Home is where the heart is. And for many, home can be a sanctuary from the outside world. To this end, it is no surprise that a large number of homeowners chose to give parts (if not all) of their entire homes a bit of a facelift each year.
For some homeowners, a home improvement project can be a much better option compared to buying a new house. In fact, 76% of Americans would prefer to make renovations to their current homes than to make a down payment on a new house, according to a 2018 Zillow Housing Aspirations Report.
Home renovations are done for a variety of reasons. You can remodel parts of your home to keep it up-to-date, to enhance your comfort and enjoyment within the home, or even to make it more eco-friendly.
When embarking on a home improvement project, sticking to a budget can be crucial; from knowing how much to spend on each room, to accounting for hidden costs. For those considering a large home renovation or development plan, here are some tips on how to prepare, set financial boundaries, and stick to a budget.
According to HomeAdvisor, the cost of remodeling a home typically ranges between $18,441 to $75,869. The national average is $46,648, with most of that budget set aside specifically for remodeling kitchens and bathrooms, in addition to any structural or mechanical repairs that need to be done. On average, remodeling a kitchen can cost up to $25,000. Bathrooms, on the other hand, can be almost half of that, at $10,000. If you were to break down the costs per square foot, the expense would be an average of $10 to $60 per square foot.
For smaller homes, less than 1,000 square feet, the average cost of renovating the entire house is $18,350. For the average 2,500 square foot home, the cost of renovating your entire home can range from $15,000 all the way up to $200,000. Further, renovating a 3,000 to 4,000 square foot home can cost you over $75,000, on average.
Old homes will generally cost more because there may be a need to bring the house up to code, which can be an added expense. Installing new plumbing alone can cost you anywhere from $400 to $1,900, and rewiring your home can add another $3,000 to $20,000 to your bill.
While these numbers are only based on data gathered by professionals at HomeAdvisor, the total renovation bill can vary from home to home, depending on a wide range of factors. These include structural repairs, the size of the rooms, cost of materials, the extent of the remodel, appliances and cabinetry in the room, and any underlying problems that were discovered during the renovation. Even the location of the home being renovated can have an impact on the total cost; urban areas have a higher cost of living compared to rural places. This can cause your home renovation expenses to be much higher as well.
Now that you have some ballpark figures in mind, you can tackle the budget.
Before the project begins, you may want to consider what aspects are most crucial for renovation. Reasons behind renovation might include wanting more counter space in the kitchen or needing a bigger family room to accommodate a growing family or an open floor plan. Knowing the reasoning behind remodeling projects and the aspects crucial for renovation can make it easier to take the next steps.
A practical way for you to create a budget and stick with it can be to know exactly what you need and what you want. Make a list of everything that you believe should be included in your home improvement project, then, set your priorities. What are the things that need to be done first? For example, if you are considering changing the countertops in your kitchen but you also want to create an open floor plan later on, it might make more sense to do things in the proper order; prioritize the open floor plan to save money and time.
Some first step questions to consider are: What parts of the project are you willing to compromise on? What details do you think are necessary? What are you willing to splurge on?
Once you have your priorities straight, you can begin to break things down to specifics. These specifics are the nitty-gritty details that can help you create a detailed plan and come up with a starting budget. Project-specific questions to consider might include: What are the fixtures and finishes you want? Are you going with hardwood floors or carpet? What appliances are necessary? Is it best to go with a black finish or stainless steel? Other details to examine may include paint, knobs, tiles, faucets, windows, cabinets,
ceiling beam installations, and the like.
After the goals, priorities, and details are ironed out, you can bring out your spreadsheet and calculator. At this point, it is important to estimate the cost of everything, from the various contractors you might need to hire, to the cost of shipping the materials to you. With a detailed plan on hand, you are more able to know what you can afford, what type of financing you may need and you can be more prepared to discuss quotes from contractors. Below are some tips on how to create estimates:
Experts advise setting aside an additional 10% to 20% to cover unexpected costs. Unforeseen problems are not uncommon during such projects and changes in the plan can also cost you additional expenses. To this end, it is important to note that the actual cost to complete a renovation can often be much higher than the projected cost. Without an “emergency fund,” you can risk going over budget and might not be able to finish your project due to a lack of funds.
Now that you have a working budget, it is time to determine if you can afford your home improvement project and how to fund your renovation. If you plan on borrowing money to finance your project, you can consider a home equity line of credit or HELOC. This line of credit allows borrowers to take out money on an as-needed basis. Those who opt for this loan should note that there will be a maximum amount one can borrow and the equity of the home in question will serve as collateral. The HELOC can be a viable option because it offers a lower rate compared to other types of loans. Plus, borrowers can deduct the interest of the loans on taxes.
Another option is a home equity loan where borrowers are given a lump sum and required to pay back the loan on a monthly basis. This loan typically has a fixed interest rate which can make it easy to include in your monthly budget.
Once you have a detailed plan, a budget, and money to spend, you can consider talking to a professional. You can reach out to at least three contractors to get bids from each one. To find viable contractors you can find local companies online and check out their reviews or ask friends and family for recommendations. It is important to compare costs, complete interviews, and check references to ensure you are getting the best available option. The latter includes looking at their most recent work. Be clear about what you want, your priorities, and how much you are willing to spend. Contractors are more able to design the project to your specifications if you can provide all the necessary information.
Pro Tip: it might not always be the best option to go for the cheapest quote you receive. While it may sound appealing because it lets you save money, there can be complications that force you to end up paying for more additional labor. Instead, consider using the quotes you receive to negotiate with the contractor you prefer.
If none of the bids fit your budget, then you may need to reassess. It might be necessary to use your list of priorities to trim your budget. Eliminate parts of the project that you are willing to do without and look for ways where you can cut down on some of the expenses to get the cost you are most comfortable with. Once you have gotten the contractor to sign, make sure to show them your detailed plan to make sure there is nothing that has been overlooked.
For those embarking on their own home renovation journey, it might make sense to do the initial demolition on your own. Smaller projects such as removing cabinets, putting in new tiles, or tearing down a wall, might not require a professional. As long as expertise is not required, then you may be able to do the labor on your own. Not only can it save you money, but it might also help to relieve stress.
You can also consider refurbishing old items. If some of your things are in good working condition, consider giving it a facelift instead of buying something brand new. For example, you can refinish your cabinets to give it a new, updated look instead of buying new cabinets.
In terms of buying materials, looking for clearance-item floor and wall tiles or opting for lower-cost finishing can save you money in the long-run. For example, you might consider choosing vinyl flooring instead of tile or perhaps laminate countertops instead of granite.
Choosing to do your own painting can also be a cheaper option. The labor cost of a painter can be as high as $300, and more in some cases. Inviting friends or family members over to help with this task can make it go by quicker and leave some room on the budget too.