The Basics of Budgeting a Home Remodel
Remodeling your home is a big undertaking, but it’s also exciting! You get to transform your space into everything you’ve ever dreamed of. But before you start tearing down walls, there’s one important thing you need to do: budget for your remodel. This may seem daunting, but with some planning, you can ensure that your renovation stays on schedule and within budget. Here are the key steps to budgeting for a home remodel:
Define Your Scope
The first step in budgeting for a home remodel is defining the project’s scope. Your vision for your home is the outline for the extent of the remodel. Having a clear idea of what you’re looking for will make it easier for contractors to estimate your job, which makes it easier to determine a budget.
Think about your remodel as a whole. What do you want to accomplish? If you’re looking to increase the value of your home, you want to prioritize spaces that will give you the best return on investment (ROI). For example, according to Bankrate, a minor kitchen renovation could have a recouped cost of around 71%.
If you aren’t looking to sell anytime soon and are simply looking to spruce up your home, you can approach the renovation differently. Knowing what you want upfront makes developing a budget more straightforward.
2. Set a Realistic Budget
Once you have defined the scope of your project, it’s time to set a realistic budget. Start by setting a firm budget cap that you are comfortable with and won’t go over. This is your absolute maximum limit. You can do some research of your own to get a vague idea of what your budget cap may look like, but you’ll get a better idea of what the actual costs will be when you sit down and finalize them with the contractor. When setting your budget, be sure to factor in the following expenses:
- Labor: These are the costs associated with hiring contractors and other professionals to do the work, including the cost of materials they will use and their hourly wages.
- Material Costs: This is the cost of all the materials you will need for your remodel, including flooring, paint, cabinets, countertops, etc.
- Permits and Fees: Depending on the scope of your project, you may need to obtain specific permits from your city or county. Other fees may be associated with your remodel, including dumpster rental fees or inspections.
Leave some room in your budget for unexpected costs that may come up during the project.
3. Get Multiple Estimates
Once you have a budget for your project, it’s time to start getting estimates from contractors. Many companies will provide free estimates for homeowners looking to renovate. A general rule of thumb is to get at least three bids to compare, ensuring you get the best price for your home remodel.
Don’t be afraid to ask the contractor questions about each line item when shopping around for estimates. You could have one estimate that drastically differs in price from another, and you don’t want to be stuck overpaying. Alternatively, don’t immediately go with the contractor who presented the lowest estimate. The lowballing figures could mean subpar work.
4. Make a Payment Plan
Once you have selected a contractor, it’s time to make a payment plan. Most contractors require a down payment before starting work on a project. Be sure to factor this into your budget. You should also ensure that you are comfortable with the payment schedule and terms before signing contracts. The size of your job will likely determine what type of payment schedule you’ll follow.
- Small Jobs: Small jobs like a fence repair or small deck addition are suited to deposit and completion payment plans. You’ll give your contractor a deposit to start the job, and once the work is completed to satisfaction, you’ll pay the remaining balance.
- Mid to Large Jobs: Medium to large jobs allow more flexibility in payment schedules. For example, you could opt for progress payments which require a specific amount to be paid upon completion of a portion of the project. Alternatively, time-based payments mean you’d pay a pre-determined amount each month for the length of your remodel.
Work with your contractor to select a plan you’re both comfortable with.
So, there you have it! The basics of budgeting for a remodel. Of course, this is just a starting point—your actual budget will be based on the specific details of your project. But if you keep these things in mind as you plan your renovation, you’ll be well on your way to creating a realistic budget that works for you and your home. Contact us today for a complimentary estimate, and let us help make your dream home a reality!!
Key Takeaways:
- Make sure you are comfortable with your budget
- Allow room for miscellaneous fees and costs
- Ask questions to potential contractors
