Ready to Renovate? Here’s How to Budget and Pay for It
- Written by Chloe Taylor
If you’re planning to make a new house your forever home, organizing a home remodel is not an easy job to do. The most complicated task of most is definitely budgeting. First, you need to differentiate between your needs and wants. Second, you need to make decisions on finishes, appliances and other features. Then, you need to find the money to finance all of it. If you’re like most renovators, you want to reduce cost and save money while still ending up with a beautiful and safe home. If you’re searching for help when it comes to budgeting for home renovations, follow the tips below.
Settle on priorities
One of the main reasons why people renovate their homes is to meet their needs that are not satisfied with their current living situation. Perhaps you need more space or you want to update your layout and make you house greener. No matter the reason for renovating, you have to come up with a list of changes you want to make. Once you have that, do your best to prioritize your renovation goals. For example, maybe you want to make your small bathroom look bigger, but don’t really need to get all new bathroom furniture and fixtures. It’s very easy to get side-tracked with the renovation and waste money on smaller projects that can wait, so make sure to keep your biggest goals in mind all time.
Set the limit
Here’s an expert tip to follow: you should spend more money on a room renovation than the value of that room in your overall house value. Here’s an example if that sounds overly complicated: most kitchens account for 15% of the property value. So if your house is worth $200,000, you shouldn’t spend more than $30,000 on a kitchen renovation—that’s your limit. Of course, renovations can be unpredictable, so create an emergency fund as well.
Find the money
Coming up with ways to finance your remodel is probably the hardest part of every renovation, but it can be made at least a little easier. First, examine your current financial situation. If you have enough cash to cover all your reno expenses, great. If not, you can get a loan from a family member or take a safer route by using a personal loan feature provided by a bank, credit union or online lender. This money is usually paid back in fixed monthly payments, typically over two to seven years. Another way to pay for your remodel is to use a credit card, but you have to have a plan to pay these credit cards off. Make sure not to take a bigger bite than you can chew, otherwise, your remodel will stay unfinished or even result in other unwanted consequences.
Consult with friends and family
A great way to save money and create a better budget is to discuss your renovation with someone who has first-hand experience with it. A family member or friend who recently went through a renovation will offer not only tips on how to complete a good renovation, but also provide valuable info on cutting costs and appropriate budgeting. If you have a friend who just renovated their master bathroom, you can ask for tips on good deals, quality hardware, cheap supplies and cost-effective loans. Also, ask about any regrets they have concerning their renovation. Learning from other people’s mistakes can help your budget immensely.
Get contractor bids
One of the biggest things that can help your budget and allow you to stay true to it is professional contractors. If you’re planning to get help with your renovation, it’s best to obtain bids from at least three different contractors (expect their bids to differ widely). According to market research, most general contractors have a fee that’s between 10 and 20% of the total renovation costs which include materials, supplies, labor, permits and such. Your low budget might be attracted to contractors who offer very low estimates, but these are too good to be true for a reason. If one contracting firm offers to do a job for half the price of the other contractors, that’s a red flag that they either don’t have experience or are plainly lying to you.
Cut unnecessary costs
When working on a budget, you always want to cut costs when possible, and there’s nothing wrong with that. If you’re not flexible on the quality of materials or fishiness, you can lower your expenses by purchasing used or refurbished items. A good contractor knows where to find leftover stone slabs or which items are on sale. Another good idea is to hire subcontractors for smaller jobs or even try your hand at DIY (painting the rooms, installing smaller fixtures, etc.)
When you have a clear budget and know how to stick to it and even stretch it out, your remodel can be a very exciting experience for all the right reasons.
Daily Bulletin
