Home Renovation Costs: Why My $75K Budget Became $500K (And How to Avoid the Same Mistakes)
Home Renovation Costs: Why My $75K Budget Became $500K (And How to Avoid the Same Mistakes)
The Problem: Why Home Renovations Cost 3-7X More Than Expected
If you're buying a fixer-upper or planning a major renovation in the Bay Area, here's what you need to know: most homeowners drastically underestimate renovation costs. A "simple refresh" can easily balloon from $75,000 to $500,000 when you don't know what to look for.
When my wife and I bought our second house in Burlingame, we planned to refresh the kitchen and update some systems for around $50,000 to $75,000. I even had a contractor tell me, "Yeah, that sounds possible." But once we started peeling back layers, it became "well, if we're doing this, we might as well do that too." Before we knew it, we'd spent almost $400,000 in the first year alone. After a year, we ended up investing close to half a million into the home.
We were aware of most of the issues upfront as they were noted in the disclosure package, so it wasn't anyone's fault. We just had no idea what it would cost to address them properly or in what time frame, versus the order in which they should be fixed. Now, to be clear, I have no regrets. I learned a lot from the experience. We own an asset that has appreciated significantly, and the home is now in excellent condition since we did almost everything possible on the remodel.
But here's what I wish I'd known: every mistake I made is completely avoidable if you know what to watch for.
The 4 Mistakes That Will Impact Your Renovation Budget
Mistake #1: Choosing the Lowest-Bid Contractor
We went with the lowest-bid contractor because the price was attractive, he felt confident about the scope, and I thought I could manage the project myself. In retrospect, this wasn't a good idea. The contractor, while a very nice person, was from out of the area (his team drove a long distance daily), the organization wasn't there, and while things looked good on the surface, the quality underneath was not what I was expecting.
Several years later, our HVAC completely failed. Turns out, instead of mounting the HVAC system in the crawl space under the framing, they installed it on the ground in the dirt on a metal pan. I'm not sure how it passed the final inspection with the City, but it did. Even though the unit was 5 years old, we replaced it with a new one for $8,300.
This is what happens with low-bid contractors. They cut corners you won't see until years later. They use cheaper materials, skip critical steps, and create problems that cost multiples of what you "saved" upfront.
Mistake #2: Skipping the Structural Engineer
Our house was built with what our structural engineer later called "cutting-edge techniques from the 1880s." I tried to laugh about it since what else could I do? This meant the foundation was sitting on dirt, not extending below the soil line as it should.
Should the home inspector have noticed this? I can't say it was his fault because digging away soil from a foundation isn't part of a typical inspection. This is just what can happen with a home built in 1924. I'd never seen this before in my real estate practice for my clients. We ended up re-pouring three-quarters of the foundation.
A pre-purchase engineering inspection would have given me a better idea of what exactly we were getting into. Standard home inspections don't catch structural issues in older homes. For homes built before 1950, a structural engineer can identify foundation problems, outdated building techniques, and hidden costs before you buy. That $800-$1,500 investment can reveal $100,000+ in foundation work you'd otherwise discover mid-renovation.
Mistake #3: The $40,000 Property Line Disaster
We couldn't afford a $4,000-$5,000 survey when we bought the house, so we just discussed with the neighbor where to put our new fence, since there hadn't been one between our homes before. This was a big mistake.
Years later, when we finally got that survey, the fence was 8-12 inches off our property line. We had to demo the entire driveway and install a new fence. Total cost: $40,000.
Here's what nobody tells you: existing fences are almost never on the actual property line. Without a survey, any work you do near boundaries can end up on your neighbor's property, leading to expensive demolition and reconstruction down the road.
Mistake #4: Not Researching Materials
Our landscape designer suggested this really cool-looking gravel for the driveway. A couple of years later, pebbles were washing out into the street because no one mentioned that it needed an epoxy binder to stay in place.
It's a similar story with the gorgeous limestone we fell in love with for our current new home nearby - it needs five coats of sealing every 12-18 months. That's a 6-7 hour job for two people, every year. Even though we love the limestone and get compliments on it, sealing it so often doesn't feel like a good use of our money.
Designers and contractors don't always disclose maintenance requirements. Beautiful materials can become expensive burdens if you don't understand the lifetime costs before you commit.
The Solution: A Framework That Actually Works
Fast forward a few years, and we had a chance to remodel a new house. This time, I was determined to do it right. Here's the framework that kept us on budget and delivered quality results:
Phase 1: Before You Buy
Get a property survey. Accept that the fences are likely not on the boundary lines, and then obtain a survey post-closing before any major work involving boundaries. A $5,000 survey can save you $40,000+ in demolition and reconstruction.
Consider a pre-purchase engineering inspection, especially for older homes. This $800-$1,500 investment reveals foundation issues, structural problems, and gives you accurate cost estimates before you commit. For homes built before 1950, this is essential.
Really understand and respect your comfort level for surprises. Older homes and major renovations will have unexpected costs. If that makes you anxious, consider a newer home or one in better condition.
Phase 2: Choosing Your Team
Hire the most expensive contractor with the most thorough bid. This is counterintuitive but critical. When we finally did it right on another home we own and now live in, we hired the most expensive contractor. Why? Because his bid was the most thorough. Instead of lowball estimates that would lead to change orders, he included larger allowances and suggested quality improvements upfront. He said things like "If you're doing this type of kitchen, you might want to consider wainscoting and thicker hardwood floors."
Check their websites. Good websites usually mean good communication. Get detailed timelines: when do they need decisions, when do materials need to be ordered, etc.
Always call references, don't just get the list. Ask specifically about change orders, timeline accuracy, and problem-solving.
Hire an architect, not just a designer. There's a big difference. Architects are licensed and have extensive training. Our architect identified problems during construction that could have led to costly mistakes later. While it's possible to have a good designer, I believe having a skilled architect is worth their weight in gold.
Get a builders' risk insurance policy during any construction. Homeowners insurance doesn't cover vacant homes under construction.
Phase 3: During Construction
Establish weekly communication protocols. We had weekly on-site Monday morning meetings. Every Sunday night, the foreman would email us with the 3-4 decisions we needed to make at the next walkthrough.
Demand immediate notification of problems. When problems came up, the contractor called immediately with solutions and costs, not panic. This prevented small issues from becoming expensive emergencies. Fortunately, all the scope creep that happened during the project was driven by us, the clients, not by surprise issues.
Question maintenance requirements for every material. Before you approve any material, ask: How often does this need maintenance? What does that maintenance cost? What happens if we skip it?
Phase 4: Setting Realistic Timelines
Light refresh: 3-4 months
Major renovation: 8-12 months of planning before construction even starts
New construction: 2.5-3 years total
Rushing these timelines leads to poor decisions and cost overruns.
The Results: What This Framework Actually Delivers
When we followed this framework on our second renovation project, everything changed.
Paying 20-30% more for the right contractor and team saved money long-term. Communication was everything. Because the contractor called immediately with solutions and costs when problems came up, we could make informed decisions instead of panic decisions.
Because we hired quality contractors and an architect who caught problems during construction, we haven't had the expensive failures that plagued our first renovation. We have no regrets about either project. We learned from the expensive lessons on the first one, and we own assets that have appreciated significantly. But the second renovation was dramatically less stressful and more predictable.
The Bottom Line: When to Invest and When to Walk Away
Looking back on spending close to half a million dollars on our first renovation, here's what I tell my clients: The best money you'll spend is on the experts who help you avoid problems before they start.
A $5,000 survey saves $40,000 in boundary mistakes. A $1,500 structural engineering inspection reveals $100,000+ in foundation work before you buy. A 20-30% higher contractor bid saves you from failures, change orders, and years of expensive repairs.
Research everything. Question maintenance requirements. Demand detailed project plans. And sometimes, the best advice is knowing when to walk away from a property entirely.
When I Talk People Out of Buying
I talk people out of buying homes all the time, and after hearing my story, you can probably understand why. Sometimes I'll look at a property with a client and say, "How do you feel about this level of unknown? Maybe this isn't the right fit. Let's be patient." There's always another house.
It's extremely expensive to buy a home in San Mateo County. These numbers are outrageous. But if you can be smart about the process, you can save yourself from the kind of costly surprises we experienced.
My goal is to help you have a good experience. Sometimes that means helping you navigate the renovation process correctly from day one. Sometimes it means knowing when to walk away.
If you're considering a property that needs work or what improvements would increase the value of your home, I'd love to talk to you. I'd rather help you avoid these expensive lessons I learned the hard way.
And if you want to see more about my experience, watch this.
This article is copyrighted by Raziel Ungar and may not be reproduced or copied without express written permission.
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