How do I budget for a home renovation? Starting an interior renovation project can be an exciting time, but it can also be intimidating if you have no idea where to begin. It’s important to realize that renovations aren’t always simple or cheap. A lot of things need to go right before you get started on your renovation project. You need the right materials, time, and expertise – not to mention the right contractor!
Coming up with a budget, let alone a strict one that can be kept to, isn’t easy. So, to help you get started, we put together a guide on how to begin the process of planning your home renovation from start to finish.
1) Get your money in order
Before you can even think about budgeting for a home renovation, you need to know two things: how you’ll be paying for it and how much is too much.
Assess your financing options
When you start renovating, the first thing you need to figure out is how much money will be needed over the course of the project and throughout the reno and how you plan on paying for your remodel. Knowing your financing options upfront can affect how much you’ll be able to eventually spend
The most common way people pay for renovations is through a loan. There are several different types of loans available to those who are looking to renovate, so weighing them is an important step as each has its pros and cons.
If you don’t want to get a loan and deal with banks or interest rates, you can set aside some money to pay for the materials you will need for the project and any work you may need to do. You can start by reserving a specified amount of money over the course of several months or even years for project-related expenses. This money should be used to cover the cost of materials and tools, materials, and equipment to complete the renovation project, overhead expenses related to managing the project, and any unforeseen problems that may arise (e.g., unexpected damage from weather or unstable flooring).
Assess how much is too much
The biggest mistake people make when remodeling is not knowing how much they can spend. Until they know how much they can spend, they have an interest in over-promising and under-delivering remodeler terms. There is a huge range available from very cheap, basic remodels to expensive ones. Therefore, having a very good idea of what you can spend money on beforehand will save you a lot of grief when it comes time to negotiate.
Beyond available cash limits, another way to determine what your upper limit should be on your remodeling budget is by following the general rule that your renovation should fall within whatever 10-15% of your home’s overall value is. Use this guideline to work out how much you should be spending on each stage of the project. If your overall home value is $200,000 then you should aim to spend no more than $20,000 on renovations.
The estimated value though should be balanced with considerations like the quality of the product, the estimated longevity of it and the look and feel of it — you will be living in it, after all, so you’ll want to be able to enjoy it.
Follow these simple rules when determining your remodeling budget—be specific as possible about what needs will be addressed and stick to projects within your home’s means—and you should be good to go in terms of value and cost. If you’re confused about how much is too much, you can also speak to an expert contractor to help you determine what needs to be done and to clear things up.
2) Determine your priorities
First, determine what your immediate needs are. Are you going to fix up your bathroom? Save up for a new kitchen? You need to know what your immediate needs are because you need to make sure you can afford the items on your list that will help you pay for the things you want to do first. Determining which room or which elements of your reno will receive the largest chunk of your budget can help prevent impulsive, costly choices that can come from heat-of-the-moment decisions.
“The biggest consideration is pinning down decisions and selecting materials and finishings before the job begins,” Tom Miller, a home remodeler and president of the National Association of the Remodeling Industry, told The Washington Post.
We get that it seems extreme to conclusively make every single decision before demo day but working out the prices of even the smallest details can help you create an accurate budget that clearly lays out what your renovation will cost. Factoring taxes and shipping costs into that detailed budget can also help prevent any unpleasant surprises upon project completion.
3) Save for overflow and emergency costs
Planning is the key to minimizing the risks involved with renovations. Research previous renovations and learn what indicators of overbudgeting or near-miss there were. This will give you a heads up if you are running low on cash or if expenses are increasing significantly. In fact, according to PolicyGenius, nearly half of home renovations go over budget. To avoid these pitfalls, here are a few tips on how to minimize your spending while renovating:
Save for the unexpected
It’s important to plan for the unexpected. We tend to be under budget and over-plan. When things don’t go as expected, it can be difficult to get back on track. Danny Niemela of Ardan Remodeling recommends that people budget for about 10-20% of their total budget as a cushion if something goes wrong or unforeseen changes pop up along the way.
Having that cushion built in for unexpected events, whether good or bad, will not only make your home renovation experience less stressful but can help prevent your project from turning into a serious money pit.
Try not to deviate from the plan
If you want to renovate your home and do not want to break your bank, the first and foremost thing you must do is to stick to your plan and budget once it’s made. Never change your mind or start wavering.
Thinking of renovating your home?
For more than 20 years, Long Home Products has been helping thousands of homeowners just like you get the home renovation projects they’ve always dreamed about. Why settle for a loan approval process that takes anywhere from weeks to months when we can provide financing in less than a week? Our financing options will allow you to break down your home renovation project into manageable payments that fit comfortably into your budget. We’ve worked long and hard to arrange relationships with banks and lending institutions so we can get you the best possible rate on an unsecured loan of up to $75,000. With financing terms that are designed to meet your needs and approvals that don’t rely on credit scores, you can finally get started on your project today! Call Watkins Construction & Roofing today at 601-966-8233.