As my recent articles have delved into the intricacies of acquiring and upgrading apartments and condominiums, I believe it’s opportune to address the actual expenses associated with the remodeling process. It would be nearly impossible to gauge the profitability of a condo or apartment renovation without a reasonable estimate of its likely financial outlay.
Generally speaking, and assuming a comprehensive replacement of all elements, anticipate around $100 per square foot.
I understand that figure may seem substantial. Allow me to elaborate further and incorporate insights from my personal “gut and replace” remodel of a 1000 square foot condominium in Seattle. I’ve structured this discussion around three guiding questions to help you approximate costs, but for more concrete figures, a detailed calculator is provided at the conclusion. Please note that my assumptions here lean towards mid-to-high-end finishes; opting for more budget-friendly materials could yield significant savings, albeit at the potential expense of the final quality.
Condo Remodel Cost Question 1: What Will You Be Completely Replacing?
Firstly, if your plan involves retaining existing flooring, cabinetry, appliances, tiling, and other costly components, you stand to save a considerable sum compared to the aforementioned $100/sf. Before committing to a complete tear-out and replacement, I recommend approaching the decision from the perspective of “what can I reasonably live with keeping?”
For instance, during my own remodel, I had stainless steel appliances that were 8-10 years old and beginning to show signs of wear. Nevertheless, I chose to keep them, saving approximately $2,000-$3,000. Ultimately, this decision didn’t significantly detract from the finished product, though perfectly pristine new appliances certainly would have been appealing.
As the image below illustrates, my condominium was so dated (constructed in the 1960s) that virtually everything needed replacement, aside from those appliances. I intentionally acquired it in this state, fully aware of the extensive work required. I had initially hoped to salvage and repurpose the existing cabinets, but their age meant they lacked even basic drawer rollers, rendering them unsuitable.
My decisions were guided by whether retaining an item would materially affect the overall quality of the completed renovation. In my scenario, this meant everything had to go (including a walk-in tub in the bathroom, which was surprisingly costly to remove). However, if you can locate a property with some salvageable elements, you could potentially reduce your total remodel cost by $10-$20 per square foot.
Condo Renovation Cost Question 2: How Extensive Are Your Structural Alterations?
As depicted in the preceding image, my condo clearly required substantial work. Two of the changes I prioritized most also proved to be the most expensive: the removal of the popcorn ceiling and the elimination of the wall separating the kitchen and living room.
I’ve already expressed my frustration regarding the popcorn ceiling removal. If I were to pinpoint a single misstep in my renovation, it was choosing a property that demanded $7,000 worth of work before we even began the actual remodel. That said, I’m undeniably pleased with the decision to remove it, as its retention would have compromised the final aesthetic.
Despite the difficulty of allocating funds to the popcorn ceiling, I believe you’ll concur that removing the dividing wall was an exceptionally sound decision. I confess my initial hesitation due to the associated expense, but fortunately, I proceeded, resulting in a much more open and inviting living space. You’ll also notice the use of lighter tones, which further enhances the perception of space.
I could have saved $5,000-$10,000 by keeping the wall between the kitchen and living room, but I’m glad I didn’t. For more detailed information on condominium kitchen remodel costs, please consult my dedicated post on the subject.
Condo Remodel Cost Question 3: How Much Work Will You Undertake Yourself?
In my 1000 square foot condominium remodel, the costs for the architect, general contractor, and labor each approximated $10 per square foot. Cumulatively, for our 1000 square foot project costing $100,000, approximately $30,000 was allocated to fees and labor.
For me, this expenditure was entirely justified. As I previously hinted, we lacked both the time and the expertise to perform the work ourselves, making professional engagement the only viable option. However, if you possess the skills and time to execute all the work personally, you could easily achieve a remarkably high-quality condo remodel for $50-$70 per square foot—assuming, of course, that the work is executed proficiently.
Condo Remodel Question 4: How Will You Finance Your Renovation?
Securing funding for a renovation can be complex, but fortunately, a diverse range of options exists. Many individuals opt to finance their renovation out-of-pocket, which was my chosen approach. This method can be more manageable than it sounds if you are able to accumulate a significant portion of the cost prior to the remodel, and then continue contributing to the renovation fund throughout the process. Just be sure to anticipate costs exceeding your initial budget—this is a fundamental reality of remodeling.
Many people choose to fund their remodel by leveraging their home equity through a cash-out refinance or a Home Equity Line of Credit (HELOC). Personal loans are also frequently considered, offering a potentially simpler solution despite often carrying higher interest rates. Lending Tree provides access to all these financing avenues and serves as an excellent platform for comparing loan options if you require external funding for your remodel.
The final financing alternative for your condo remodel involves an equity sale. Companies like Point and Unison allow you to sell a fractional ownership stake in your current home or your new property purchase. This represents an intriguing alternative to HELOCs and cash-out refinancing, though it is inherently a more intricate arrangement.
Vigilantly Track Your Investment and Understand Tax Deductions After Condo Renovation
Even once your condominium remodel is physically complete, your tasks aren’t entirely finished. Ensure you meticulously document all your expenses for tax purposes and continually monitor your property’s market value.
Monitoring Your Investment
Utilize Personal Capital’s free tools to track your home equity alongside your other investments and accounts.
Given the substantial financial outlay likely for your condo remodel, I highly recommend finding a system to diligently track both your remodel costs and the evolving value of your condominium over time. I personally rely on the complimentary tools offered by Personal Capital for this purpose; they feature a Zillow z-estimate connector to conveniently keep your condo’s valuation accessible. Simply register for Personal Capital, then add your home as a new asset. Next, input your mortgage as a separate account, and you will see the same comprehensive overview that I observe in the image above.
Why is it crucial to track all this information? The reason is quite simple: if you invest an excessive amount of money into a property, you could easily find yourself in an underwater situation (owing more than the property is worth). Ensure you are always aware of your financial standing.
Understanding Your Tax Deductions
If you intend to lease out your condominium after the renovation, make sure to diligently log every single expense, particularly your contractor’s invoices if applicable. You have the ability to depreciate the cost of your condo remodel over the next 27.5 years, which can significantly reduce any tax liability you might incur from your rental income. Depreciating the cost of our renovation, for example, effectively provides us with approximately $4,000 per year in rental income on which we do not have to pay income taxes ($100,000 / 27.5 ≈ $3,636, which rounds to approximately $4,000).
Condo Remodel Cost Calculator: Determine Your Own Estimate
Enough from me; now try estimating some costs for your own project below (scroll to the bottom). Please remember that this is merely an estimator, and your actual costs can fluctuate wildly. Furthermore, when costs do vary, they have a peculiar tendency to vary upwards, so plan accordingly.
Caveats notwithstanding, the calculator should be relatively straightforward to use. Most of the default inputs are perfectly fine, so you can primarily adjust the square footage, desired quality of finishes, and remove any individual items that you will not be needing or using.