Due to a shortage in homes for sale, more and more people are opting to stay in their current homes. Not only does this allow homeowners to forgo the added expense associated with moving, but it allows them to build more equity into their home. Additionally, people are emotionally attached to their homes and would often prefer to make the investments into their current homes to get exactly what they want.
Time to Budget
It’s important to know that renovations come at a cost, and it is critical that you have a plan. Some renovations are not cheap. According to Remodeling Magazine, a minor, mid-range kitchen remodel costs an average of $22,507, and a major overhaul costs an average of $66,196.
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When it comes to home improvements, knowing what you want is the easy part. The tougher question is figuring out how much you can afford.
Here are 4 steps you should take to budget for a remodel.
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1. Ballpark the Costs
First, get a handle on how much your remodeling dreams will cost. In general, the suggested spend of a kitchen remodel is about 16% of the value of your home. A primary bathroom is about 7%. If this surprises you….you’re not alone. Many homeowners are caught off-guard when they see the final number. Don’t expect to make a phone call and get a solid price over the phone. Every remodel is different and a good contractor will want to sit down with you and discuss your priorities before giving you a detailed estimate.
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2. Determine How Much You Have to Spend
Once you have a plan for what project(s) you want to tackle, the next question is whether you have the moolah. If you are paying cash, that’s easy to answer. However, if you are borrowing/financing, you need to assess how much a bank will lend you and what that loan will add to your monthly expenses. Don’t be shy about telling your contractor your budget. I know it seems like a remodeler will take advantage you once they know the budget. But really, it’s an advantage to the homeowner. Contractors are the best people to determine that fastest and easiest ways to save money and come in at or under budget. (Without compromising what’s most important)
Here are some ways to afford your remodel
- Refinance.
- Take out a home equity line of credit.
- Take out a construction loan.
- A wealthy uncle
- Win the lottery
SpaceTurtle has a great financing partner that can discuss all financing options and help you to determine which option is best for you.
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3. Get Quotes from Contractors (a lot of them)
Ask, ask, ask. Get recommendations for contractors from friends, family, neighbors, and industry professionals. You can check out our recommendations on Facebook, Instagram, Google and Nextdoor. Images of all our work can be seen on our website, and we’re also happy to provide references. Ask for current photos of similar projects. If you don’t like what you see, move on. Not every contractor you come across will be a good fit. If it doesn’t feel right, look right, or smell right, just tell them you aren’t interested in going any further. That way you aren’t wasting your (or their) time.
If you think it’s a fit then give it some time. Sometimes the best estimate is the one worth waiting for. Be cautious of someone giving you something like a flat $75/square foot for a remodel. That can’t possibly be accurate for everyone. A good contractor will need some time provide you with a detailed estimate that will include itemizations. For example, an estimate should know how many square feet of flooring you will need and call out an allowance for flooring (i.e. $5/sq foot). Then based on the client’s final selection, the total cost will be adjusted up or down accordingly. Quick note: An estimate isn’t open to negotiation. If a contractor spent time putting together a detailed estimate it means they went through and itemized all the costs to come up with a total. If you are looking to bring the number down it means you’ll be reducing scope or finding less expensive finishes.
It’s important to also be realistic and have a contingency for unforeseen problems (mold or asbestos issues) or for changes made to the project scope. Consider adding 10% to the winning bid. If this is still within your budget, great. If not, reevaluate your project.
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4. Are Your Dreams and Budget Aligned?
If you can afford everything you want…Hooray! If you won the lottery and can afford more than the remodel…Hooray Hooray! If not…it is important to understand your list of must haves versus nice to haves. This will assist you in setting your priorities and making adjustments to your project to fit your budget. Working with the right contractor/designer who can assist in this process, will make this easier. Suggestions can be made that will allow for cost savings and helping you to stay on budget. For example, if the estimate was made using top-tier products, costs can be scaled back by identifying mid-tier options. Think hardwood flooring versus a luxury vinyl plank flooring made to look like wood. Or going with a granite countertop versus a quartz countertop. Some designers are really good bargain hunters. Don’t be afraid to ask for them to keep an eye out for sales and clearance items.
Bottom Line
Renovations and remodeling are not for the faint of heart. But a happy home can make it more enjoyable and can help improve your overall well-being. Make sure you consider these four steps before tackling your project as well as partnering with the right contractor and you’ll be enjoying your dream space before you know it!