Home expenses might be your single most important decision variable on the road to financial freedom. Buying and maintaining a home that’s bigger or more luxurious than you need, is one of the most common detours along that road.
The amount of money typically spent on a large trophy home, especially if you must hire others to improve or maintain it, could instead accelerate your retirement by years, if not decades.
Yet most of us do choose to own homes at some point. And we want them to be attractive, comfortable, and roomy enough for our families. But the costs can be overwhelming. So how do you maintain or renovate a home on a budget?
We owned two different homes over the past couple of decades. During that time I learned a thing or two — both positive and negative — about how to keep a home on a budget….
Some Smart Improvements
I’m going to preach some frugality here, but I’m not going to suggest ignoring your home. It’s a huge investment, and if you hope to enjoy it and eventually sell it for what it’s worth, you will need to maintain it well.
One thing I learned early on: The greatest enemy of most modern homes is water. If you have a water-related problem — leaks, intrusion, moisture, etc. — you are well advised to fix it immediately, and fix it well!
A few years back when it became apparent that the exterior of our house was compromised, we got to work. We had the wood siding completely replaced on the most weathered side of the house by an experienced contractor. They used the good pieces remaining from that side to replace weathered pieces on the other three sides of the house. Lastly they painted from the roof line down to the top of the first story of the house, where we took over and finished the paint job. So, in the end, we got a like-new exterior, for a fraction of the cost of a full replacement.
Then we turned our attention indoors. The traditional advice is that kitchens and bathrooms are some of the most important contributors to the value of a house. You supposedly can’t go wrong putting money into these rooms. I agree with the first point, but not the second. So, yes, we invested quite a bit of time and effort into improving our kitchen and master bath before successfully selling our house last year. But, we spent relatively little money in the process.
The kitchen was the epicenter of our house and so we put the most money into it, though it still wasn’t much by many standards. Advised that granite still exerted strong appeal for buyers, we added the proverbial stone countertops. That was about half the total cost of renovation, and it was successful in totally changing the look of our kitchen. We loved the new countertops, at first. (Read on below for why we ultimately changed our minds.)
Also central to our kitchen was the stove, which was stained and worn. So we replaced it with another Jenn-Air. A high-end appliance wouldn’t normally have been our first choice, but we had few options because of the required downdraft vent. But, again, it looked awesome and contributed much to the curb appeal of the kitchen.
Next on the list for our kitchen renovation we replaced the existing linoleum floor tile. With more linoleum! We didn’t like the price tag for reinforcing the floor to support new ceramic tile, so more linoleum it was. However, we spent a great deal of time and effort picking out the best tile and pattern. In the end it looked fantastic and even fooled several realtors and appraisers — who didn’t realize it wasn’t ceramic.
Finally, since our cabinets were in passable condition, we simply treated the finish with oil and replaced all the knobs with new solid stainless steel versions, giving the storage facilities in the kitchen a quick facelift.
Total cost for our kitchen renovation? About $8,000. Yet, according to Remodeling Magazine, a similar Minor Kitchen Remodel could cost in excess of $18K.
After the kitchen, we moved on to the next most important room in the house: the master bathroom. We started with fresh paint and caulk all around. I cut out a section of worn rug from in front of the shower and laid down an attractive marble-finish linoleum tile in its place. We upgraded light fixtures, towel racks, and faucets with high-quality replacements. We added a nice wooden display shelf on one side. Finally, we dealt with the worn-around-the-edges but functional 6′ vanity mirror by epoxying attractive stained oak trim around the edges. This turned a potentially expensive eyesore into an attractive centerpiece, at a cost of about $30 in materials plus our time.
Total cost of our bathroom “renovation”? About $1,000. And it again it fooled the pros: Both the appraiser and realtor commented on our “newly renovated” master bath.
Shortly after finishing our bathroom, I was waiting in a doctor’s office when a home remodeling show came on the air. They were having a special segment on “cost-effective” home renovations, interviewing a trio of proud homeowners who had spent “only” $45,000 renovating their bathrooms.
I almost gagged. For reference, consider that I was well paid back when I worked. And $45K was near the maximum I ever managed to save in the best of my earning years. Know that for many people, that represents years worth of savings. Yet some will give up those years of life, just to do their personal hygiene standing on fancy tile floors, surrounded by exotic hardwoods.
Fancy appointments are nice. But I wouldn’t trade years of my life for them.
In retrospect, the essence of intelligent, frugal home renovation is to not “tear it all out.” Rather, look at what you can do to incrementally upgrade just the critical components of key rooms. Of course there can always be situations where you are forced to demolish everything down to the walls. But, if you start with property that is in good functional shape, and avoid water damage, I think you can sidestep extreme renovation in most cases. Instead, look for the least you can do — the 20% of effort and cost that will yield 80% in improvement.
For example, a recent article in Money Magazine points out three potent but generally economical renovations for upgrading old homes: expanding closets, opening up kitchens, and moving laundry facilities out of basements.
Similarly, when it came time to stage our house, we focused on first impressions that buyers would value and be attracted to: We painted a prominent front room and touched up carefully throughout the house. We gently cleaned the exterior so the house sparkled. (Not by destructive pressure washing, but with diluted bleach.) We resuscitated our decks with a beautiful honey-toned stain. We resurfaced the front sidewalk and added modest landscaping: mulch, a few shrubs, several dozen annuals, new grass seed.
I’m convinced this final staging was an important factor in selling our house in 24 hours. Total cost? About $4,000. (We could have spent less by doing more ourselves, but the schedule was tight, so we paid for help.)
Some Questionable Expenses
You can only learn some lessons through experience. Most of our home improvement blunders fall into that category. It seems the home improvements that I regret the most were the ones that looked great, on the surface, but were short-lived or had unexpected side effects.
I already mentioned our beautiful granite countertops that we loved, at first. But ultimately we decided that stone wasn’t a practical counter surface for us. For starters, it was totally unforgiving of dropped dishware: I lost hold of a small glass one day from about 18 inches up, and spent the next hour and a half surgically removing splinters of glass from every possible corner of the kitchen. Even more annoying, the counters’ beveled edge was hard on clothes: We each lost several garments from abrasion against the rough surface, before we realized the cause was working in the kitchen.
A related kitchen headache was the fancy stainless steel kitchen appliances we installed over the years: refrigerator, dishwasher, and stove. They looked fantastic, when clean, but were hard to keep looking that way. They attracted fingerprints and grease like magnets. And, every scratch accumulated over the years was a potential deal killer. In the end, the granite and steel gave our kitchen an upscale feel and probably helped sell the house — but, like a beautiful but temperamental mate, they were hard to live with.
Our largest home improvement regret, without question, was some new carpeting, to the tune of about $4,000. We had lived with our blah, low-pile, office-style carpets for years, and were ready for an upgrade. So we installed a high-end, stain-resistant, off-white berber throughout most of the downstairs. It was just about the most expensive synthetic carpet we could get our hands on, so surely it would last forever and we’d love it just as long? Wrong. Within months, it seemed, faint stains began appearing. Though we never conclusively tracked down the culprit, teenage acne medication was the most likely candidate. Then, after a few years, entrances and hallways took on a dingy tone that did not respond to any known carpet cleaning technology. Moral: when there are still teenagers and pets on the loose, it’s too soon for a high-end, light-colored carpet upgrade!
Do-It-Yourself vs. Contractors
If you simply enjoy living in a designer home, there is one route to upgrading your surroundings that remains compatible with early financial independence, and that’s to buy the materials and do most of the work yourself. And, if you actually enjoy home renovation, then you’re multiply blessed. You have a fun hobby that increases the comfort and beauty of your surroundings, while putting money in your pocket!
The irreverent Mr. Money Mustache is one of my icons in the “frugal luxury home renovation” department. He lives on a shoestring, but in some really nice places, because he has developed a full suite of carpentry and home improvement skills. For just a few of his many interesting thoughts on the subject, check out Shaving Major Renovation Costs or Hacking Home Depot.
As for me, though I’m an engineer, and have done a little of everything around the house over the years, I just never enjoyed it enough to perfect the skills or allocate the time for a major renovation project on my own. Rather, we’ve hired help as needed. Predictably, this has been more expensive and less satisfactory than if I could have done all the work myself.
But, with some careful oversight, we’ve usually gotten the results we needed. Along the way, I have learned to take absolutely nothing for granted when dealing with contractors and workers. Sometimes they are competent. But they are always human, usually spread thin, and occasionally have bad days just like the rest of us.
I’ve seen everything from the trivial — missing nails and screws, to the grotesque — an entire kitchen floor installed crooked. Frankly, no matter how experienced the crew, there is just no substitute for another set of eyes. Once, after the 3rd fruitless trip out from a contractor attempting to find and fix a leak in our roof, I spotted the culprit myself: a quarter-size puncture (likely from hail), several feet away from where the seasoned carpenter swore the problem had to be.
In the end, if you truly care about quality work being done on your home, you need to inspect it all yourself. I use casual “management by walking around” coupled with friendly reminders when workers are on the job. Then, once they’ve gone home for the day, I get out the flashlight and do detailed inspections. Be friendly, but persistent, about any problems you see. And remember, until you write that last check for the job, you have a lot of clout to get things fixed. After that, forget about it!
Home Improvements as “Investments”
I’ve already written about why houses are not necessarily good investments. But what about renovations on houses? Can they return more than you spend? Sure, anything is possible, especially if you do your own work. But the odds are against you.
Remodeling Magazine’s latest Cost vs. Value Report shows a 2014 cost-value ratio of about 66%. (That ratio is the resale value of a remodeling project as a percent of construction cost.)
Nationwide, the cost-value ratio exceeded 100% for less than 1 in 10 projects. And, as a rule, “more expensive projects did not fare as well as lower-cost projects.”
Don’t be fooled by apparently large payback percentages. Any “payback” of less than 100% means you lost money. These are not investments. True investments pay back more than you spend!
Do you have a lesson-learned about frugal — or costly — home renovation?