How to Save Money on a Basement Remodel

When we bought our first house, it had a partially finished basement that didn’t look much like a living space. The vinyl floor didn’t completely hide the underlying concrete. The walls were haphazardly covered in fake wood paneling. The ceiling was uneven, and the light bulbs were bare.

Over the next few years, we fixed every part of this room. We upgraded the electric system, repaired the ceiling and woodwork, painted the walls, and redid the floor. We added light fixtures, window treatments, furniture, and art. And we did it all on a budget of about $1,600.

Technically, our project wasn’t a full remodel since our basement already had walls and a ceiling — crude as they were. But the techniques we used can help you save money on any basement renovation, from a minor refresh to finishing an unfinished basement from scratch.

How to Save Money on a Basement Remodel

Adding a finished basement is one of the most significant home improvement projects you can do without actually building an addition. A basement remodel can cost tens of thousands of dollars, and material pricing is on the rise. That means a project three months from now could cost even more than the prices you can find today.

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But with the right strategies, you can keep your basement remodeling project well below the average cost. It’s all about setting priorities and spending your dollars wisely.

1. Make a Budget

You can’t stick to a budget if you don’t make one. The first step is to figure out your goal. Possible uses for a finished basement include:

  • Home office
  • Family room
  • Game room
  • Playroom
  • Home gym
  • Home theater
  • Wine cellar
  • Wet bar
  • Guest bedroom
  • Additional bathroom
  • Complete apartment you can rent out as an accessory dwelling unit

Once you know what you want to do with the room, walk through it and figure out what changes will make that possible. Then look at HomeAdvisor to figure out what these changes are likely to cost. Use that info to make a preliminary budget.

If your initial cost estimate looks like more than you can afford, start editing. Which parts of the project are must-haves, and which can you skip or save for later? For instance, wet bars and home theaters require costly plumbing and electrical work. Cutting these features could get your budget in line.

If you’re unsure what to keep and what to cut, talk to a contractor about costs. They can tell you how much is realistically possible on your budget.

2. DIY Where You Can

If you’ve edited your list to the minimum and the cost is still too high, it’s time to start looking for ways to do it for less. One of the best ways to pare down your budget is to do the work yourself instead of hiring contractors. 

Labor costs can amount to anywhere from 10% to 40% of the cost for a basement remodel. That’s how much you can potentially save by tackling the job yourself. And if you do enough of the work yourself, you might even be able to add back some of the extras you cut in Step 1.

DIY was the primary way my husband and I kept the cost of our basement renovation so low. We did almost all the work ourselves: removing the old paneling, repairing and painting the walls, refinishing woodwork, installing light fixtures, and redoing the floor.

If your basement refinishing job is more extensive than ours, you may not be able to do everything yourself. But with basic DIY skills, you can handle jobs like painting, replacing fixtures, and patching walls. More advanced DIYers can hang drywall and install flooring.

3. Get Multiple Bids From Contractors

If you’re starting with an unfinished basement, you probably can’t DIY everything. You need to bring in contractors for big jobs like plumbing and electrical work or adding an egress window.

As a rule, any job that requires a permit is best left to pros. These jobs need to meet building codes, and you need to be familiar with the code to do them right. A homeowner who tackles them could end up paying more money to have a contractor fix their mistakes.

When hiring contractors, always get at least three bids. By comparing the three, you can get a good idea of the reasonable rates and avoid getting gouged.

But don’t automatically go with the lowest bid you receive. Any bid that’s much lower than all the others could be a sign of a contractor who’s cutting corners. If you have to pay to have a job done, it’s worth paying a little more to have it done right.

To find a good contractor, check:

  • Reviews. Look for verified reviews on sites like Angi (formerly Angie’s List). They can tell you how satisfied other customers are with the contractor’s work and material choices.
  • References. Ask each contractor for referrals to past customers, and check them out. Ask questions like whether the contractor finished the job on time and on budget.
  • Licenses and Accreditation. Ensure any contractor you hire is properly licensed, bonded, and insured. Places to check include your local building department, your state consumer protection agency, or the Better Business Bureau.

We got lucky when hiring an electrician — the one professional we brought in for our basement renovation. The contractor with the best reviews was also the one who offered us the best price. That made our hiring decision easy.

But if the best contractor you found has the highest bid, try using the lower bids to negotiate with the contractor. Tell them what the others offered and ask if they can come down on price. Also, ask them for suggestions on ways to bring the cost of your project down or work out a payment schedule that fits your budget.

4. Choose Basic Materials 

When planning a remodeling project, it’s easy to get swept off your feet by the beautiful pictures in home magazines and online. Unfortunately, those gorgeous images often feature high-end fixtures and materials that can wreck your budget.

To keep your remodeling cost under control, look for more reasonably priced materials. Ways to save on materials include:

  • Search by Price. When searching for merchandise like tile or lighting fixtures, look at the lowest-priced options first. If you start at the high end, you could fall in love with something way out of your budget. But if you start low, there’s a good chance you’ll find something you like before you get to the really pricey stuff.
  • But Don’t Go Too Cheap. Sometimes, the cheapest materials aren’t very durable. If you find something that looks like a bargain but has no reviews to confirm its quality, be wary. You could save more in the long run with a slightly pricier material that lasts longer.
  • Choose Prefabricated Over Custom. Custom fixtures, such as cabinets, cost a lot more than prefabricated ones. For instance, custom egress windows and window wells can cost thousands of dollars, while prefab ones can cost as little as a few hundred.
  • Look for Bargains. Consider discount options for materials, such as secondhand goods, floor models, and factory seconds (slightly damaged goods sold at a reduced price). Try reuse centers for bargains on all kinds of materials, such as lumber, floor coverings, lighting fixtures, paint, and bathroom fixtures.

5. Save on Walls

One of the costliest parts of a basement remodel is adding walls. Depending on your needs, each new wall in your refinished basement can cost anywhere from $1,000 to $3,000.

Choosing an open-space layout can save you big money on your remodeling project. The fewer basement walls you add, the less you need to spend on framing, drywall, wiring, insulation, and doors.

If you don’t want a completely open layout, look for cheaper ways to divide the space. For instance, you can hang curtains, use freestanding screens, or hang wall dividers on a track. As a bonus, you can easily open these to make a single big space when you need it.

If you do add walls, save money by using fewer studs. Because your new walls won’t be load-bearing walls, you can get away with spacing the studs 24 inches apart instead of 16 inches. 

In addition to cutting framing costs, using fewer studs can help you save on utility bills. Exterior wall studs act as conductors, pulling summer heat and winter cold into your living space. Walls with fewer studs insulate better, cutting your winter heating and summer cooling costs.

You can also save on walls by sticking to plain painted drywall on the outside. Fancy drywall texturing techniques, such as combing or sand swirling, add to the cost. 

6. Opt for Inexpensive Flooring

Hardwood floors look great, but they can cost as much as $22 per square foot. They’re not the best choice for a basement anyway since they’re vulnerable to moisture damage. Ceramic tile stands up to moisture, but it can also be pricey, and it’s hard and cold underfoot.

Instead, go for one of these cheaper basement flooring options

  • Carpet. Carpet averages $3 to $11 per square foot and provides welcome insulation from a cold basement floor. Just add a moisture barrier underneath to protect it from seepage.
  • Laminate. Laminate costs about the same as carpet. It’s scratch-resistant and easy to clean, and it comes in a wide variety of colors and patterns. But it’s vulnerable to water damage, so don’t install it in a basement with water issues.
  • Luxury Vinyl Tile. Luxury vinyl flooring, which costs $2 per foot, is waterproof and very durable. Like laminate, it comes in a wide range of patterns. You can install it right over a concrete floor, but it needs a moisture barrier in damp basements.
  • Finished Concrete. One of the cheapest ways to finish basement floors is to paint or finish the existing concrete. Options include paint, stain, and epoxy. You can polish the concrete or use a stencil to add patterns. Finished concrete is very durable and low-maintenance, but it’s also hard and cold. Pros can charge anywhere from $2 to $25 per square foot for this job, depending on the treatment. But you can do a simple stain job yourself for under $1 per square foot.
  • Paper. In our basement, we went with an unusual paper-bag floor treatment. It was cheap because we did the work ourselves and didn’t need to add a subfloor. We spent about $325 on kraft paper and polyurethane to cover 400 square feet.

7. Leave the Ceiling Open

Adding a finished ceiling to a basement costs between $1 and $5 per square foot for joists, insulation, and drywall. Additional finishes like wood paneling or a textured ceiling treatment add to the cost.

A drop ceiling costs even more. This type of ceiling has removable panels, giving you easy access to pipes and heating ducts. However, the panels, the grid rails they sit on, and the installation can cost between $3 and $26 per square foot.

The cheapest way to finish your basement ceiling is to simply spray-paint it. Pipes and ductwork blend into the background once everything’s the same color.

This treatment costs less than half as much as a finished ceiling, and it allows access to all your pipes and ducts as needed. The only downside is that it doesn’t provide any insulation between the basement and the home’s upper levels.

8. Plan Bathrooms Around Existing Plumbing

Adding a bathroom as part of a basement remodel is a major cost: around $10,000 or more. However, it’s usually cheaper than putting in a new bath elsewhere in the home, which can cost as much as $35,000.

Moreover, this upgrade can increase the resale value of your home significantly. A new half bath adds around 10% to your home’s value, and a full bath adds 15% to 20%. 

To get this benefit while keeping the cost low, work around the existing plumbing. It’s cheaper to tap into plumbing lines that lead up to the main floors than to add new ones. 

If you already have a drain in place, that can shave $500 to $1,000 off the cost of the bathroom addition. And if the bathroom is completely “roughed in,” meaning it has water supply and drain lines set up for the toilet, shower, and sink, that saves you $1,500 to $4,000.

Another plus of a basement bathroom addition is that you can put the sink and shower closer to your water heater. That means you don’t have to wait as long for hot water to travel through the pipes. By running the water less while waiting, you’ll conserve water and save money.

9. Don’t Skimp on Waterproofing

Waterproofing is one of the most essential parts of a basement remodel. You can’t use your basement as a living space if water gets in every time there’s a heavy rain. Plus, moisture that builds up in the walls can lead to health-threatening mold and mildew.

So before doing anything else to your basement, do a simple moisture test. Tape a square of plastic wrap or aluminum foil to the wall with duct tape and leave it in place for 24 hours. If the side next to the wall is damp, your basement needs waterproofing.

The cost of waterproofing varies greatly. If your moisture problems are minor, you can sometimes fix them with a coat of sealant that costs as little as $100. 

But bigger problems require more costly solutions, such as sealing the foundation, repairing cracks, or adding drains and sump pumps. The average cost for professional basement waterproofing ranges from $2,000 to $7,000.

Still, it’s money well spent because it helps prevent future water damage. If your newly finished basement floods after a year or two, everything you added — drywall, carpet, even furniture — could need to be removed and redone.

10. Leave Some Space Unfinished

The point of remodeling a basement is to add more living space to your home. However, don’t forget that you also need some room for storage. The basement is the primary storage space in most homes, and a home with no storage is a turn-off for buyers.

But if you’re setting aside some room in your basement as storage, there’s no need to pay for renovating it. Just wall off that section and leave it unfinished. If you do that with one-third of the basement, you cut your remodeling costs by as much as a third while leaving plenty of room for storage.

Leaving part of the basement unfinished can also save you some money on your property taxes. In most cases, the appraised value of your home is based on the square footage of living space only. The unfinished storage area won’t add to your tax bill.

Final Word

A basement remodel is one of the best projects to increase your home value. It’s a highly cost-effective way to add more living space to the home without building an addition. According to HomeAdvisor, a basement finishing project has a return on investment of 70%.

Still, the most significant benefit of a basement remodel isn’t the resale value. It’s the enjoyment you get from using your new space. So when designing it, focus on what works for you and your family, not what you think some future buyer will want.

Depending on the real estate market in your area, a home gym or home theater may not be a major selling point. But if it’s a space you use all the time, that makes it a worthwhile investment. And if it allows you to drop your gym membership or save on movie tickets, it could have a financial payoff too.

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