Our $35,000 Basement Renovation: Why We Paid Someone Else To Do It
One of the regrets we had with our first home is that in the eight-and-a-half years we lived there we never got around to finishing the basement. We vowed not to make the same mistake when we built our new home nearly three years ago. So after we had the basement framed last summer we decided to hire a contractor and finish off the renovation this spring.
A recent CIBC poll revealed that 40 percent of Canadian homeowners planned to renovate their home in the next 12 months, with the average price tag coming in around $20,000.
Related: Do home renovations pay off?
Our $35,000 basement renovation
The basement renovation will cost us about $35,000 including furnishings – money we had to borrow on a home equity line of credit at 3.5 percent to get started. Once complete we’ll have 850 square feet of extra living space, including a family room, two bedrooms, and one bathroom.
We picture using the space for movie nights, entertaining friends after the kids go to bed, a weekend hideaway for dad to watch football, and sleepovers for the kids and their friends. A spare bedroom will come in handy for when friends and relatives come to visit, and eventually our girls will want to move their bedrooms downstairs to get away from mom and dad.
Our old place was a 4-level-split with two bedrooms and one bathroom on the top level. It worked out great for a starter home and with no plans to have kids in the immediate future we didn’t see the need to finish off the basement for extra space.
Related: My biggest home buying regret was getting in over my head as a first-time buyer
Unfortunately that meant the basement became a storage room for all the stuff we collected over the years. Frankly it was a disaster down there and when it came time to move we had to work hard to declutter and clean up the mess.
One of the pitfalls of new home construction is that you typically don’t get a basement or a yard. Last summer we spent a good chunk of time and money on fences and landscaping. This year we planned to tackle the basement in stages as our budget allowed for electrical, plumbing, drywall, and finishing.
I’m a good DIY investor but I make a lousy handyman. Rather than filming my audition for Canada’s Worst Handyman, my wife found the design she wanted for the space and we hired a contractor based on a recommendation from our home builder. We realized that piecing this project together would take a long time because while we saved up for a new phase, the contractor might be onto a different project and need time to circle back.
We met with the contractor and found a window of time to complete the entire project within a few weeks. The basement has been wired and plumbed, fireplace installed, and drywall will be put up this week.
Related: How to make a better personal budget
Final thoughts
So now instead of paying cash as we go we’ll end up making monthly payments toward the balance on our line of credit. I revised my annual budget and it looks like we’ll owe $17,000 on the HELOC at year end.
It made more sense to pay off the HELOC at 3.5 percent rather than our mortgage at 2.2 percent, so we’ve scaled back the extra mortgage payments for now. We’ll make it a top priority to pay off the line of credit in full by the end of 2015, and then resume our accelerated mortgage pay down.
The cost actually seems quite reasonable especially since it includes furnishings. We built a new home a year ago and will be faced with the same scenario. Like you I’m horrible at handy work and could probably win Canada’s worst handyman. Our new home also didn’t come with any landscaping so we had that done (by a contractor) last summer. I’m sure you’ll love having the extra living space down there (and potential for a man cave)
@Dan – Sounds like we need to arrange a worst handyman challenge for pf bloggers!
Where do I sign up?!
Who has time to do any handy work when your busy running a website anyway. It sucks all your time away!
We hired a contractor to finish the basement for our last two houses, for the simple reasons that A) I suck as a handyman and B) it would take years and years for me to do it. Just get ‘er done and enjoy the new space.
@Steve – yup, that’s the idea. thanks for stopping by!
I’m a pretty good handyman, I’ve done quite a bit of work on my house by myself. But after the last job, the basement, I’ve decided hiring professionals is the way to go. Often I work with them, this allows me to make sure things are going as I want, I learn from what they’re doing, and it saves a bit of money because I can do the rough work. The advantage is they know what they’re doing they’re doing so things (like plumbing, electrical, etc.) are done properly, with their guidance I spend less time figuring how to do it, and since you spend less time thinking it gets done much faster (thinking perpetuates thinking, whereas doing perpetuates doing).
@schultzter – that’s good advice, thanks for sharing!
Just this weekend, friends of friends were talking about the absolutely massive house reno project they are starting this year. Almost everyone else told them it was insanely ambitious and they should probably hire out sections of it, so that it gets done and doesn’t take the next decade! I’m sure you will be thrilled when the space is all liveable soon!
@Anne – That’s what we want to avoid, the project taking a decade to finish.
Just thought I’d mention that it’s worth testing one’s basement for radon gas if it’s going to be used steadily. I’m running a test now using a detector from a company in Vancouver. It takes about a year to get an accurate reading so it’s not a fast test.
“Radon exposure is the leading cause of lung cancer in non-smokers and it’s estimated that in Canada there are about 3000 lung cancer deaths related to radon each year.”
Read more: http://www.cancer.ca/en/prevention-and-screening/be-aware/harmful-substances-and-environmental-risks/radon/?region=on#ixzz2xY5YlGE0
There are ways to significantly reduce radon levels in a home so it’s worth checking into.
As a concerned Mom (reading the phrase “2 bedrooms”) I thought I’d mention it here, even though I’m pretty sure you’ve already thought of this since Lethbridge is known to have a high incidence ( http://www.cbc.ca/news/canada/calgary/radon-gas-home-tests-urged-by-calgary-cancer-experts-1.2505835 ). This is more for your readers awareness.
@Bet – thanks for sharing this. We’ll pick up a radon test right away and check things out. Interesting that the map of high radon levels looks awfully similar to the map showing high cases of MS. Hmmmm.
we had the same layout at our last house. it was great when the kids came home from university and after they got married and brought home the grand babies. we sold it two years ago so now we do the visiting. i’m sure you will get much enjoyment from the new digs.
@Gary – We’re here for the long haul so we’re looking forward to getting a lot of use from this space over the years.
Ditto on the concern with Radon levels. I finished off our basement but never allowed any of our four children to move their bedroom down there. A good place to watch Netflix, movies, office, etc . . . but not a good place to live.
@David – Very good point to consider. We’ll be testing for this right away – the device is under $40 at Home Depot and Home Hardware.
I’d suggest you consider checking reviews. There’s a company in Vancouver that sells and decodes detectors. I’ve heard some poor things about some of the US-based ones for Canadian users. Also long slow tests tend to be more accurate as their is seasonal variation for levels of radon.
That cost is not bad at all considering you’re getting 850+ square feet. I’d say you’ll get a pretty good ROI from it when you go to sell down the road.
Most of the handyman stuff isn’t that hard at all if you’re willing to just jump into it and willing to accept a little bit of failure/rework. With YouTube, these days you can find nearly how to do anything.
To the writer:
I plan to do a similar project but it involves renovating a kitchen and bathrooms so will come in at a much higher price tag. Instead of going the HELOC route, when our mortgage (variable) comes up for renewal in two years I plan to borrow the extra cash against the equity in the home and roll it into the mortgage. This way our interest rate will be whatever the variable rate is at the time (hopefully prime minus) and not prime plus as with a HELOC. Do you see any downfalls with this approach? Thanks.
Sounds like the main risk (and potential downfall) is rising rates. That strategy would be best assuming rates stay low (or fall even more). But if they rise, you’d likely be paying more in the future than now. 3.50% for a HELOC (current rate) seems reasonable but obviously the lower the better
We have considered refinishing our basement as well. I wouldn’t tackle a project that size myself either. Do you know how much value this will add to your home?
My husband is quite handy, so we decided to DIY our basement (minus the electrical). All fine and thrifty, but 3 years later we’re still only 85% done. With 2 very young kids, there is never the time. Sometimes, I wish we had bit the bulllet and opened a HELOC to get it done by a contractor. Time is money, after all. Enjoy your new space!
I’ve been thinking about doing this, but with no kids I’m not sure it’s worth it. Maybe if we have enough time before deciding to sell. Getting more of the mortgage paid off needs to come first anyway.
Smart, know your limits 🙂
When we finished our basement it seemed like a lot of work even though we subbed out electrical,small bit of plumbing, bathroom tiles, drywall taping and painting. My husband did the framing and drywall, fireplace and tiles, bar and tiles. We did this to save money, but in all honesty I don’t know how much we saved because he works for himself so he suffered loss of income while this project was going on. The experts know what they are doing and they are a lot faster. For him it was a right of passage since he never completed the basement in our previous house, so I left him to it.
Add me to this $20,000 home renovation statistics. A couple small renovations ended up adding up to over $25K so far. I just found out I need to get a sump pump installed in my basement, so that’s another $4K. Thank goodness I have an emergency fund and interest rates are low, otherwise I could have a soggy basement for a long time.
Way back in ’85 I contracted out the basement reno after watching all the 2×4’s I had stupidly ordered warp on me as i just didn’t get around to doing it (not that I was able). So we have had many, many years of enjoyment while our kids were young.
We’re now on our second reno after a flood in July of 2012-our son and his fiancé will soon be occupying the space.
Mr. Money Mustache always talks about how great it is to DIY home projects. But the fact of the matter is he is good at that and he enjoys the work. Few people do. You’re wise to realize you’re limitations as a handy man and stay away from the time-suck that is DIY without passion.
@Will – I agree, if you like the work (and are good at it) then go for it. I’m good at writing articles, so I’ll stick to that in my spare time and leave the handy-work to the pros 🙂
In my opinion, you made a good decision. I do quite a bit of remodeling and it can be very very stressful. Sometimes I think I’d be better off in the long run just paying the pros.