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Homeowners often wonder how much money they should budget for a home remodeling project. There is a common principle called the 30 Percent Rule in home renovation, that states you should spend no more than 30% of the total value of your home on the sum of all home remodeling projects. This rule ensures that you don’t spend more than you will get on a return on your investment. You can be strategic with your budget and get a good ROI, increasing the potential resale value of your home.
The 30% Rule says your total home remodeling budget should not exceed 30 percent of the total value of your home. This rule is to ensure you do not overspend on home renovation and get a reasonable return on investment. This is the formula for the 30% rule:
Your Homes Value x .30 = Total Home renovation budget
For example:
If your home is worth $500,000 then your total home renovation budget should be $150,000.
If your home is worth $750,000, your total home remodeling budget should be $225,000.
The goal of the 30 Percent Rule is to strike a balance between improving your home’s functionality and aesthetic beauty, and getting a decent ROI from the project.
It Protects Your Investment
If you spend too much on renovations, you might take a loss when you sell your home. This rule safeguards you from being underwater financially.
Avoids Overcapitalization
The market rate is what buyers are currently willing to pay. If you spend more than 30% on remodeling and attempt to add that to the price, you may not be able to sell at that price.
It Forces You to Budget Wisely
The 30 Percent Rule forces homeowners to focus on high ROI projects, like kitchen remodeling and bathroom remodeling.
If you need to focus on more than one remodeling project, and you have 30% of your home’s current value as a guide, here are some ways the budget may be allocated.
Home Value = $400,000
Total Remodeling Budget = $120,000
Kitchen Remodel Budget = $70,000
Bathroom Remodel Budget = $30,000
Flooring Upgrades = $10,000
Miscellaneous / Unexpected Expenses = $10,000
Keeping a smart budget is wise, it prevents you from overspending or underspending.
Here are situations in which you should follow the 30% Rule.
There are some good reasons to go over the 30% rule and spend more on your home renovations.
If you’ve been considering a home renovation—bathroom remodeling, kitchen remodeling, or any other home remodeling project, turn to the contractor trusted by hundreds of Sacramento homeowners. JC Construction & Remodeling is an elite remodeling contractor in the Sacramento area, helping property owners with every kind of home renovation. To schedule a free consultation, follow this link and pick a time to meet with one of our home remodeling experts.
JC Construction & Remodeling is more than just a construction company; we are your dedicated partners in transforming your vision into reality. With over a decade of industry experience, our locally owned and operated business has honed its craft, delivering exceptional home improvement solutions to our valued clients. Integrity and honesty are the cornerstones of our approach, guiding every interaction and decision we make. We understand that each project is unique.
Whether you’re looking to renovate your entire home or simply need a few repairs, our team is equipped with the expertise and resources to exceed your expectations. At JC Construction & Remodeling, quality is not just a goal; it’s a standard we uphold in every aspect of our work. Specializing in general home improvement and remodeling, we take immense pride in the craftsmanship and attention to detail that defines our projects.
