Nailing down a budget is the first step in any home remodeling project. It can be overwhelming at first to organize the financial aspects of things. But with the right strategies and know-how, you can absolutely hone in on a budget that will serve you well throughout the renovation process. Read on to learn more about how to craft a budget for your home remodel project.
According to HomeAdvisor, it costs anywhere between $17,916 - $78,051 to tackle a home renovation project. Typically, you'll base your budget around the overall value of your home. It’s a good rule of thumb to not spend more than roughly 10 to 15 percent of your home’s value on a single room. Spending anything beyond this will not add additional value to your home.
Once you understand what the limit for your budget should be, you need to understand how much you can actually spend. Take an honest look at your financial situation and determine how much you can realistically put towards your project. Keep in mind that you will need roughly 10 - 20 percent of your budget toward emergencies and inevitable unforeseen issues.
There are two general directions you can take when planning your renovation – pursue a whole home remodel or remodel one or two rooms. Not only will you need to decide which path makes more sense financially, but also from a practical, day-to-day standpoint. Remember, if you choose to do a whole home remodel, you will likely be displaced for weeks if not over a month. Will it be inconvenient to have constant construction happening around you? What will you do when your kitchen or bathroom isn’t available? These are questions you want to ask yourself about what option is best for you.
How will you finance your project? There are a few different ways to go about this that you can choose from.
Cash. Whether you’ve been saving up or you simply have the income for it, you might decide that you want to pay for the total cost of your project upfront.
Credit or loan. If you don’t have all the funds available to pay for the entire project cash, you may take out a full or partial line of credit or loan. If you decide to go this route, it’s essential to be mindful of your monthly payments and the interest you will incur. Be sure this will fit comfortably in your long-term budget.
Home equity line of credit (HELOC ). If the amount you owe on your home loan is less than the value of your home, you may be able to take advantage of a HELOC. Essentially, it’s a line of credit that uses your home as collateral. You can use it like a credit card – once you pay it off, you may use it more. A lot of homeowners will opt to use a HELOC when planning a home remodel.
With a better idea of how much you’ll spend and what your payment method will be, now you can ask yourself if you want to hire a home remodeler near you to do that job or if it would be worth your while to do it on your own.
Keep in mind that not all projects will be safe to do on your own. Simple undertakings such as painting and adding a backsplash can be accomplished by the ambitious DIYer, but some more complicated renovations are best left to the pros. Here are a handful of projects you should hire an expert for:
Be sure to choose carefully when you pick a contractor. It’s not wise to simply hire the cheapest option. You should look into several companies and see which home remodeler near you seems the most credible, skilled, and best aligned to your own personal tastes. Be sure to interview your options, look into references, review previous work, and assess if you would be a good fit for each other. You’ll be working with these folks for quite some time so be sure to carefully vet any potential home remodelers.
You should also keep in mind that you will pay more for a project if you hire a contractor. Plan on spending roughly 20 to 35 percent of your project’s budget on labor alone. The extra cost is well worth it if you can afford a professional though.
Take a moment to take stock of your wants versus your needs. List out every single subproject you would like to complete in each room – the sky is the limit. Now narrow this list down to the items you absolutely must complete. These will likely be repairs and severely outdated appliances or features. Once you have a list of your must-haves, you can categorize your “wants” by highest priority and desire.
When you’re organizing your list, ask yourself these questions:
Now that you have a wants and needs list, you can further define your budget by breaking down the cost of each individual renovation project. It’ll be worth your time to create a detailed breakdown of each price point. It will help you figure out how many “want” projects you can work with. We recommend creating a spreadsheet that lists each project, estimated cost of materials, and labor. Be sure to look into any potential permits you may need and list their cost. You can track down a lot of estimates on both material and labor costs at HomeAdvisor.
Be prepared to get really granular with how you break down your list. You can simply build your estimate room by room or list details like hardware, faucets, paint, or tiling. Don’t forget to include shipping costs and taxes – that can add up. You may also want to include any living expenses such as hotel stays or pet boarding during the renovation.
After you have a detailed breakdown of your budget, you might feel an ache in your pocket. Whether you underestimated how much your project would cost or you simply feel like it’s a good idea to trim down your expenses, there are a couple of different ways to do so:
