One of the best ways to increase the value of your home is by renovating. Home renovation is also an excellent way to bring life back into your home. Just as long as you are planning to stay put for a little while longer. So, whether you are starting a project before you move in or getting ready to remodel your current space, it is best to understand how to budget your home renovation project before you start.
Budgeting for a home renovation project can be complicated as many homeowners usually end up spending more than they planned. However, this does not have to be the case if you know what factors to look at. Here are some excellent guidelines to make sure you stay on top of your home renovation project budget.
Get Your Finances in Order First
Figuring out how you are going to finance your renovation is probably the hardest step in the project. You will first have to see whether you have enough cash to cover the project.
If you do not, then you will have to borrow money. Often this comes through a home equity loan or home equity line of credit. In some cases, homeowners even use their credit cards to finance their remodeling projects. This might be a good last resort. Credit cards are not part of a solid financial plan, as interest rates are very high. If you do go the credit card route, be sure to have a plan in place to pay them off.
Know Your Priorities Straight
Ask yourself the question:
“Why do I want to renovate my home?”
The answer will probably be to provide you with a need that is not being met in your current living space. Whether you need more living space, an updated kitchen, or a new area for entertainment, make sure to identify which projects are the top priority.
Also, make sure to look at the things around your home that are in need of immediate attention first. If for example, you need your roof to be fixed or you need to add insulation in the attic, you might want to make these areas your first priority.
It is easy to get sidetracked with smaller projects along the way, so make sure to keep your goals in mind and leave that fancy kitchen equipment for later.
Compare The Cost With The Value
If you plan to sell your house one day, make sure to keep the return on investment in mind. Therefore it is not wise to go for a renovation project that costs a fortune if the house is not going to sell for more than what you originally paid.
The best way to make sure you don’t lose money when you eventually sell your property is to research each project’s cost versus value.
Obtain At Least Three Bids From Various Contractors
Not all contractors will provide you with the same quote. Many times these bids will differ wildly as some might charge a high percentage.
Contractors will have to calculate in costs of materials, supplies, labor, permits, and more. And on top of the total job cost, they will add a percentage which will ensure that they make a profit. This percentage is usually between 10 to 20 percent of the total cost.
While it is good to be aware of those contractors who might be overcharging, one should also be on the lookout for those who undercharge. A contractor who offers you a too-good-to-be-true estimate might be inexperienced or lying about something. Therefore it is always best to obtain at least three estimates from various contractors so that you can compare the prices.
Be a Good Communicator
If you want the contractors to estimate the renovation project as accurately as possible, then you will have to be as precise as possible about your needs. Make sure to provide the potential contractors with a list of your renovation goals, which will include all significant structural changes as well as cosmetic changes to your home.
If you prefer specific brands, be sure to communicate that to the bidding contractors. This will allow the contractors to provide you with a more accurate quote, and if you don’t like the final numbers, you can talk with them about possible solutions to cut down on the costs. In this way, you will also be able to see which bidding contractors are more willing to reach your goals.
Research Various Materials and Sources
Whether you are working with a contractor or not, you must have an idea about how much everything costs in order to accurately budget your home renovation project. Researching the cost of your desired materials not only gives you an understanding of where the money is going, but you might find some better solutions.
For instance, you might have a specific type of flooring in mind, which is high priced, but when you start researching, the chances are good that you will come across a similar product that offers the same benefits but at a lower price.
The best way to go about your research is not only online, but by actually going to the hardware stores in person to get a better feel for the products in mind. With some luck, you might even bump into a special offer along the way.
Cut Costs Where Possible
If you are determined to stay in your budget and even cut some costs, then there are various things you can do to make the price drop. One can choose alternative materials or finishes for individual parts of your project.
However, if you are scared of compromising the quality, then purchasing gently-used or refurbished items is another way to go. Maybe your contractor has connections to leftover materials somewhere. Make sure to be on the lookout for sales as well. Alternatively, you can also hire subcontractors instead of a general contractor and do some of the work yourself.
Calculate in The Unexpected
It is essential to calculate hidden costs into your budget. Many times, especially when it comes to tearing down a wall that contains wiring or plumbing, unforeseen problems may occur.
As a general guideline, the amount for the hidden fees should be about 10 to 20 percent of your total budget. If you don’t have enough money set aside for unexpected problems, then it is time to reevaluate your project and maybe put some projects on hold for the time being. If all goes well, you will have that extra “emergency” cash to continue with your initial plans.
Sell What You’re Not Using
As the saying goes, “one man’s trash is another man’s treasure,” and many times, this is the case with old materials or appliances. If you are tearing out an old kitchen unit, for example, or are getting rid of some appliances, then you can list them online for someone else to buy.
Not only are you being environmentally conscious by keeping your unwanted goods out of the landfill, but you will get some money in return, which you can put back into your remodeling project.
When it comes to remodeling, it is essential not to let your imagination get ahead of you. Stay realistic. When you budget your home renovation project properly, you’ll greatly reduce stress for all parties involved.
Communication is the key! Make sure that you are on a good communication level with the renovation contractor, sub-contractor, or suppliers. This will ensure that you stay on top of the project plans. Everyone stays informed and the results will speak for themselves.
Mattea Jacobs is a freelance writer who mostly writes about home design and environmentally-friendly ways to improve homes. She is also a green activist and a mother of two beautiful sons. You can reach her on Facebook and Instagram.