Planning a home renovation can be exciting, but it is also overwhelming. You know you need to make a plan before diving in, but it’s hard to know where to start. Do you call a contractor first so you know how much to budget? Make a budget first so you know what to tell the contractor? How can you avoid being “those” homeowners who set out simply to do a few projects and end up spending way beyond their means? Creating a home renovation budget really is the best way to begin.
Start with Your Wish List for Your House Renovation
Begin by laying out all the renovation projects you want to tackle. Be specific when you make your plan. “Kitchen” is a huge, all-encompassing project that can easily swallow your entire budget and more. However, breaking “kitchen” down into smaller projects such as, “reface cabinets”, “add island”, or “new floor”, will let you break down your budget too. Once you have your wish list, start prioritizing the projects that you want to tackle first. If the bathroom or kitchen takes priority, focus on starting there, and then rank the rest of the projects accordingly.
Do Your Research
Once you have your prioritized wish list, start doing your research to get a general idea of the cost for each project. This can, admittedly, be tricky. The cost of doing home renovations can change rapidly depending on the season, the current state of the supply chain for materials, how busy the contractor is, and more. Your neighbor may have done a renovation only a few years ago, but his cost and yours may not be the same. Look for current average costs online, and if you know of any local friends or family who have renovated recently, talk to them about the costs of their project. Outline the cost estimates with ballpark figures you find through this research.
How Much Can You Spend?
In a perfect world, you’ll have savings ready to go and can finance your house renovation entirely from funds you have available. Renovating without taking on any additional debt is the best strategy. Yet in reality, that’s not how most homeowners finance their renovations. Many homeowners look for financing options such as a home equity loan, a home equity line of credit (HELOC) or a home refinance with an equity cash-out. All of these options have pros and cons, and all will depend on your individual situation. Look at your finances and see how much you can realistically afford to spend on your house renovation without putting yourself in a precarious situation. That is the top of your renovation budget. When developing your project, plan your budget around 75- 80% of that number at maximum. This will allow you some wiggle room if problems develop that you didn’t expect.
Talk to a Contractor
Now that you’ve done your research, you can reach out to a few contractors in your area with good reputations. Ideally, you want to get estimates and timelines from three contractors. Ask for a bid that is broken down into estimates for each piece of the project so you know what you can prioritize. Let them know what you want to do and what your priorities are. Most contractors will appreciate homeowners who have done their research and understand all the components that go into a house renovation. When you get your estimates, don’t be tempted to jump right on the lowest bid. Weigh all the factors and find the best contractor to fit your budget and needs.
Renovating your home can be overwhelming, but the increased value and comfort can be well worth the investment. When you plan your budget, remember why you are renovating and focus on what will bring you the most value.
Originally posted 2022-11-08 17:38:31.