Since you’re exploring the nuances of apartment and condominium acquisitions and renovations, it’s timely to delve into the actual expenditures involved in the remodeling process. Accurately gauging the potential profitability of a condo or apartment overhaul is virtually impossible without a reasonable estimation of the associated costs.
Generally, assuming a complete replacement of all components, budget around $100 per square foot.
I acknowledge that this figure might seem substantial. Let me elaborate and share insights from my personal “gut and replace” renovation of a 1000 sq. ft. condo in Seattle. I’ve structured this discussion around three pivotal questions to help you formulate a cost approximation. For more precise figures, a detailed calculator is provided at the end. Please note that my assumptions throughout this discussion lean towards mid-to-high-end finishes. Opting for more economical materials could yield considerable savings, though potentially at the expense of the final aesthetic quality.
Condo Remodel Cost Question 1: What Are Your Plans for Complete Replacement?
Firstly, if you intend to retain existing flooring, cabinetry, appliances, tiling, and other high-value items, you’ll realize significant savings compared to the aforementioned $100/sf. Before committing to a full-scale removal and replacement, I recommend adopting a “what can I reasonably preserve” mindset.
For instance, during my remodel, I had stainless steel appliances that were 8-10 years old and beginning to show their age. However, I chose to keep them, saving approximately $2,000-$3,000. Ultimately, this decision didn’t significantly detract from the final outcome, though gleaming, brand-new appliances would certainly have been appealing.
As illustrated in the image, my condo was quite old (built in the ’60s) and required virtually everything to be replaced except for those appliances. I intentionally purchased it in that condition, knowing a substantial amount of work would be necessary. 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 decision-making process was guided by whether or not retaining an item would materially affect the quality of the finished product. In my case, this meant a complete overhaul (including the removal of a walk-in tub in the bathroom, which was not inexpensive to dismantle). However, if you can locate a property with some salvageable components, you could potentially reduce your total remodel cost by $10-$20 per square foot.
Condo Renovation Cost Question 2: What Is the Extent of Your Alterations?
As you can see in the image, my condo certainly needed some attention. Two of the most crucial changes for me also turned out to be the most expensive: eliminating the popcorn ceiling and removing the wall between the kitchen and living room.
I’ve previously expressed my frustrations with the popcorn ceiling removal. If I had to pinpoint a single misstep in my renovation, it was selecting a property that demanded $7,000 worth of work before the actual remodeling even began. That said, I’m glad I opted for its removal, as its presence would have undoubtedly diminished the finished product.
Despite the difficult decision to spend money on the popcorn ceiling, I believe you’ll agree that removing the wall was an exceptionally good idea. I admit I was initially hesitant due to the cost, but thankfully I decided to proceed, resulting in a much more open and inviting space. You’ll also notice the lighter tones, which create an illusion of even greater spaciousness.
I would have saved $5,000-$10,000 by keeping the wall between the kitchen and living room, but I have no regrets. For more comprehensive information on condo kitchen remodel costs, be sure to consult my detailed article on the subject.
Condo Remodel Cost Question 3: How Much Work Will You Handle Yourself?
In my 1000 sq. ft. condo remodel, the architect, contractor, and labor each accounted for approximately $10 per square foot. In total, our 1000 sq. ft. remodel cost $100,000, with $30,000 of that allocated to fees and labor.
For me, this was money well spent. As I hinted earlier, we lacked the time and expertise to perform the work ourselves, making professional assistance the only viable option. However, if you possess the skills and capacity to undertake all the work personally, you could easily achieve a remarkably high-quality condo remodel for $50-$70 per square foot, provided, of course, that the work is executed competently.
Condo Remodel Question 4: How Will You Fund Your Remodel?
Financing a renovation can be complex, but fortunately, numerous options are available. Many individuals choose to finance their renovation out of pocket, which was my chosen approach. This can actually be simpler than it sounds if you are able to accumulate a significant portion of the cost before the remodel begins, and then continue contributing to the remodel fund throughout the process. Just be sure to anticipate costs that may exceed your initial budget—that’s a fundamental reality of remodeling.
Many people opt to secure funds for their remodel through a cash-out refinance or a HELOC (Home Equity Line of Credit). Personal loans are also frequently considered, which can be a more straightforward option despite potentially higher interest rates. Lending Tree offers all of these alternatives and serves as an excellent resource for comparing loan options if you require external financing for your remodel.
The final option for financing your condo remodel involves an equity sale. Companies like Point and Unison both allow you to sell a fractional portion of your equity in your existing home or your new home purchase. This presents a fantastic alternative to HELOCs and cash-out refinancing, though it is also a more intricate process.
Ensure You Track Your Investment and Understand Tax Deductions After Renovating Your Condo
Even once your condo remodel is physically complete, your responsibilities aren’t entirely finished. Make sure to meticulously track your costs for tax purposes and diligently monitor your property’s market value.
Tracking Your Investment
I highly recommend finding a method to track both your remodel expenses and the evolving value of your condo over time, especially since you’re likely investing a significant amount. I personally utilize the free tools available through Personal Capital for this purpose—they offer a Zillow Z-estimate connector to keep your condo’s valuation readily accessible. Simply sign up 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.
Why is all this tracking important? It’s quite simple: if you invest too much money into a home, you could easily find yourself “underwater” (owing more than the property is worth). Ensure you always know where you stand financially.
Understanding Your Tax Deductions
If you intend to rent out your condo after the renovation, make sure you meticulously document every single expense, particularly your contractor’s bills, if applicable. You can depreciate the cost of your condo remodel over the next 27.5 years, which can significantly reduce any tax you might owe on your rental income. Depreciating the cost of our renovation, for example, provides us with approximately $4,000 per year in rental income on which we don’t have to worry about paying income taxes (calculated as $100,000 / 27.5 years ≈ $3,636, which rounds to about $4,000).
Condo Remodel Cost Calculator: Determine Your Own Estimate
Enough from me; now, try estimating some costs on your own using the tool below (scroll to the bottom). Keep in mind that this is only an estimator, so your actual expenditures can vary widely. Also, when costs do vary, they have a peculiar tendency to increase, so factor that into your planning.
Caveats aside, the calculator should be fairly intuitive to use. Most of the default inputs are appropriate, so you can simply adjust the square footage, desired quality of finishes, and remove any individual items that you won’t be needing or utilizing.