Budgeting for your next home renovation
When you decide to renovate your home — whether to sell or make improvements for you and your family to enjoy — setting a budget can be a challenge. Knowing what you want to accomplish may be the easy part, but avoiding the bad advice out there and determining what you can actually afford takes research and detailed planning.
Consider these tips from contractors who are members of the National Association of the Remodeling Industry (NARI) to help build an appropriate remodeling budget.
Identify your project and budget
Start by creating a list of everything you would like to include in your renovation, then separate your list into wants and needs. From there, determine a proposed budget for the project based on how much you’re comfortable spending and your home’s value.
“Get your bids after you know what the project is,” said Michael Anschel, principal of OA Design+Build+Architecture in Minneapolis.
Meet with remodelers
Set up a meeting with a local remodeling company and share your proposed scope of work and budget to see if it’s feasible. An experienced, professional remodeler who is a member of an organization like NARI can share feedback on the costs in your area and any challenges involved with your project based on experiences with homes like yours.
Once you have a better understanding of the true scope of the project, meet with other contractors to gather a few estimates to compare.
“Are you hiring an installer or are you hiring an expert guide?” asked Barak Steenlage, co-owner of Anchor Builders. “The difference is worth the investment.”
Beware of low estimates
When evaluating companies for your project, remember estimates you may find online don’t typically account for regional variations, the cost of various types of labor and necessary permits.
“Cost estimates you find may be national averages that are lower than the costs in your city,” said Bjorn Freudenthal, homeowner advisor at New Spaces.
“Also, they may only account for the cost of the replacement materials, not other costs like changing the floor plan or updating electrical, plumbing and HVAC systems. They might also be missing the costs of removal of hazardous materials like asbestos and lead paint.”
The COVID-19 pandemic has also caused some materials to rise in cost, so it’s important to account for these increases.
“Bad contractor stories come from people cutting corners and hiring unqualified people,” Anschel said. “When you’re paying bottom of the barrel, there’s no bandwidth for the contractor to solve problems.”
Ensure you get proper permits
Not all projects require permits, but it is important to determine if your project requires one from your city or county. Make sure you (or your contractor) obtain one, if necessary, to ensure the safety of the work and its compliance with building, construction and zoning codes.
“If a homeowner or contractor doesn’t pull permits and something goes wrong, the homeowner is liable to fix the problem,” Anschel said. “This additional cost could be a large percentage of the original job, and maybe more.”
Understand your timeline
The purpose of your renovation can impact the long-term value of the project. Making updates to prepare your home to sell, for example, is a more immediate cost than updating a space you will spend time in for years to come.
“When the homeowner is looking to stay seven to 10 years or more, it impacts lifetime value because you can spread the cost out over a longer period of time,” Steenlage said.
Find more tips for your next remodeling project, and member contractors in your area, at RemodelingDoneRight.com.