Before you start choosing new tiles and colors, make sure you know how much you will actually have to spend to renovate your home.
Home renovations usually start with modest goals: increase the value of the home, improve the functionality of the space and increase the appeal to potential buyers. But even the most well-intentioned renovation can be derailed by one unexpected or emotional decision that causes the goals to become unfocused. Most of the time, depleted finances (and thoughts) could be solved by considering a renovation budget.
If there’s one tool every home remodeler should use, it’s this: a well-researched and realistic budget.
The key to a successful and less stressful home renovation is setting a realistic budget. Even if you don’t follow a budget in your personal finances, a remodeling budget will keep you from overspending and save you from financial ruin. However, more than controlling your spending, a thoroughly researched and well-crafted budget is probably the most important tool in the entire project; it will influence every decision you make.
If this is holding you back from realizing your remodelling dreams, consider this: Limiting how much, what, and where you spend, will save you time and stress and make for a better remodelling experience overall. By using budget guidelines, you can clearly communicate your project goals to contractors, get more accurate quotes, and ultimately end up with a renovation that meets your vision. And if the goal of your renovation is to increase the value of your home, a budget will ensure that more profit remains in your pocket when you sell.
Keep your renovation goals in mind and create a more efficient renovation process with our renovation budgeting guide.
Estimate the cost of home renovations
Determine how much you can afford and what the scope of the renovation will be. In general, a minor home renovation can cost 5 to 10% of the property’s purchase price, a medium renovation 10 to 20%, and a major renovation 30% or more. Some experts recommend spending 5% of the total value of your home on the kitchen alone. Whatever the budget and scope, make sure you can financially support the entire project.
Which renovation brings the greatest return on investment? Renovation of the bathroom. If you are thinking about renovating your home for sale, then this is definitely important information. A new bathroom actually means a higher resale value for your home.
Create a spreadsheet
The best way to start is to organize your budget in a spreadsheet. If you’re renovating your entire home, start with each room and then break them down by item. Keeping track of your expenses in one place means you’ll know exactly how much money you can spend and where. Even if you’re not the most skilled with a spreadsheet, you can create and track your budget with just paper and pencil.
Get quotes from home improvement contractors
For each contractor you want to hire, take the time to research and request at least three quotes. You want to make sure that you are working with the right people on the project. Read as many reviews as possible, such as Google reviews, to get an honest opinion of the company. Don’t just take a friend’s word that someone is good – back them up with research.
Some contractors will give you an estimate based on what they think you want done, and work done under those circumstances will almost certainly be more expensive. You need to define very precisely what you want to do and define it in the contract – right down to the materials you would like to use.
Get quotes from multiple contractors, but you don’t have to settle for the lowest estimate. A bid that is much lower than others can be a sign that the contractor is skimping, which can lead to additional costs in the long run.
Stick to your home renovation plan
During your renovation, you may be tempted to add another “little” project at the last minute or incorporate the latest design trend. But be aware that changes need to be ordered every time you change your mind, and even minor changes can be expensive. If possible, try to stick to the original agreement.
Consider the hidden costs of home remodelling
Your home may look perfect on the outside, but there may be problems lurking beneath the surface. In fact, hidden defects are one of the reasons why renovation projects often cost more than anticipated.
Instead of scrambling to come up with extra cash later, secure yourself a reserve in advance. Allow 10 to 20 % (or more) of the contract budget for unforeseen costs, because they can occur – and often do in practice. In fact, rarely does a major project run completely smoothly.