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Agent Resource Center

How to Budget for Home Renovations (And Stick to It)

Written by Posted On Monday, 14 October 2019 03:05

While you may have visions of home renovations, coming up with the ideas is the easy part. Creating a budget you stick to can be difficult.

Thinking of remodeling or renovating your home? You're not alone -- nine in 10 surveyed homeowners are planning to do the same thing!

After all, with home prices expected to go up by at least 5.4%, improving an existing home makes much more sense.

But haphazard planning of a home improvement project can also cost you a lot. A lot more than the average home improvement spending of $9,081 in 2018. Especially if you don't take the time to compare contractor quotes.

That's why it's important to plan out your home renovations, as this can help you stay on budget. The last thing you want is to take out a home renovation loan that you'll have a problem paying back.

So, how do you budget for a home renovation, and most importantly, how do you stick to it?

That’s exactly what you’ll learn in this post, so be sure to keep reading!

Understand the Difference Between Renovation and Remodeling

This is important because there could be a huge price gap between a renovation and a remodel project. Depending on what you plan to do to your home, a renovation could be more expensive than a remodel.

That said, "renovation" is the practice of restoring or updating an existing structure. It's the process of repairing something damaged and bringing it back to a working state. Fixing sagging floors in a room, for instance, is an example of renovation.

Whereas a remodel refers to changing a structure's entire appearance. If you want to "transform" your bathroom's looks and improve its function, that's a remodel. If you want to extend your master's bedroom floor area, that again is a remodel.

So, renovation is to "restore" something broken, without necessarily changing its functions. Remodel, on the other hand, is to "transform" something, be it in terms of appearance, use, or structure.

By knowing how these two terms differ, you can have a more accurate idea of what your budget should be.

Make a List of Your Ideal (or Dream) Home Renovations

Let's say you've determined that your goal is to actually renovate parts of your home. To figure out what your home renovation budget would look like, make a list of everything you want to "fix" or "update".

For example, your kitchen counters are so scuffed that you can't prepare meals anymore. Your kitchen cabinets are also missing their handles and are on the verge of collapsing. The floor is also worn-out that it has become a slip, trip, and fall hazard.

Or perhaps your bedroom floors creak so much that you can barely get a wink of sleep at night. Your bedroom windows are also rattling and letting in a lot of cold drafts. The attached bath and toilet also have plumbing pipe and fixture problems.

List all these items down on a rough draft. By doing so, you'll get closer to a ballpark figure of how much you'd spend on the renovations.

Zero in on the Priority Areas

Now comes the hard part: determining which items on your list should be a priority.

First, think about safety hazards, such as slippery floors. You'd want to prioritize this, as slips and falls lead to more than one million hospital ER visits every year.

Next, consider the extent of the damage and how it interferes with the structure's uses. Let's use the kitchen counters example above. If they're in such a bad state that you can no longer use them, you may already need to prioritize their renovation.

Still unsure what exactly you should renovate first or what you should even renovate? Then you might want to check out this article by Solid Construction & Design. It can help you figure out the priority areas for your renovation project.

Obtain Estimates from Contractors

Ring up your local contractors who offer free job estimates. Reputable contractors often stick to their provided quotes in the contract. So long as everything is in writing, you can worry less about them charging you more than what you budgeted for.

However, you need to be very specific about what you want them to do. Be very detailed, down to the specific type of materials you want them to use.

Make sure that you contact at least three contractors for each job too. That means three plumbers, three electricians, or three flooring experts. Having several quotes to compare is the only way to determine if you'll really pay for the lowest price.

Look Up Average Estimates Online

Use online home project estimators to get the average cost range of your project. This way, you can compare other homeowners' costs with the quotes you’ll get from contractors.

For example, Home Advisor reports an average cost range of $490 to $720 for a subfloor replacement. The site also puts the average range of a new toilet installation at $218 to $522.

Another site you should use to help you with your renovation budgeting is Fixr. Here, you'll find that the cost to install kitchen cabinets ranges from $6,412 to $11,400.

Create a Budget Template

Now that you have a priority list and estimates, next is to prepare a home renovation budget template. This table should have at least five columns, one for each of the following:

  • Items (or materials needed for the renovation, such as tiles, wood planks, faucets, etc.)
  • Quantity (actual count or number of the items you need)
  • Price (per item)
  • Total price (multiply price per item by the number of items you need)
  • Your budget

If you'll have a professional do the job (like a plumber), add another column. This is where you'll put the quotes that they'll give you for your project.

Negotiate What’s Negotiable and Learn to Compromise

The best contractors will work with you and your budget, so don’t hesitate to ask. Ask them if there's anything that you can cut back on because your budget is only XXX amount. Rather than lose you as a customer (and their potential profits), they'll try to find ways to meet you halfway.

Also, if your entire project cost is a little too steep, check your list to see if there’s anything you can do on your own. DIY home renovations can cost only half of what you’d pay a professional since you won’t shell out money for labor.

Beautify Your Home Without Spending More Than What You Can Afford

There you have it, your ultimate guide on how to budget for home renovations. By keeping all these tips in mind, you'll be able to set the right expectations when it comes to your project costs. It'll also be easier to determine how much you can afford to renovate now, and which ones you'd have to set aside first.

What's important is to start with the prioritized items on your list! Your safety should always be first, so begin with the areas of your home that pose safety hazards.

Need more advice on how to keep your home healthy, comfy, and livable? Then be sure to bookmark our site's Consumer Advice page! You'll find even more useful homeowners' guides in that section.

 

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pat ferguson

Pat Ferguson is a real estate agent and consultant, a writer at his blog as well as a senior editor here at usdailyupdate, where he maintains the across the pond feature

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