So, you’ve bought an older home that needs some renovation—now what? Deciding what to renovate and how much to spend can feel overwhelming. The key is to make strategic upgrades that enhance functionality and value without over-improving beyond the standards of your neighborhood. Here’s how to prioritize renovations and stay within a smart budget.

Understand Your Neighborhood’s Value

One of the biggest mistakes homeowners make when renovating is spending more than their neighborhood’s home values justify.
If you’ve purchased a starter home or a property valued primarily for its land, focus on making it attractive and functional rather than overly luxurious. A buyer seeking a high-end home is more likely to look in neighborhoods where upscale features are standard across all homes. Keeping your upgrades in line with surrounding properties ensures a better return on investment when it’s time to sell.

Prioritize High-Impact Areas

If your home needs multiple updates, prioritize renovations that improve convenience, comfort, and functionality the most. Typically, the kitchen is the best place to start.

Planning a Kitchen Remodel

Before starting, ask yourself these key questions:

• Do I need to replace all cabinets, countertops, and appliances?
• Would a new layout improve functionality?
• Can I reconfigure the space by borrowing from another room?

A kitchen designer can help you assess your needs, manage costs, and maximize storage and workspace. Realtor.com recommends having a Plan B (and even a Plan C) in case certain features become too expensive or unavailable. For example, you might price out high-end appliances but have more budget-friendly alternatives as a backup. A good designer can provide multiple schematics with different price points, helping you make the best financial decisions.

Set a Realistic Renovation Budget

When determining how much to spend, it’s important to follow industry-recommended guidelines. Budget Dumpster suggests allocating no more than 10 to 15 percent of your home’s total value to any single room.
For example:

• If your home is valued at $400,000, your kitchen remodel should stay within $40,000 to $60,000.
• If you also plan to update bathrooms, allocate 10 percent per room and set aside an additional 10 percent for unexpected costs.

Plan for Hidden Expenses

Unexpected expenses are almost guaranteed when renovating an older home. Issues like outdated wiring, plumbing problems, or structural surprises can quickly add to your budget. Setting aside a financial cushion helps prevent unexpected budget overruns.
A good strategy is to get multiple contractor quotes before starting any project. Comparing multiple quotes can help ensure you stay within budget and avoid overspending.

Making Smart Renovation Decisions

Renovating an older home can be a rewarding experience, but smart budgeting is key. Keep your upgrades in line with your neighborhood, prioritize high-impact areas like the kitchen, and set a realistic budget with room for unexpected costs. By making strategic upgrades, you’ll increase your home’s value, improve functionality, and enjoy your space—without exceeding your budget.