INSIDE: How much does an exterior home remodel cost? It depends on many factors, but here’s what I spent on my 1940’s home renovation in Atlanta.
How much does a home renovation cost? More than you’ll plan to spend. Kidding. Sort of. The answer, of course, depends on how much work is done to the home, prices in your area, and how much of the work you do yourself (DIY) vs. hiring a contractor.
I can’t give you a definitive answer on how much a home renovation costs, but I wanted to share my own experience: how much I paid when I renovated my first home in 2013, what all that money actually got me, and what many first-time buyers may not know when it comes to renovating a fixer upper.
A remodeling project looks fun on TV. And sure, it is really fun, but it’s also incredibly emotionally and financially stressful.
How much does a home renovation project cost?
Again, it depends on how much work you’re doing, the square footage of the rooms and whether you’re shelling out for the remodeling all at once or doing improvement projects little by little. HomeAdvisor.com’s study on renovation costs puts the average cost of a multi-room renovation between $18,000 and $76,000. My own home renovation was in this range, but projects can run as low as $3,700 or up to $150k for high-end work in pricey homes.
A kitchen renovation alone averages $25,000, according to the study. A bathroom remodel averages $10,000, and a basement remodel runs about $20,000.
What is the best way to pay for a home remodel?
Wondering how much does an exterior home remodel cost? And how should you pay for it?
Given that home renovations are such an expensive endeavor, many people who do home improvements choose to pay for them on credit or by taking out loans. Below are the most common ways to pay house renovation costs.
Paying with cash or savings is the best way to pay for renovations because it doesn’t cost you any interest. Still, very few people have $20,000+ lying around for upgrades. The more you can pay for renovations in cash, however, the better because it will keep you out of debt.
Here are a few things LendingHome recommends keeping in mind if you’re deciding whether or not to use cash.
- Cash is typically best for smaller projects (think $2,000-$5,000 or less).
- It’s great for home improvement projects you’re thinking of tackling bit by bit that do not affect your ability to live in the home. For example, if you’re upgrading the trim in the bedroom but then discover a leak in your bathroom, it’s much more important to fix the leak and leave the trim incomplete for a little bit longer.
- Cash can also be used to fund part of a home improvement project while you finance the rest. It’s also the most popular option among homeowners.
91% of homeowners in a 2017 Houzz study used cash for all or part of their home improvement projects.
Save up for your renovations with CIT Bank, which offers one of the highest interest rates in the business. There are zero fees, and it only takes $100 to open an account.
Credit cards can work for home renovations, but I wouldn’t recommend them. High interest rates, plus low credit limits, make this a barely viable option. A credit card wouldn’t be able to fully pay for a $60,000 home renovation, for example.
Here’s what else to consider when it comes to using a credit card for a house renovation:
- Only use a card to finance a home renovation if you feel confident that you can repay the amount in a short period of time.
- If you’re just looking to do a few small tweaks – flooring in the bathroom or new appliances – a credit card can cover it.
- After you’ve paid, try looking for balance transfer offers on other cards, so you can at least get a 0% APR on your home project after the fact.
If no balance transfer offers are available, make a plan to pay off the debt.
Home Equity Loan or HELOC
These are two of the most popular options when it comes to paying for home renovations because home equity lines of credit (HELOCs) and home equity loans come with much lower interest rates than credit cards or personal loans. These options are only available to people who have been in their home a significant amount of time and have more than 20% equity in the home.
Here’s a quick overview of the difference between the two.
A home equity loan is a second mortgage (loan) against your home. The money comes in one lump sum, and you pay it back every month.
A home equity line of credit is an amount you can borrow against the equity in your home. It isn’t paid as a lump sum. Instead, you can borrow amounts over a specified period of time (usually 10 years) and then pay it back over another term (the next 10-20 years after you take out the money, for example).
Pro Tip: You can tap into your home’s equity better and faster with FigureHomeEquity. It just takes five minutes to apply and five days to fund.
If a home equity loan is unavailable, a personal loan (which could also be called a home improvement loan) can pay your remodeling costs. There are some major advantages to using a personal loan for home renovations, including:
- A personal loan works for recent home buyers who have a home they’d like to improve but who don’t want to wait five to 10 years to do it.
- Your home isn’t on the line in the event you default.
- It’s faster than a HELOC or home equity loan, with fewer fees.
But the biggest disadvantage to using a personal loan is the high interest rate. You’ll always get a lower interest rate on a home equity loan or HELOC.
Credible (pictured above) is a search engine for personal loans. Quickly scour for the best rates without affecting your credit score. Click here to try it out.
It’s nice if your parents want to pitch in to help financially. If given the choice between using the money for a down payment on a home or for renovations, choose the latter. When you use cash to help finance a home purchase, the bank will want to see documentation for the money, and that can be a hassle.
I also like to say that using gifts for home renovations instead of the actual purchase helps buyers get into a home they can actually afford.
What about a home renovation loan?
A home renovation loan, also known as an FHA 203k rehab loan, lets the borrower lump both the home purchase and home renovation money into the same loan. When I renovated my first home, I did it with a 203k renovation loan. You can read the full post about my experience here. (A similar program is the Homestyle Renovation loan from Fannie Mae.)
I wouldn’t have been able to renovate or buy a fixer upper without the 203k option. It was nice to pay the money each month with my mortgage payment, and it was nice to get the bulk of the renovations out of the way up front before I moved into the house.
But honestly, I have mixed feelings about the 203k loan. I’ll just say: My experience wasn’t awful, but it wasn’t amazing.
My own home renovation example + what I spent
The money I spent on my little fixer upper can be split into two categories. The first is how much I spent from the 203k renovation budget during the initial renovation phase (from August to November 2013). The second remodeling budget is how much I spent in the five years I spent living in the home before I sold it in September 2018.
When I first walked through the home during the inspection, there were a lot of things that, as a novice, I didn’t think needed fixing.
But when you live in a home every day, especially when you start working there…it’s really easy to get into the fixer-upper mindset and keep making mental lists of everything that isn’t just-so.
I’ve included all the expenses because (as with any investment) the money you spend impacts your investment’s bottom line.
If you’re wondering how much does an exterior home remodel cost or an interior, this might help you to judge even though your situation will be different.
Home Renovation Costs – Let’s Go Room by Room
Interior – Before
Interior – After
- What I Spent: About $25,000
- What I Got: All new plumbing, electrical and HVAC systems for the house. New drywall in places and refinishing of the home’s original hardwood floors. New light fixtures for the home (and a few I got for free through a sponsored partnership with Supply.com).
- Money Spent Since 2013: $1,800 on a brand-new set of stairs up to the attic.
Shop the room: Progress Lighting Chandelier (c/o Supply.com), living room light fixture (similar here). Paint: Benjamin Moore – November Rain. All furniture is either a hand-me-down or a secondhand thrift store find.
How much does an exterior home remodel cost? Let’s get into that now.
Psst. I sold the home (read about that here) and removed the exterior photo for privacy for the current homeowner.
- What I Spent: $7,650
- What I Got: New landscaping to help with drainage, new front steps and a new retaining wall.
- Money Spent Since 2013: $1,200 on additional drainage work to front landscaping and to landscape the front with flowers for curb appeal to potential buyers when I attempted to sell the home with Redfin in 2015; a cheap front door makeover that only cost $15.
Kitchen – Before
Kitchen remodel – After
- What I Spent: $14,061
- What I Got: New everything: appliances, sink, countertops, kitchen cabinets and flooring.
- Money Spent Since 2013: $584.63 on one side of the backsplash in the kitchen (after I decided to upgrade from the Smart Tiles), window treatments….and changing the paint color…. twice.
Shop the room: Pfister faucet, farm sink, cabinet hardware (pulls for drawers and cabinets) in “Brushed Nickel” finish. Paint colors: Cabinets are Benjamin Moore- Ashley Gray #HC-87, walls are Sherwin Williams – Sky High.
P.S. Like the “custom” roman shades in the picture above? I made them myself on the cheap from an old shower curtain! Click here to read my full Ikea roller shade hack tutorial.
Downstairs bathroom – Before
Downstairs bathroom remodel – After
- What I Spent: About $1,200
- What I Got: New shower tile and fixtures, new vanity and light fixture.
- Money Spent Since 2013: $1,400 for new flooring, new drywall and linen closet, new hardware on the walls and upgrading the faucet fixture.
Shop the room: Floor tiles (similar here), bathroom vanity (similar here – I painted it a lighter gray color for a pop!), curved shower curtain rod (really does make such a difference!), two towel bars and other bath hardware, shower curtain (similar here). Paint: Benjamin Moore – Chelsea Gray.
Office & sun porch – Before
Office & sun porch renovation – After
- Money Spent Since 2013: Both rooms just got the paint treatment. It cost me $250 to give the sun porch a makeover, and about $100 and give-or-take two years of my life to finally get all of the office trim painted. Ha. The furniture in here are all hand-me-downs.
Attic bathroom – Before
Attic bathroom renovation – After
- What I Spent: $2,500
- What I Got: New laminate flooring, paint and light fixtures upstairs. Plus I moved the attic access doors to make room for some shelving in the upstairs bathroom.
- Money Spent Since 2013: $1,420.26 to convert the former master closet back into a fourth bedroom and to freshen up the bathroom (new mirror, light fixture, faucet, hardware and moving the attic access doors) when I was trying to sell the home. Otherwise, I haven’t done much because I’m trying not to overbuild for the area.
Grand total for all renovations: The total for the 203k renovation was about $58,000 (which I wrote about in this post) + the $6,754.26 I’ve spent since 2013 makes me all in at $64,754.26.
So around $65,000 to renovate a home top to bottom. Yikes.
Total Spent vs. Total Earned
Now we answered, how much does an exterior home remodel cost? And how much for interior renovation (well for mine anyway).
But has it been a good investment? I definitely think so. Let’s check out the numbers below.
Since I bought the home I’ve earned:
- $40,000 in a state income tax credit (over three years) for rehabbing a historic property.
- $3,000 each year of loan forgiveness for living in the home as my primary residence. This is part of the down payment assistance program I leveraged to get into the home for just $1,800.
- $16,410.77 from renting out bedrooms the last three years.
- I sold the home in September 2018 for a profit of $130k (read about that right here).
That’s a total of $189,410.77 earned on the home, or $37,882.15 a year for my first five years of homeownership.
When I think about how much I could’ve spent renting this entire time instead of having my money make money by increasing the home’s value, I know my real estate return was a good investment, despite all of the trouble it has been.
Thinking of renovating and wondering how much does an exterior home remodel cost? You’ll need cash and a savings account to do it. Even if you take out a loan for the majority of the remodeling cost, it’s still important to have a bit extra on the side for when the unexpected arises. Consider putting money in the Savings Builder program at CIT Bank. The high-yield savings account (P.S. this is where I keep my savings) and money-market account offer higher-than-average interest rates (7x the national average) and a no-fee structure. All it takes is $100 to open, and you get rewarded for automatically saving each month.