As Spring approaches and the snow melts, many homeowners begin to think about projects to undertake and changes they might like to make. Remodeling a room or any kind of home renovation project can help build equity and have a positive impact on home appreciation, too. Whether you are thinking about selling, planning to work on a recently purchased home, eyeballing a fixer-upper, or just deciding to switch things up at home, home renovation might be on the horizon. While the ideas may be easy, creating a budget can feel daunting. Here are some of our tips to guide you through the process. is not so simple.

Why do you want to remodel?

This may seem like a silly question, but your motivation for starting this kind of project is going to be the guiding force in the months to come. Is your family growing? Shrinking as kids head off to places of their own? Or are kids returning to roost? Do you want to increase the sale value? Are you hoping to do a green remodel? However, a word of caution: if your answer to this question is that you are just bored, then try a fresh coat of paint or a new window treatment before investing time and money in a remodel.

How much can you afford?

Once you know why you want to remodel, it’s time to figure out what you can afford. The answer to this question, though, requires two steps. Start with some serious research on what you want. Start looking both on line and at your local home improvement store for the items you want and the materials you think you might need. (At the home improvement store they will also be able to help you ballpark labor costs, too.) Jot down prices on a spreadsheet. Then when it is time to make your final budget, you’ll have everything at the ready.

Take a look at how much money you have in short-term savings and the cost of the project. If the cost exceeds what you have in those accounts, it might be good to consider a home equity loan or a home equity line of credit. If you think the project is a lump sum kind of deal with a relatively firm start and end point, then a home equity loan might be the way to go. If you think the project will stretch on for an extended period of time (more than the usual few months) and result in ongoing expenses, a home equity line of credit may be the better way to go.

Are you going to do it yourself or hire a contractor?

There are definite benefits to hiring a contractor. The project will go faster; you can take advantage of their expertise, particularly when it comes to electrical and plumbing); and you can tap into their intimate knowledge of building codes and permits. Doing it yourself is cheaper, more flexible, and perhaps more satisfying.

What should you include in the budget?

Once you decide whether or not you are going to do it yourself or hire a contractor, you’ll need to include not just stuff (a new bathtub or convection oven) but labor costs (if you are hiring a contractor), tools and equipment (if doing it yourself), and the cost of permits and clean-up. You may be able to save on surcharges and fees if you purchase the materials yourself. You may also be able to save if you buy salvaged materials, too; however, that will depend on whether or not your contractor allows it. (Some contractors won’t use anything but brand-new items for liability reasons.)

Make a room by room spreadsheet and list all the things you want, and then research the prices. If you go with a contractor, keep in mind that the budget will include some materials, i.e. paint, but not fixtures and finishes such as tile, flooring, cabinets, countertops, etc. Remember, too, that part of your budget will also include taxes and shipping. For particularly large items, the delivery fee can be upwards of $100 to $500.

Leave room for mistakes and changes. You will find that some prices will change suddenly or there will be something unexpected. Unforeseen expenses are simply part of the terrain of a remodel. Most things that will go wrong will occur or be discovered between demolition and new drywall. This is when things like faulty wiring, leaky pipes, black mold, and cracked foundations appear like Godzilla from Tokyo Bay. Create a reserve of at least 10- to 20-percent for this. Changes in plans will result in change fees. A change fee is like a mini-bid for new work and is needed when a new item or job appears.

Include the cost of maintaining two residences. Depending on the scope of your project, you may not be able to live in your home during the remodel. If that is the case, your budget should also include rent, travel costs, property taxes, and insurance. It may seem silly, but these are very real expenses that will pull from your bank account. There may also be delays due to permitting, planning, and the aforementioned unforeseen expenses. If construction is supposed to be three months, assume four and budget for that.

Splurge only on a few items. It’s easy to fall in love with custom designs and unique features, but there are two reasons to hold yourself in check here. Splurges can require more time, and that can mean a delay which costs money. Custom work can also result in a low resale value. Using tile that reminds you of your trip to Italy last year may seem like a stroke of genius, but a future buyer may not be as fond of it and see it only as something expensive to remove.

Stick to your plan. Do not, under any circumstances, go down the “While you’re at it you might as well…” road. This is where your expenses stand the greatest chance of running out of control and where many a remodeling project lands at a dead end because the money ran out.

Once you have your budget, ask an architect to go over your estimates to see if you missed anything. This will help you avoid some budgeting mistakes and probably help reveal some hidden costs, i.e. custom finish costs of concrete countertops, etc. Make the adjustments, and get ready to start talking to contractors!

Photo by Cathy T.

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