Lessons Learned From My First Major Home Renovation

How to afford major home renovations

Upon purchasing my home two years ago, I never imagined spending $25,000 on maintenance and repairs within a single year… but that’s exactly what happened.

While my first year as a homeowner was rather uneventful – my most costly expenses were painting my garage door and installing a new apartment door – Year Two was an altogether different story.

This past winter – the coldest in decades in Ontario – took a toll on my house. While I was fortunate not to have a tree branch come crashing through my roof, the frigid temperatures compromised the exterior of my three-bedroom suburban bungalow. One day, as I stepped outside, I noticed the floor of the basement retaining wall had lifted; this was only the beginning of my troubles. My flagstone front porch steps soon fell to pieces, not to mention my eavestroughs were leaking.

When I woke up to two inches of water in my basement, I knew I would have to spend big bucks on home renovations. Spring couldn’t arrive soon enough, although the longer-than-average winter gave me plenty of time to call around to contractors for estimates and put money aside.

Cleaning up a flood is always a dirty job.

Cleaning up a flood is always a dirty job.

The Importance of an Emergency Fund

Throughout this, my saving grace was my financial planning; I had enough money set aside in my emergency fund. Most experts recommend that you should save between three and six months’ worth of living expenses. As a single homeowner and breadwinner, I decided to be prudent and sock away six months’ living expenses in my TFSA; little did I know I’d need every last penny.

Budgeting for Maintenance and Repairs

I knew homeownership is expensive, but that didn’t really ring true until I urgently needed repairs on my house. Condo owners have a lot less to worry about; when you own a house major repairs like a leaky roof and new furnace can sneak up on you.

A rule of thumb for homeowners is you should be prepared to spend an average of 3 per cent to  5 per cent of the value of your home on maintenance and repairs each year. For example, I purchased my house for $425,000 in August 2012, so I should set aside up to $21,250 each year. This may seem high, but owning a house isn’t cheap, folks!

Dealing with Contractors

Probably the most stressful part of the renovations was dealing with contractors – it really is ‘buyer beware’. I’ve heard plenty of home renovation horror stories about shoddy work, incomplete jobs and financial disputes.

I learned firsthand the lowest estimate isn’t always the best when my neighbour paid to have his sidewalk redone. Two weeks later the cement slabs had lifted; when my neighbour called the contractors about the poor workmanship, they disconnected their phone number and vanished into thin air, leaving him to foot the bill.

Do Your Research

When it came time to choose contractors, I mostly relied on word of mouth and the site HomeStars, which offers user reviews of contractors in your area; you can search by category such as siding or roofing, and find a list of reputable options. As I was getting major work done – spending upwards of $20,000 – it was well worth the effort to do my due diligence.

Gather Several Estimates

If your renovations are extensive (spending at least $10,000), I recommend getting at least five estimates. I actually ended up getting nearly 10 because the estimates were all over the map – one contractor quoted $3,500 for my retaining wall, while another quoted a whopping $18,000; I ended up settling somewhere in the middle.

It’s a good idea to take the time to meet with your contractor in person. You should bring along someone knowledgeable about renovations to help ask the right questions. If a contractor can’t answer simple questions before the job has begun, they’re probably best to avoid. It’s important to get your estimate in writing with every single detail written into the contract – you’ll be thankful you have it should there be a dispute!

Determine Your Deposit

It’s important to not give your contractor too much money up front. My contractor asked for a 50 per cent deposit at the beginning, and 50 per cent once the job was finished. While contractors are the renovation experts, it’s a good idea to keep an eye on things to ensure they are going according to plan. For example, my contractors would have dug my sidewalk in the wrong location if I didn’t keep a watchful eye.

Keep a Contingency Fund

I learned first-hand the importance of having a contingency fund. If you’ve ever watched HGTV’s Income Property, you know renovations don’t always go according to plan. When the contractors tested out the drain at the bottom of my retaining wall, they informed me the weeping tiles were shot – I would have to spend an extra $4,000 on a sump pump, or they couldn’t complete the job. Income Property host Scott McGillivray recommends budgeting at least 10 per cent in a contingency fund, as it’s not uncommon for projects to run over budget.

The Renovations are Complete – Finally!

In the end my renovations ended up taking six weeks and put me back $25,000. They included a new eavestroughs, a retaining wall, sidewalk, and front porch steps. Although the renovations were costly, they will increase the value of my house over the long-term.

Mike Holmes says it often makes sense to put your renovation dollars into functional over cosmetic renovations. While I would have much rather spent $25K on a walk-out patio, if I ever go to resell my property, these will be three less projects the new owners will have to worry about.

Looking good as new.

Looking good as new.

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