What do you do when you want the perfect home renovation but you lack the funds?

It can be tough to make the decision between what you can afford and what you need—let alone what you want to get out of your renovation project. That’s why it’s so important to set a budget, create a cost breakdown list and stick to the initial plan when hiring a building contractor.

Use this guide to help you get the most out of your budget renovation project.    

Setting a Budget Number    

The bottom line of any budget renovation project is money. By setting the amount of money you are willing (and able) to spend upfront — and sticking to that figure throughout the project—is the best and only way to get the project done for the right amount of money.  

So how much should you spend?  Your return on investment is an important way to determine the amount of money you’re willing to invest. If a renovation project like installing an on-demand water heater costs more than you’d like to spend, consider that it will save money every year, recouping initial costs quickly.  Another way to tell how much money you should spend on your renovation project is by assessing the value of your home and taking into account whether you intend to sell or stay.

Spending somewhere between 20-30% of the value of your home is likley to be a suitable amount of money to allocate for a budget renovation project, and still get a great return on your investment, particuarly if you are intending to stay in that property long term.  However, it also depends on buyer perception, whether the money you spend is spent in such a way, that if put on the market, new buyers would see the extra value and be prepared to pay for it.

If you’re like the rest of us, it's likely that your wants and needs may exceed the amount of money in your budget. A good way to pinpoint costs to help you pick out the needs from the wants is by creating a cost breakdown list. This is a list that helps you to nail down labour and material costs so that you can better plan for your renovation project.   

Some of the considerations you should keep in mind when you’re drawing up a budget:
How much cash you have on hand?
How long will you occupy the home?
How much you can borrow?
How much is the interest rate?
How much can you afford for a monthly payment?  

The Best of the Best    

Work with a quality builder.  It is standard to check about three different contractors portfolios so that you can choose the best fit for you for your renovation.  Ensure that you choose only contractors licenced for the work you need completed and check to make sure all their insurances are current.  You should also speak with past clients and inspect past work, ideally on a similar scale to the work you need completed.

ROI
 
Return on investment or ROI is the best way to get the most bang for your buck on any renovation project. Even if you plan on staying in your home your whole life and never selling, it’s still in your best interest to recoup some of those renovation funds by employing projects that give you the best ROI factor possible.  Here are a few examples of budget renovation projects that give can you the most ROI:

• Bathroom renovations
• Kitchen renovations
• Master bedroom renovations
• Basement and attic renovations
• Curb appeal renovations (cladding, decking, roofing, etc)

Allow a Buffer

The reality of building is that there can often be unexpected costs, particularly if demolition or excavation are involved, or you are adding to an older building that wasn't built well.  To allow for this it's normally recommended to have a contingency sum available (usually around 5-10%) just in case. 

Building a new home is a big investment. And as with any investment, you want a qualified individual or group to know exactly what they are doing so they can give you the best possible return on your investment. That’s why it’s so important to find a builder who has experience, knowledge and a good reputation.

Prospective clients regularly ask a number of builders to tender for their project on the assumption that they will get the best deal possible when choosing who they will appoint to complete their project. But the fact of the matter is, tendering has very little appeal to builders because the process can be very time consuming and costly to the builder. When a client chooses a tender on the assumption that they are the lowest bidder, it usually results in the dissatisfaction of the homeowner. This is because in the bid to get the job, corners can be cut by unscrupulous builders and the overall quality of the project suffers.

Avoiding the many problems associated with tendering and choosing the lowest bidder can be easily eliminated with basic research and credibility checks on your behalf. One of the best ways to get that information is to ask people you know directly who have hired a builder in the last few years. They’ll let you know exactly how they feel about the builder and give you a heads up about their strengths and weaknesses.

With the advent of the internet, it’s easy to compile facts and figures about various builders and the work that they have done in the past. It’s a good idea to use the internet to narrow the list of builders by location, specialties and abilities to ensure you get the best fit for your particular project.

Besides basic references, it’s also a good idea to check on prospective builders licensing and insurance through Fair Trading and by asking the builders you are interested in to provide copies of these documents. Always ensure your builder has the correct licence and insurance requirements before signing any agreements or contracts. A builder who is associated to local building organisations doesn’t necessarily mean they are a quality builder (speaking to past clients and seeing past & current work is the strongest reference), but it does show commitment to their trade and increases their knowledge about new building methods and materials.  In Australia the two best known organisations for builders to be associated with are HIA (Housing Industry of Australia) and Master Builders.

Once you’re set on a quality builder, negotiations can be made to find the best project design at a price that will fit your budget. This is a great way to still get the quality, reputation and service of a reputable builder that you’re sure will give you the quality home you want and deserve, while still getting the most affordable structure possible—all without the hassle and inaccuracy that tendering can sometimes create. 

Many builders work directly with architects and designers, allowing your home to be designed and built exactly to your specifications while remaining in a price range suitable to your budget constraints. Designers and architects should all fall under the same scrutiny that your builder did, so choosing one that has a reputation for quality, experience and customer service.  Choosing the right partners and designing and building your project with them is definitely the best way to ensure value for money and satisfaction with the final results at the end of the day.

If you love the street you live on, your neighbours are great and schools, shopping and work are right around the corner—but your home has seen better days, then you may want to consider the option of knocking it down and rebuilding a new structure in its place.  This decision can be a tough one to make though when it comes to choosing between selling your home, renovating the existing structure or starting from scratch. By knowing what’s in store for you when knocking down and rebuilding your new home, you’ll be prepared—if and when—you knockdown and rebuild the home of your dreams.

Feasibility

Put down those blueprints and designs and ask yourself this question first: Am I even allowed to knockdown my structure and rebuild? There are many reasons why this would be an unfeasible request. Heritage and conservation controls can prohibit some older buildings from being torn down and rebuilt specific ways.

Local building councils control other aspects of demolition and construction as well. These include and are not limited to, setbacks from the street and other structures, colours and design elements of the exterior, height, size and square footage allowances and storm water runoff control. Before you begin drawing any plans, it’s a wise idea to find out what your limitations and restrictions are first. That way, you can still design the new home of your dreams, and still keep within code boundaries.

Windows and Doors

Any new openings in the home must be carefully planned. Proper window and door placement is crucial in knockdown rebuild designs, especially in locations that are in close proximity with neighbouring structures. Window and door placement may also be governed by building codes as well.

But besides the obvious—windows not facing the neighbour’s windows directly—solar orientation is crucial to preventing too much sunlight from entering the home and heating it excessively. Too little sunlight can overwork heating systems in the cooler months. A finite balance should be achieved during the design process to properly orientate the home for optimal sunlight conditions and to meet BASIX requirements.

Overall Costs

Pricing factors include a wide variety of subjects and all should be addressed independently in your building budget. Hiring a designer, builder and architect to submit the design for approval to the council is the first step. Demolition, disposal and recycling fees for removal and processing of the old structure come next. Rebuild materials and labour costs are last as the home is completed.

And that’s just for your new home. Since your old home is going to be knocked down, you’ll need a place to stay for several months while your new home is being rebuilt. Monthly home rental costs, furniture storage fees and double utility bills are significant costs that need to be considered during the knockdown rebuild process and factored into the final budget.

Knockdown rebuilding has been gaining popularity over the last decade, despite the fact that it is more costly than a typical renovation. By using cost effective strategies like installing energy efficient appliances, creating a wastewater recycling system and using ecofriendly building materials, the overall costs can be significantly offset placing a knockdown rebuild in a similar price range as that of a renovation. Factor in the huge increase in the appeal of the property and new home value when you knockdown and rebuild and you’ve got an affordable dream home that’s well worth the investment.

Pros and Cons of Tendering for Residential Building

For any home owner the cost of renovating or building a new home is a significant purchase.  Naturally you need to ensure you are getting the best price possible, however, it is also critically important that you select a builder who will deliver a high quality project.

Clients and Architects regularly ask a quantity of builders to tender for any given project.  However, there are a lot of factors that clients need to consider before choosing who to appoint.

Tendering has little appeal for Builders, because it is a very time consuming and expensive process & regularly the lowest price is selected.  If a builder wins on a low price and then cannot or does not deliver the expected quality, the long term cost to the client will be massively higher financially and emotionally, putting you and your family under significant stress for an extended period of time.

1)      Cost of Tendering

If a tender is prepared thoroughly it will cost a Builder thousands of dollars put together.   This cost is made up of work contracted out to Quantity Surveyors and setting aside several days to organise plans, contact all relevant trades, detail the scope of work and send it out for pricing.  All quotes then need to be followed up and a tender document or tender pack prepared.

2)      Comparing Prices

If 4 builders tender on a project and 3 have similar prices and one is significantly less, warning bells should be ringing.  For one of four tenders to be much less than the others it suggests it was rushed, items were left out and/or they are not quoting to allow for all the subcontracted work to be delivered by high quality tradespeople.

3)      Price vs Value

Staring a building project is like starting a long term relationship.  You want to be sure you select someone that you can trust.  If you choose the wrong partner to save 200K on a large job, you may well find that it costs you 700K extra by the end of job or worst case that you spend all the money and do not get a good result.  If you have bad building work done, the cost to repair the work second time around will be much higher than having it done correctly the first time.   

4)      Asset Value

Building is an investment.  When you are building or renovating the cost to build should increase the value of your asset.  Cutting corners is likely to see the impact on your asset either reduced or minimised.  All clients have a budget and you need to choose a building partner who will respect your goals, work with you to deliver the project within the set budget and deliver the best possible quality possible within that framework.

5)      Reliability

Structural quality guarantees are set at 7 years by the government.  If you choose the wrong builder though, as demonstrated by many horror stories on TV, it can be very difficult, almost impossible to get them to help you when things go wrong.  For this reason it is critical to pick qualified, experienced builders.  You need to see the quality of the work, meet or speak with several former clients and know that they can be relied on to assist with any warranty work, if required, when required in the future.

A recommended alternative to Tendering

To avoid the pitfalls of tendering and choosing the wrong partner or a misleading price, there is another less known and very effective option. 

Do your research on the builders you are interested in; call past clients, visit past jobs, meet their team, find out their company history and check out their licences.  Select a great builder that you trust and would like to work with, one who you can be sure will deliver the result you want for your home. 

Set your budget with them (and your architect where appropriate) and work as a team to engineer the project costing so that you can be confident you are getting the look, quality and price that will work for you, delivered by a reputable, high quality building company. 

The value for you, your family and for your home asset will be well worth the time you spend researching and engaging the right building partner for your project.

Project Management Software for Residential Building

Building your new your new home or renovating is an exciting and important endeavour.  At the Home Building Centre we want the process to be as smooth and enjoyable as possible.  This is why we provide each of our clients with access to a secure website with all of the details of their home building project.

Whether you are at home, at work, on the road, or on holidays, the Home Building Centre puts information at your fingertips about your selections, upgrades, financial decisions, questions, documents, photos and more.

Selection Sheet

See choices and stay on schedule.  Our site organises selection items on a single colour-coded list, displayed with all of the pertinent allowance, pricing, and other helpful information.  Upcoming selections are automatically flagged to help keep you on schedule. With just a few clicks, you can enter your choices.

Expenses & Change Orders

Eliminate any surprise price variations as every decision made on the selection sheet is automatically reflected on the expenses page. With a single click, you can see how each of your choices have affected the final price of your home. If you need to approve a change order, you can do it electronically, saving you the time and hassle of faxing or mailing signatures to us.

Schedule & Milestones

Building a home is an involved process.  To make is easier for you we set up key project milestones in the system so that you can check the progress made so far and see what steps are coming up next.

Questions List

Over the course of a project, you will have lots of questions and this section will help you keep all of those questions, and your builder’s answers, organised and in one place. Simply enter your questions here, and your builder’s responses will be listed right next to them.

Comments, Photos, and Files

As your home building project progresses, you will need to have “conversations” about certain items, like asking for clarification on a selection or providing an update on a request. Rather than using e-mail, you can add comments to many of the items in the site. Comments group these conversations together with the items to which they relate, which keeps information organised and available to everyone, cutting down on misunderstandings. You and your builder can also attach photos and files.

Warranty List

Once your home is complete, you can submit warranty requests online. You can come back to the site to check the status, add comments as necessary, and then verify when they are complete.

One of the greatest concerns of those opting to build or renovate their home is of course price. No one wants to engage in an endeavor in a money pit. For many, once a budget is in place there is very little margin for error.

Pre-Qualification

Unless you are one of the fortunate few that are able to pay cash for your building or renovation project, your first step should be to get pre-approval from a lender. Lest you have an established relationship with a banking institute, you will need to shop around and find a lender that will handle your type of project at a competitive rate. Once a financing establishment has been selected, you will need to obtain pre-qualification. Like with any other type of financing, you will need to provide documentation for income, debt, and go through the credit check process. Be sure to thoroughly review the interest rates and all terms as these may vary from a typical home loan. Once this tedious step is completed, you will know what kind of budget you have to work with.

Selecting a Builder

Once you know the exact amount of money that you will be able to work with, you will need to begin the steps to select a qualified builder. If you do not have a relationship with a builder, you may wish to begin by contacting a local housing association or community business group to initiate the selection process with their members. By doing this, you can be assured that the members are legitimate business people that are serious about their industry. This also gives you more avenues for recourse in the event of a grievance.

During your selection process, be certain to inquire as to how significant the builder’s role will be in the project, how much will be subcontracted, and how much will rest on your shoulders. Don’t hesitate to express what capacity you intend to be involved and what you are expecting from your builder. Ask how close to budget your builder usually runs. Find out the experience level of the builder and his relationships with the building authorities in the area. Don’t hesitate to verify licensing and insurance. You must have open communication with your builder and trust that they will not take advantage of an excess in budget. Find out if the builder has a working relationship with an architect of choice.

You Will Stay within Your Budget

Once you’ve decided on a financing institute and a builder, you need to put all your cards on the table. If you’re not comfortable financing the entire amount that you have been pre-qualified for, do not use that as your budgeted amount. Let your builder know your upper limit and be certain that you leave 10 to 15 percent margin for error. Go through your list of must-haves, preferences, and can live with outs. You must realize that if you change your decisions during the construction or renovation, it will affect the budget. Therefore, you need to be as rock solid as possible in your initial decisions to remain within the boundaries you have set.

With a flexible financial provider and qualified builder and his team of associates, you will stay within your budget providing you do not make significant changes to your plans after it is set in motion.

Keeping Your Home Building or Renovation Project on Budget (23 KB)

When building a new home or having renovations conducted on an existing home, many people will be faced with the decision of choosing between Brick Veneer and Full Brick. For some this choice will be easy, for others they may need the assistance of a qualified builder in making a choice that will result in their dream home. While you may have heard of the terms Brick Veneer and Full Brick, do you really know the difference? This is where a professional builder can help - by explaining the benefits that each can provide you with in your building process. Many Australians do not even realise that they have a choice between Brick Veneer and Full Brick.

Generally, a Full Brick home will consist of an outer brick layer as well as an inner brick layer, this is why it is sometimes referred to as ‘double brick’. In some home designs however, the outer brick is complimented with a other forms of finish rather than using two layers of bricks, so the term double brick is not always correct.

Brick Veneer on the other hand only consists of the outer “skin” of brick. The brick used is not part of the structure to hold the house up as this is taken care of with the timber framing internally. Brick Veneer is used for appearance and aesthetic appeal. Brick Veneer allows you to have the appearance of a brick home but also allows you the benefits that are provided with a home made from timber framing. Brick Veneer is one of the most popular finishes used in modern homes as it is both economical and provides homeowners with the similar comfort and security as a Full Brick home.

To ensure the effectiveness of both Brick Veneer and Full Brick it is important to select a builder who has the experience and ability to construct a quality home with these materials. Ask your builder for details of their experience in using both Brick Veneer and Full Brick – Do they have a successful record of accomplishment in using these materials in your location? A builder with experience in your area will be able to provide you with detailed advice and guidance on whether Brick Veneer or Full Brick will better suit your own individual needs. While both of these materials are capable of providing you with exactly what you want you want the assurance that your builder is skilled in their use.

When selecting a builder, make sure you ask the questions that will allow you to find out which material will allow your housing dreams to become a reality. A reputable builder will liaise with you to find out exactly how to achieve your dreams and will advise you on the most effective use of building materials so you can make informed decisions. Make sure you select your builder wisely, as you will be reliant on your builder for many years of happiness.

Defining Brick Veneer and Full Brick (22 KB)

Whether you need a builder for a new home, renovations, extension or complete refurbishment, you need to be sure that the builder you select will be able to achieve a stunning home, on time, on budget and create great relationships for all the stakeholders.

It is estimated that Australians will spend about 65% of their lives inside their homes so there is enormous value in taking the time to make sure that the builder you choose can ensure your vision becomes a reality.

Before you sign a contract, make sure you get answers to the questions that will identify the builder who is most suited to your needs.

There are many important issues to consider; logistics, costs, site selection, and ongoing customer service being just a few. The following is a suggested list of questions to ask your potential builders -

1. Can you explain your business structure, how does it benefit our job?
2. How much work do you currently have on, when will it complete?
3. What other work do you have to start, how will that impact on our project?
4. What is the expected duration of construction?
5. Do you have any recommendations to improve or speed up the job
6. Can you provide a program (bar chart is visually good!)
7. What is included in your submission?
8. What elements should I take particular note of.
9. What work is not included in the submission, why not?
10. Are their any hidden or extra costs that may come about?
11. Do you have plans and pictures of previous work done?
12. Can you provide a list of your most recent clients, can we speak with them?
13. What are the standard features and what will cost me more?
14. What warranties and guarantees will you / the manufacturer offer to me?
15. Does any work conducted by sub contractors void any warranties or guarantees?
16. How do your prices compare with other builders and why?
17. How long have you been in the industry?
18. What experience do you have?
19. Will I be able to access the home during the building process?
20. Site meetings – When / where?
21. What professional memberships and registrations do you hold
22. Are you insured and to what level, can you provide a Currency Certificate for each?
23. Can I be sure that all construction you carry out will be fully compliant with all laws and regulations?
24. What responsibility do you take if something is found to not to compliant?
25. What is the “defect liability period”, how long and what is covered?
26. Have you done any other work in this area? If so where?
27. Have you ever filed for bankruptcy?
28. If I have any questions during the building process, who should I contact?
29. What hours are you available, how do I contact you?
30. Do you have a dedicated customer service policy before, during, and after the construction-taking place?

Although this is not an exhaustive list, it will make sure that you are on the right in building your confidence to proceed. The domestic building process is complex to execute and the value you should be looking for is one of “support” from your partner (builder) in this project.

Remember, be inquisitive and ask questions, my important recommendation for you, is that you look to make and be part of a team, this mindset encourages a united approach to start and finish the project where everyone partakes and is a winner.

Questions to Ask Your Builder (Before You Sign Anything) (23 KB)

It will come as no surprise to you that there is a global financial crisis. As the threat of a recession looms upon us people contemplating building or renovating a house need to take a few more precautions or risk their very own construction crisis. The current volatility of international finance markets has put a huge strain on many businesses including building companies. For this reason when deciding upon a builder for your construction needs you not only have to consider the cost effect on you but also more importantly – Does the builder have the financial security to withstand a recession. It is of little use to you to hire a builder who is later forced into liquidation before completing your construction; this will only lead to higher costs for you.

Building in a recession is the same as building in any other economical climate with the only difference being you need to place more emphasis in vetting the builder. No doubt you are aware of your own finances; but how much do you know about the business finances of your builder? Can you be sure that they have the financial backing to make it through the tough times? During a recession, consumers need to dig a little bit deeper to ensure that the chosen builder is able to withstand the rigors and demands of a recession. The key is to choose a quality builder who has strong record of accomplishment in continuing to provide quality construction during financially demanding times. There have been many financial crisis’ which have rocked the construction industry many occurring in the 1990’s – Has the builder you are considering been able to show strong performance even with the impact these had on the industry?

With the financial threats we are currently facing it is an important part of your building process to choose a builder who you can trust in tough financial times. It is not hard to find a builder, but what is hard is finding a quality builder who will be able to build your dreams with minimal financial and emotional stress. Sit down with a selection of builders and ask them the tough questions and you will quickly see which builders are most suited to your needs. If a builder fails to answer or even deflects your financial questions then this should be taken as a warning sign. While building in a recession does have some risks they can be overcome by ensuring that you select a quality builder with a reputation for meeting client needs even in times of heightened financial pressure. A recession is going to be stressful to you as it is without having the added stresses of how your builder is going to perform when things get tough. Make sure you select a builder who you can be confident will continue to build the house of your dreams and will not succumb to the pressures that a recession brings. By choosing a builder carefully, you will negate the risks associated with building in a recession.

Building in a Recession (22 KB)