Welcome to our home renovation for dummies series. In this series, you will learn the fundamentals of renovating your home, pros, and cons of DIY or hiring a builder, what budget to prepare and a lot more.
This is the first installment in the series.
You will learn how to plan your renovation and whether you should choose the DIY route or hire a builder.
Table of Contents
Home Renovation For Dummies [Basic Information on Renovation]
Planning A Renovation
The first thing you want to do is to:
Make a Master Plan and keep your renovation goals in perspective.
Have you ever given guests a guided tour of your house, and spent the whole time apologizing for the “work in progress” bathroom or pokey kitchen?
Being embarrassed by the slow evolution of your dream home is common among renovators but the good news is that those undergoing a bit-by-bit renovation may be better off in the long run.
Thinking of your renovation as a quick, one-off activity is discouraged by design experts such as David Hallett, Victorian state manager of Archicentre, the building advisory service of the Royal Australian Institute of Architects.
Archicentre champions the concept of the renovation ‘Master Plan’, which takes into account the long term effect of a renovation on both financial and social situations.
Poorly designed and managed renovations can result in costly mistakes and poor returns on the sales of the home.
The Master Plan approach is aimed at getting homeowners to think strategically about planning and managing the home over a period of time to make sure every dollar spent on the renovation builds wealth.
The Master Plan approach falls into a number of stages.
1. Settling in
- Get an inspection if you haven’t already.
- Carry out urgent repairs that may cripple your house if left. For example, roof leaks or rotting stumps.
- Cost: $2,000 and up.
2. Design the dream
- Spend time with a professionally qualified architect to discuss your renovation needs and take into account your long term finance and family needs.
- Without this stage, you could end up making regrettable decisions. For example, you could spend thousands on landscaping and in a few years’ time replace it with a family room extension.
- Cost: Variable
3. The Small Renovation
- Most commonly the first renovation takes place in the kitchen or bathroom two areas that are personal and need to reflect the owners’ personal taste.
- Cost: $15 to $20k up
4. The Big Renovation
- Archicentre advises waiting a few years while your houses gain equity before embarking on this step.
- The Big Renovation is the core of your of your project and often includes either an indoor/outdoor extension or an upstairs addition of two extra bedrooms plus a master ensuite.
- Cost: $80-100k up.
5. Finishing Touch
- Occurring at least two years after your big renovation, this stage often focuses on areas that were postponed during the major work. Stage five should always feature an independent or separate aspect of your master plan, yet still, be tailored to your family.
- Don’t think of your renovation as a quick, one-off activity.
- A renovation ‘Master Plan’ sets out the long term financial and social effects of a renovation.
- Start small and build up to a major renovation over time.
Buddy Up With A Builder
Follow these tips and find the right builder for your job:
Choosing your builder is an immensely important decision. If you pick a skilled craftsman who is properly qualified to do the job it will make the renovation experience stress-free and exciting.
But hire an incompetent goof who doesn’t know a spanner from a spaniel and your housing project could be less than enjoyable.
That’s why you need to do your homework.
Keep the following points in mind as you select a builder:
- Create a list of builders you would consider using. Ask your friends and family for recommendations.
- Ask these builders where you can see recent examples of their work and speak to the people who employed them. Was the quality of the work up to scratch? Was it completed on time? Was the builder easy to work with?
- Narrow your list down to three builders. Supply all of them with exactly the same set of requirements and ask each of them for a quote. Read each quote carefully to ensure nothing has been left out and watch for unrealistically low estimations as you may be the victim of a blow out of the budget later down the track. Keep in mind that it’s worth paying more for a reputable builder who takes pride in his work.
- It is absolutely essential to make sure your builder is properly qualified for the type of work you want to be done. In many states, it is illegal for a builder to do residential construction without a proper license. The adjacent table provides a summary of licensing laws in each state and tells you who to contact to check that your builder has the appropriate license.
- Your builder will not be an invisible presence during your renovation he (or very occasionally she) will be an active member of your household, perhaps for months on end. So ask yourself, ‘Can I live with this man in my house?’ If the answer is no, it may be advisable to look for a more compatible partner.
- Many states require a builder to have home warranty insurance to protect you against a botched job or unfinished work. You should ask to see your builder’s insurance for yourself. Read more in our section on home warranty insurance.
- If a builder is pressuring you to sign a contract to avoid ‘price rises’ he is probably just trying to secure the job. And be extra careful of any builder who wants you to get an owner-builder license he may not have the right kind of license for your work or he may be unable to obtain home warranty insurance.
You should ask your builder these important questions:
- Are you properly licensed? (This varies according to state laws.)
- Where can I see examples of your work?
- What other jobs have you got on at the moment? A contractor with a lot of work on their plate may not be able to properly manage your job.
- Who will supervise the work? If your contractor is using a supervisor, make sure the supervisor has sufficient experience in the type of work you want to be done.
- Do you have proper insurance?
- How much money do you need for your deposit?
- When can you start the work and how long will it take?
- What sort of contract will be used? Plain English contracts are available from a number of sources, including the HIA.
- How much will it cost?
- When are progress payments to be made?
- What happens if the work is defective?
- Who cleans the site?
- Make sure you thoroughly check out your builder before you sign anything.
- Ensure all builders quote for the same amount of work.
- Ask your builder our set of 12 questions.
- Know the licensing laws for your state
Also Read: Best Paint Sprayers of 2018
Owner-Builder Renovation: Should You DIY?
Before deciding to renovate your home yourself, make sure you’re aware of the dangers.
There is certainly something to be said for kicking back on the balcony, beer in hand and admiring the view, knowing that you built it yourself.
Apart from the personal satisfaction of completing your own DIY project, you may have saved yourself some bucks and picked up some handy extra trade skills.
But the simple fact is: renovation is nowhere near as easy as it looks on TV. It can cost you energy, frustration and – if you don’t get it right – a lot of money.
If you are considering taking on your own renovation project you need to seriously ask yourself whether you have the skills and time available to complete the necessary work.
Consider the following before you launch into DIY:
Are you prepared to be responsible for the project?
An owner-builder is anyone who manages their own residential building project and looks after the co-ordinating and contracting roles that are normally undertaken by the builder.
That means if you plan on being an owner-builder, there are a number of responsibilities you need to be prepared to take on board. Depending on the project, you will probably need an owner-builder permit.
How much will you save?
The main reason people choose to build themselves is to save money. The reality is that an owner-builder who is not part of the industry usually pays significantly more for materials than a building professional.
Many professionals work on very low margins and use their bulk buying power to purchase materials at much cheaper prices. And of course, they don’t need to buy or hire their tools.
Owner-builders can save money if no mistakes are made, but a lack of technical know-how dramatically increases the opportunity for errors and will eat into any savings.
The more work the owner carries out, the more chance there is for mistakes and the longer the project will usually take to complete.
Do you know the legal liabilities and complexities associated with renovating?
Depending on the value of the work, an owner-builder may be responsible for obtaining planning approval and building approval; organizing workers compensation, public liability, a long service levy, health, and safety levy, and even a training levy.
Further, trades which are licensed and registered with the appropriate authority are obliged to provide their own insurance and compile trade contract documentation.
This becomes your responsibility if you are an owner-builder.
If the renovation exceeds a certain value, appropriate home warranty/indemnity insurance will be required. The owner-builder needs to pay for this if they sell the house to someone else during a particular time period.
Health and safety
Even worse than damage to your home, is the possibility of harming your health. Licensed building professionals understand the health and safety issues associated with working on a building site and know how to ensure they have a safe working environment.
If you have an old house and are at risk of the potential of asbestos and lead paints, you should definitely hire a professional to complete your renovation.
Many older homes were constructed with timber treated with arsenic or used lead. Here too a building professional is the best way to deal with unforeseen risks.
Do you really understand the time and energy involved?
Building work is messy, dangerous and time-consuming. Most people go into a project unaware of the time it takes from beginning to end and how it can cause disruptions to their everyday life.
Remember, it will take you up to three times longer to tackle a task than it would the professional.
Not everything in a renovation project can be DIY
Certain electrical and plumbing tasks must legally be done by a professional because they need the relevant occupational license or certification.
Do it yourself
There are many jobs in a renovation project that you can do yourself. Hiring a contractor to do the bulk of the work and completing the smaller tasks – like cleaning a surface before it’s painted can help you save.
Another option is to get a builder to do the structural work and complete the redecorating yourself. But remember an odd job here and there is very different to major building works.
Always keep this in mind when deciding what you want to do, or more importantly, what you are capable of doing.
- As an owner-builder, you take full responsibility for the project.
- You need to be familiar with legal, insurance and safety issues.
- Getting a loan as an owner-builder is often difficult.
- You may not even save money.
Renovate or Buy?
Give careful consideration to the choice between renovating your home and moving to a new one.
It’s a big decision.
Should you move to a brand new, more suitable property, or stay put and renovate the house you currently live in?
Before making any sort of decision, consider your long term goals, along with the following:
One of the major advantages of renovating an established home is that you can already measure the price performance over time. This determines how much the house has been worth over the last few years and allows you to estimate what future potential growth will be.
On the other hand, if you build a new home in the right area (perhaps a new estate on the outskirts of a capital city) you may be able to catch the beginning of a growth spurt in prices.
While you can measure an existing property’s potential growth, you must also be wary of over-capitalizing. This is where the cost of your renovation outweighs the market value it will add to your home.
Some believe that by spending a great deal on renovating their home will reap thousands more in the re-sale. This is not always the case.
While unlikely to be a problem in housing estates, if you build a new home in an established area you can also have problems with overcapitalization.
For instance, if you build a flashy house in a street full of weatherboard shacks you will most probably fail to recoup your investment.
It is best to research your local real estate market to gain an understanding of what existing homes are selling for and what gains have been made over the past few years.
This can be a major factor in your decision to renovate, particularly if you have children. Uprooting your family, leaving behind friends, the local school, neighbors and near-by amenities can easily tip the scale on the side of renovation.
But if your family is young and growing, or if the area you live in has serious problems, a new start might be just what’s required.
State of the house
Part of your decision to renovate may hinge on the state of your current home. A building inspection can uncover potential problems such as dry rot or white ants – that may mean moving is more viable than the costs involved in rectification.
Budget blow out
You’ve probably heard horror stories from your friends of renovation budget blow out.
For this reason, it is exceptionally important when you begin a renovation to be clear about what you want so that your builder can quote accurately. And ensure you add an extra 10 percent to 15 percent on to your budget estimation to cover any unforeseen costs.
If you buy a new, pre-built house you can be sure of exactly how much you are going to spend but be aware that any changes to the house may cost you extra.
If you have a new house built there is still some risk of a budget blow-out. However, your contract should provide at least some security against extra costs.
Overall, you need to do some homework and weigh up the advantages and disadvantages of each option. For example, if you decide to move house there are costs such as:
- Stamp duty
- Refinance costs
- Agent fees
- Legal fees and conveyancing costs
- Building and pest inspection reports
- Moving costs
On the other hand, if you decide to renovate, you will need to consider the costs of:
- Labour (builder and contractors)
- Permits and council fees
- Design Fees
- Inspection costs
- Repayments for any finance that you may require for your project
Knockdown / Rebuild
If you like the area you live in but have certainly outgrown your old house (even past the point of renovation) there is another option.
Knocking down the old house and building a new one in the same location (knockdown/rebuild) is growing in popularity, particularly in more crowded cities like Sydney.
Besides remaining in the same location, other advantages of this approach include avoiding having to look for suitable vacant land or paying stamp duty.
On the downside, you will have to pay rent in another property for the period of the project.
The Renovation Budget
Before you start renovating make sure you do your sums.
There is nothing more frustrating than having to cut back your renovation halfway through because you’ve run out of money.
Making early budget estimations can be a daunting and tedious task but is essential to a successful renovation.
Consider these factors to make it easy:
1. Review your cash flow. Look at your current cash flow, including your existing commitments and monthly expenditures.
Ask yourself how much you could spend on your house without feeling poor, then find out how much you can borrow – and what the repayments would be – on a home-improvement loan or mortgage at a financial institution.
2. What you want. Write down everything that you and your family want from the renovation. Create two columns called ‘essentials’ and ‘luxuries’ and list each item under one of these two headings.
Obviously, if you can’t afford everything on the list, you will need to cut some of the luxuries.
3. See a professional. Armed with the knowledge of what you want and what you can afford, consult your building professional to draw up a preliminary design and cost the project for your approval.
The fee for design and full drawings can be from five to 10 percent of the overall construction cost.
4. Contingencies. Allow at least an extra 10 to 15 percent of the budget for contingencies. These are the ‘unknowns’ that may be uncovered in the course of the renovation or required by various local authorities.
5. Prices may vary. Be aware that building prices may change depending upon a number of different factors including:
- The individual building professional selected.
- The choice of materials involved in the renovation project. Take your list of appliances, fixtures, kitchen and bathroom cabinets, tile flooring and finishes (other than basic paint) to the appropriate stores and cost the items. Factor in labor costs for items such as skylights, doors, windows or dishwashers. The labor is usually at least equal to the cost of what is being installed.
- The construction method involved.
- Your geographical location. Building costs in some major cities are higher than others, while costs in the country can be up to 15 percent higher than in the city.
- Changes to the existing space must also be factored in. For instance, if you are changing a bedroom into a bathroom or knocking down walls you should calculate this. Ask for estimates of labor costs and necessary materials for the carpentry, plumbing, electrical and drywall work.
- Quality of the work required.
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