Whether you plan to renovate a house before moving in or are preparing to remodel your current home, budgeting for a home renovation can be a tough process. First, you need to determine what it is you really need versus what you simply want. Next step, you’ll have to figure out how you are going out to finance the renovation in the first place. Once you have a general idea of how much money you have to spend on renovations, you should be able to make better decisions on finishes, appliances, and other renovation features. Remember: most renovations end up costing more than originally thought, so be sure to have a money cushion set aside in case of emergencies. This is especially true if you plan to tear down walls and make structural changes, as these projects often end up with unwelcome surprises. A lot of homeowners may also be concerned with ways to cut costs and save money without compromising the quality of the home.
DECIDE ON TOP RENOVATION NEEDS AND PRIORITIES
The reason for renovating your home probably has something to do with a need that isn’t being met by your current living situation. Perhaps it’s a need for more space or perhaps it’s a need for an updated bathroom. Whatever the reason (or reasons) for renovating, be sure to write down and prioritize all of your remodeling goals. For instance, a larger kitchen island may be at the top of your priority list, whereas updated appliances may be lower down on the list of needs. Keep your goals in mind and avoid getting side-tracked with smaller projects that can wait for later.
LOOK AT COST VS. VALUE FOR EACH RENOVATION PROJECT
Planning to sell your home in the future? Keep the return on investment top of mind when choosing home renovation projects. After all, there’s no reason to pour $40K into a kitchen, if the home isn’t going to sell for more than you originally paid. Once you’ve prioritized your home renovation needs, research each project’s cost vs. value using the latest cost vs. value report.
FIGURE OUT HOW YOU ARE GOING TO FINANCE THE RENOVATION
Now for the hard part: figuring out how exactly you’re going to finance this renovation. First, take a look at your current finances. Do you have enough cash to cover the renovation? If so, great. If not, you’ll need to borrow money for the project. Unless you have a fairy godmother willing to loan you cash, we recommend either using a home equity loan or home equity line of credit, where homeowners can borrow money against their home.
CREATE A LIST OF SPECIFIC NEEDS AND GOALS FOR CONTRACTOR BIDS
After going over your needs and wants, create a clear list of renovation goals to hand to contractors. This will ensure that your bid (or cost estimate for the renovation) is as accurate as possible. Make sure to include both major structural changes to the home and cosmetic changes. Examples of what to include on a kitchen renovation list include demo, new quartz countertops, new custom-made cabinets, painting kitchen cabinets and walls, new subway tile backsplash, ceiling beam installations, and new GE appliances. Make sure to include specific brands you plan on using as well. From here, a contractor should be able to give you a much more accurate quote.
CUT COSTS WHERE YOU CAN
Cutting unnecessary costs where you can is never a bad idea, especially is you are on a tight budget. Those unwilling to compromise on quality materials or finishes should look into purchasing gently-used or refurbished items.