximately $750,000-$765,000, depending on the finishes I select.
Understanding your home’s current value vs. resale value after projects, is a great gut check to make sure you are making smart investments for the long haul.
Renovation Estimate
Now comes the not so fun part…the renovation cost. When opening up walls, and tearing up concrete, the initial budget can be somewhat of a moving target with all of the variables that come into play. With that being said, you know I love transparency, so I wanted to share with you my initial estimates.
Itemized Breakdown:
Given my experience with contractors and their estimates, I assume a 20%-30% increase to this initial quote for unforeseen changes that need to be made. Knowing that and the fact that I didn’t want to invest more than $50k into this basement renovation, I’m looking at creative ways I can cut back on the renovation cost, without impacting the final project outcome.
An example of this is my window quote. I wanted to install two egress windows - 1 in the bedroom and 1 in the family room for additional light - plus update the old, original windows to glass block windows,. This helps seal up the basement from insects, as well as utility costs. By cutting out the living room egress window, and switching to a glass block window, I can save approximately $2,000 from the budget.
Another expense I could cut is painting. I personally do not enjoy painting and know that it will take me quite a long time to complete alone, so the biggest question I ask myself when contemplating cuts is, what is the time value as well as the savings. I would prefer to manage the contractors and cut the $10,000 General Contractor fee than paint the basement because that is where more of my strength lies. To each their own though. No matter what you decide, as long as you are happy with the renovations at the end of the day, that is what is important!
Living Through a Renovation
One last note that I’ll leave you with if you have never lived through a construction project. Don’t ever underestimate contractors being in your home daily, and living in a construction zone for multiple months. Depending on the location of the project within your home, and your personality type, it can take a toll on you. Knowing this project will be confined to my basement, and that I have minimal belongings down there that could get ruined, it truly helps make this more palatable than if it were in a space I use every day. Just my two cents! I’m pretty laid back when it comes to contractors being around me and Penelope, but I know it can be stressful for many people rightfully so.
As always, I wish you nothing but the best! Here’s to tackling our dreams and making smart investment decisions along the way!
Cheers!
Jen
