Let’s talk…reno budget.
Since we opted to finance the home on a conventional 15 year with no PMI instead of an all cash purchase, it gave us the opportunity to think creatively about the capital we have saved from the sale of our home in Nashville last December.
That capital has become our renovation budget.
We also bought our home well beneath the national average. This was intentional so that we could maximize the ROI in the distant future. For those interested, we are essentially following two different real estate investing strategies in tandem with this being our primary residence. The first, BRRRR and the second, House Hacking. The BRRRR option isn’t exactly 100%, as we have no plans to refinance to open funds for another property, but it follows the rest very closely. With house hacking, we plan to leverage that finished basement as another STR for cash flow & living expenses. But keep in mind, the main reason for our home is simply that. We need a new home base, the rest is extra. That’s the creative part.
Circling back to the reno budget and capital from the sale of our other home…
Most of the capital saved will be used, however, we keep a designated amount set aside as a emergency fund greater than 6 months. The challenge with a large renovation project like this are the unknowns. You can decide on a budget all you want initially, but it’s likely that amount will change as forward progress is made. For starters, we have $15k worth of foundation work including new floor joists & a structural beam that need to be repaired before we get to the fun stuff. There’s certain things you just have to accept when dealing with a home that’s well over a century old.
We estimate that…
Our Phase 1 renovation which includes the main living, foundation, & exterior work will cost us $150k. Phase 1 is all about making the necessary safety & required livable repairs. Additionally, the main living area needs some functional adjustments as the current layout of the home doesn’t work for us. Phase 1 also includes making the finished basement ready for us to move in and later convert to a STR.
Has anyone else taken on a large renovation project?