Don't lose your head during home renovation

The Savings Game

My husband and I are in the process of buying a 100-year-old house. We’re facing the first big renovation project of our lives. It’s exciting but also incredibly nerve-wracking.

One of the hardest parts about budgeting for a home renovation is figuring out how to think about the cost. Is it a short- or long-term investment, like mutual funds? Is it unavoidable cost-of-living maintenance, like health care? Or is it an occasional splurge that improves your quality of life, like a vacation? In my normal budgeting, I consider those three areas to be very separate, but the reality is that a home renovation can be all three.

Here’s how we’re trying to make smart financial decisions about our new house.

Consider the context: Many people justify spending more than feels comfortable on a renovation because they expect to recoup their money when they sell the house. But there are many pitfalls to that approach. In 2016, Remodeling magazine reported that people made back a little less than two-thirds of what they spent on renovations, and that was when they sold the house within the year.

If you’re planning to keep the house more than five years, experts say you shouldn’t figure in long-term return on investment from a renovation. Spend what you can afford, and if the home as a whole appreciates, you’ll be ahead of the game.

Also important when considering the scale and style of your renovation is the overall condition of the property and values in the neighborhood. A too-splashy “improvement” that’s hard to reverse can turn a property into a white elephant that actually lowers its value. My husband and I once went to look at a 350-square-foot studio apartment with a giant modernist Italian marble bathtub smack in the middle.

Start with the unsexy stuff: Maintenance has to come before remodeling. Basic building systems like the HVAC, boiler, roof, plumbing and drainage have to be in good condition or they will lead to costly repairs down the road. We are focusing on highly rated new appliances, insulation and weatherproofed windows to lower our energy costs.

Bolstering this point, Remodeling magazine reports that attic insulation is one of the only home improvements with a consistently positive return on investment. Fire safety, soil, water and air quality, and accessible design are important to us too.

Make priorities and stick to them: I’ve been living in rentals my whole adult life. The idea of customizing a place to my taste feels too good to be true, like a once-in-a-lifetime opportunity. But I’m trying my best to focus on the changes that will have the biggest impact on my daily life: uninterrupted counter space in the kitchen, a double vanity in the master bath, soundproofing in the home office/guest room. I don’t want to get upsold on luxury finishes that I’d never even heard of when we started this process.

We also are stretching out our improvements over time. There are some changes, like repairing the deck, planting the back yard and restoring the fireplace, that are on our list but may take a year or two, or even longer. Same with buying furniture. We are holding off on any new investment pieces until we’ve had a chance to get used to the place and figure out what will fit our needs.

Look for bargains: In many parts of the country, it is possible to buy entire luxury kitchens secondhand. Plumbing fixtures, appliances and hardwood flooring that have useful lives of a decade or more may be available as salvage or former store displays.

Plan for the unexpected: Everyone says that when you get an estimate from a contractor, you should double both the time and the money. Our renovation costs include covering both the mortgage and our rent for a maximum of six months, which is much longer than our contractor expects it to take. I hope he’s right, but I’ll be prepared if he’s wrong.

Readers who have been through this process, I welcome your wisdom. What do you wish you had known when you started a home renovation? What did you do right?

Anya Kamenetz’ most recent book is “The Test: Why Our Schools Are Obsessed with Standardized Testing, but You Don’t Have to Be.” She welcomes your questions at

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