How much do you budget for home repairs and renovations?

[disneysteve]

We have a number of issues in our house that need attention. A couple are significant like our roof being near the end of its life and a leaky basement so I'm not asking about those, but then there are a number of other things that need to be done at some point, especially prior to selling the house down the line - refinishing the wood floors, stripping old wallpaper and painting, replacing carpet, maybe updating the bathroom, etc.

How do you decide how much you can or should spend for those sorts of things? Once our mortgage is paid off in a few months, we'll have about $1,700/month of additional cash flow so I'm figuring we'll start directing some of that to fixing up the house, but how much?

We currently have 13% of my income going to my 401k, another 6% going to a taxable investment account, and another 6% going into our savings account. The P&I and extra principal payments to the mortgage make up about another 10% of income. So all together, once the mortgage is gone, we'll be "saving" about 35% of income. How much of that is reasonable to redirect toward house stuff?

[TexasHusker]

We have a number of issues in our house that need attention. A couple are significant like our roof being near the end of its life and a leaky basement so I'm not asking about those, but then there are a number of other things that need to be done at some point, especially prior to selling the house down the line - refinishing the wood floors, stripping old wallpaper and painting, replacing carpet, maybe updating the bathroom, etc.

How do you decide how much you can or should spend for those sorts of things? Once our mortgage is paid off in a few months, we'll have about $1,700/month of additional cash flow so I'm figuring we'll start directing some of that to fixing up the house, but how much?

We currently have 13% of my income going to my 401k, another 6% going to a taxable investment account, and another 6% going into our savings account. The P&I and extra principal payments to the mortgage make up about another 10% of income. So all together, once the mortgage is gone, we'll be "saving" about 35% of income. How much of that is reasonable to redirect toward house stuff?

This is the kind of thing where budgets don't really work in my opinion. If something needs fixing, it needs fixing, whether it exceeds your budget or not. Some years you might spend $10K on repairs, others it might be $1K. A lot of that, however, is beyond your control. You can't predict when your HVAC is going to roll over and die, nor when your roof gets hailed out.

Improvements are another story, but similar. Fix your house up so that it suits you. If you want to afford it, do it. Whether someone else would want to afford it is another matter. When we renovated our house, I went with commercial grade stainless appliances. That is what we wanted so we afforded it. For someone else that might seem a complete waste of money.

[creditcardfree]

I would do some research on the cost of paint, supplies and measure square footage of walls. Same goes for carpet and pad. Get some estimates for these big projects. $1700x12 is $20,400...one could easily spend this much on home repairs, particularly the ones you mentioned. Once you have a general idea of what you may want to do, you will know how much to save based on the estimates and your timeline.

[disneysteve]

This is the kind of thing where budgets don't really work in my opinion. If something needs fixing, it needs fixing, whether it exceeds your budget or not.

Improvements are another story, but similar. Fix your house up so that it suits you.

Agreed. That's why I said I wasn't asking about the roof or basement. Those need to be done. It's the cosmetic stuff I'm wondering about. Personally, I don't care about any of it. My wife is a bit less understanding and would like some things updated but she's not hardcore about it either. The biggest issue is if and when we try to sell the house. I've already told my wife I really don't care about milking it for every penny we can get. I've never considered the house an investment. If we get 250K for it, great. If we get 225K, that's fine too. If we get 195K, I won't lose a moment's sleep over that. As long as someone comes along and takes it off our hands when we're ready to move on, I'll be happy. The question is how much time, money, and effort we want to put into sprucing it up in hopes of selling it easier.

[~bs]

not much, other than the maintenance fee i pay for the condo. i lived here for 10 years and have not done significant repairs or purchases of furniture/appliances since then, although it was renovated a few years before i moved in. To be honest, it would be nice to replace all appliances and redo the flooring, but i prefer not to unless something is broken.

I will say this though, and i think i mentioned it before, when i do replace something, it will be higher end quality wise. Better to buy something once to last 10 years than to buy something that needs to be replaced every year

[TexasHusker]

Agreed. That's why I said I wasn't asking about the roof or basement. Those need to be done. It's the cosmetic stuff I'm wondering about. Personally, I don't care about any of it. My wife is a bit less understanding and would like some things updated but she's not hardcore about it either. The biggest issue is if and when we try to sell the house. I've already told my wife I really don't care about milking it for every penny we can get. I've never considered the house an investment. If we get 250K for it, great. If we get 225K, that's fine too. If we get 195K, I won't lose a moment's sleep over that. As long as someone comes along and takes it off our hands when we're ready to move on, I'll be happy. The question is how much time, money, and effort we want to put into sprucing it up in hopes of selling it easier.

A realtor is the best resource on how you can spruce it up to make it fetch more $$. Most of the time, you don't get back dollar for dollar what you put into it. We spend $50K on a reno. and I am guessing that we would get maybe half of that back.

[creditcardfree]

Agreed. That's why I said I wasn't asking about the roof or basement. Those need to be done. It's the cosmetic stuff I'm wondering about. Personally, I don't care about any of it. My wife is a bit less understanding and would like some things updated but she's not hardcore about it either. The biggest issue is if and when we try to sell the house. I've already told my wife I really don't care about milking it for every penny we can get. I've never considered the house an investment. If we get 250K for it, great. If we get 225K, that's fine too. If we get 195K, I won't lose a moment's sleep over that. As long as someone comes along and takes it off our hands when we're ready to move on, I'll be happy. The question is how much time, money, and effort we want to put into sprucing it up in hopes of selling it easier.

That's a bit different if your question is about selling the home. I do believe many of today's buyers want move in ready. They will notice that your carpet is old and they see that as an expense. Some will ignore your home, others might ask for a carpet allowance. You need to think of the costs you invest in your home as allowing you to sell and move quickly. The longer the home sits on the market, the more it appears that there is something wrong with your home. I've sold a home with 16 year old vinyl kitchen floor and cabinets (very good market at the time, sold in five days), I sold a home with neutral, clean but also over 15 year old carpet. Don't paint all the walls stark white, but neutral colors, and get rid of wallpaper that is dated. And decluttering is very important so that buyers are not distracted by your stuff. They just want to see basically how basic furniture fits in each room. Updated light fixtures and faucets are relatively inexpensive and can make a difference in an older dated home.

[riverwed070707]

Agreed. That's why I said I wasn't asking about the roof or basement. Those need to be done. It's the cosmetic stuff I'm wondering about. Personally, I don't care about any of it. My wife is a bit less understanding and would like some things updated but she's not hardcore about it either. The biggest issue is if and when we try to sell the house. I've already told my wife I really don't care about milking it for every penny we can get. I've never considered the house an investment. If we get 250K for it, great. If we get 225K, that's fine too. If we get 195K, I won't lose a moment's sleep over that. As long as someone comes along and takes it off our hands when we're ready to move on, I'll be happy. The question is how much time, money, and effort we want to put into sprucing it up in hopes of selling it easier.

I'm conflicted here. If you don't care what you get out of it, I personally wouldn't spend the time and money updating cosmetics for others to make it "easier" to sell. Reality is you won't be able to predict the buyers taste, and for me, I'd prefer to grab a great price on a home I can update to my taste than pay top dollar for one where the work is done. Additionally as another poster mentioned, you won't get your money back out of updates - usually half, sometimes less (particularly if you're hiring the work out). Things that will make it easier to sell are taking care of the needed or dated maintenance items that aren't taste specific - make sure your heater/water heater are new-ish and efficient, roof with plenty of years left in it, windows are good quality and in good repair, manicured landscaping goes a long way because it takes time to cultivate, etc. Things like updating bathrooms, painting neutral colors, updated kitchen is too taste specific and will limit your buyer pool, IMO. Now if there's something your wife wants to update because she's ready for a change and an update, then go for it - but to me that's not the same as updating to get ready to sell.

[LivingAlmostLarge]

I think you should do it if your wife wants somewhere nicer to live. All renovations are for your pleasure. You won't get back $ for $. I spent $80k on our renovations and I bet I don't make back half. I could of course be wrong. Maybe I do since we had a completely unfinished garage (insulation showing and some places no insulated), leaking bathroom/rotted in basement, which had no insulation and no drywall only paneling and drop ceiling. So perhaps some of it we would make back. Our realtor said all of it because we basically doubled the square footage of our home finishing it. But I doubt it.

But if you want it to look nicer do it. why? Because truly our renovations might be worth it if we had cheaped out and done everything bare minimum and we'd see a real return. But a lot of things like tile, stone, carpet, etc we picked what we liked and it was higher quality and grade than someone doing a flip. So I bet we could have done it CHEAPER and that I bet would return money.

So decide why you are doing it. And then budget it. Or set a budget and then work within those parameters like I will do eveyrthing for $20k.

[Jluke]

I go around the house and make a list of things that need to get done (i.e. broken or worn out) and things that I’d like to replace/upgrade.

If you have wired smoke detectors (or even battery operated ones) that are older than 10 years they need to be replaced. Be sure you have carbon monoxide detectors on every level. You can get a combo smoke alarm and CO detector.

[Fishindude77]

I retired last year and tried to come up with a figure for that. We own a home and a lake house, I've included $15,000 per year in the budget for both. Just about every year we will have something like; driveways to seal, painting of some sort, plumbing or HVAC repairs, a deck to stain, garage door repairs, some flooring, etc. which isn't too bad and doesn't eat all of that up, however you have to prepare for the big ticket items. Roofs last 15-20 years, windows and doors eventually need replaced, HVAC gets replaced, etc.

[greenskeeper]

As long as it's functional....it's ok at our stage of life. Anything "new" would be quickly destroyed by the kids so that's put on hold until they are older (teenage)

[scfr]

Regarding how much to budget, I've found the 1% rule of thumb to be pretty useful. (I'm often not a fan of rules of thumb, but this is one I like.) Set aside 1% of the purchase price of the home every year, starting as soon as you buy the house, earmarked for home maintenance, and use it as the need arises. Some years you will spend very little , some years you will spend a lot. After a few years you should have enough of a cushion built up to cover the "life happens" issues. This assumes the home is in good, well-maintained condition when you purchase it. And have an appropriate amount of insurance; if you decide to go for a higher deductible (nothing wrong with that as it may save you some money overall), be sure to set aside enough extra to cover the higher deductible, although maybe that could be in your EF instead of your "home repair cushion." This is the "needs" (should) side of the equation.

The "wants" (can) side is really up to you, what you want, the original (or in your case, current) condition of the home, what you can afford, and your overall financial picture. One thought is to come up with an amount that you and your wife are willing to spend, and then let her take charge of deciding where the money gets spent and doing the fix-ups (or managing the people you hire). I suggest that because it sounds like she is the one more interested in the process. For example, maybe the 2 of you would decide to spend $3K less on vacations in 2019, and instead let her spend $3K on home fixups.

As far as selling your house, that's a whole different question. This is perhaps a bit OT, but given that you really don't care how much you make on the sale of the house (an attitude that is the exact opposite of mine, by the way, but I definitely understand that people can feel very differently about their homes), you may be an ideal candidate for the direct home buying services that the big online RE places like Zillow and Redfin have started to offer. Save yourself the hassle of fixing up, listing, keeping it spotless all the time, showing, etc. Right now the markets where they offer that service are limited, but both companies say they plan to expand. Keep an eye on that.

If you do list with an agent, I agree that you should let them tell advise you on what changes to make. Remember that fixups aren't always about getting top dollar. Sometimes it's about getting a buyer at all, or getting your home sold faster. Trust me, having just gone through selling my house, minimizing days on market is a sanity saver.

[JoeP]

We have a banking account that gets some money through direct deposit every time I get paid. We use that fund for things such as painting, fixtures, changing out lights, replacing outlets/switches, minor updates, sometimes furniture, etc. If the project is larger such as flooring or a furnace or roof, we'll manually add cash to that account every so often until we reach the target. The EF is for more urgent issues such as a leaky roof or unsafe furnace or leaking water heater.

[amarowsky]

not much, other than the maintenance fee i pay for the condo.

this may be a simple way to figure out the average maintenance cost of a house. Steve could look at reasonably similar size and location condos. And consider the HOA fee they charge for condo owners.

I'd imagine this HOA calculation is some amortized cost of typical maintenance and maintenance worker labor cost. (Maybe you could shave off some % because you don't have to subsidize condo overhead (club house, admin cost, pool cost, etc...).

So maybe try for 50 or 60% (complete guess) of a comparable HOA. And that may be a good yard stick if you have no jumping off point calculation. (Worst case, you save a bit more)

Using their local rates probably give a good estimate for cost of materials and labor in your area.