How to Create a Renovation Budget: Steps To Take

Homeowners decide to do renovations for a number of reasons, but one constant is clear, they all should create a renovation budget to ensure they stay on track and on budget. Perhaps you have been leafing through design magazines and decided that this is the year for your kitchen to be transformed. Forty percent of the money spent on renovations in the United States every year is spent on kitchen remodels, from granite countertops to bright retro stoves.

Maybe your electrical wiring is old and not up to code and must be replaced. It could be your bathroom faucets have been leaking, and you have decided to upgrade the bathroom since the faucets already need to be replaced. Maybe your kids have gone off to college, and you are going to convert their rooms to a solarium, second office, craft room, or media space.

Clearly, home renovations vary and occur due to all kinds of life changes, ideas and motives. But there is one element all renovations have in common: a budget. Those homeowners that create a renovation budget will have the best opportunity to stay on task and not overspend.

A home renovation budget can strike fear into the hearts of homeowners. It can be scary to think of spending a lot of money and going through the temporary disruption that renovations cause. The key is to have a plan and visualize what the end result will be, not the actual process of living through the changes.

Finally, do not worry! If you have a plan of attack to create a renovation budget, everything will go much more smoothly. Here is a step-by-step guide to making one and staying on task the entire way through the process.

Set Your Goals

Write a list of goals you want to accomplish with the renovation. At first, do not worry about the budget. That comes later. The key here is to just get your thoughts on paper so you can decide which aspects are must haves, which are niceties, as well as those things you will not get done (whatever the reason).

The more specific your goals are, the better. Do not write only “renovate the bathroom.” Itemize which elements you would like to change. The more you would like to do, the more expensive it is likely to be. To estimate costs, you need to get a handle on how extensive you want it to be. There is a big difference between repainting the bathroom, for example, and changing the color, replacing the fixtures, upgrading the materials, and going for a sunken tub and sauna to replace the current shower.

You need to know what you want before you can determine a budget. The best way to do that is to put it in a format you are comfortable with and can go back and update if necessary.

Determine The Professionals and Equipment You Need

Once the list of goals is complete, it is time to determine which professionals you need. Home renovations are completed by several different groups of people, depending on what is being done. Sometimes, even by you.

Any building or remodel, for example, is usually completed by contractors who will hire and supervise a construction crew. If your renovation is structural, involves new uses, adds new wings, or changes shape and size, you may need an architect or design firm that will advise you on zoning and regulations in your area. If you are doing interior redesign, you may want to hire a designer. Changes to plumbing or wiring usually require a plumber or electrician, respectively.

If the renovation is small, you may want to hire individual workers. For instance, if your renovation is new kitchen shelving and paint, a handyperson, carpenter or painter may be all you need.

While 85 percent of renovations employ professional help according to a survey by Houzz, many homeowners prefer a do-it-yourself (DIY) option. If you are handy, DIY can be a great alternative. It can also help your budget by shaving off labor costs. But be sure you know the correct steps and have the right equipment to get it done.

Your local equipment store is the best choice for renting equipment for whatever project you have in mind. It will have skid steers for moving dirt, compactors to set the ground for pavers and light equipment if you are willing to work into the night.

Just remember, if you have to call it quits and hire a professional after completing part of a renovation, it could end up more expensive. Certain areas are also pretty complicated to have a try yourself. Zoning, regulations, plumbing and electricity are examples of areas where DIY should only be considered if you are experienced.

Figure Out Your Budget

Now you have a wish list and a sense of who would be required to fulfill it. Now it is time to figure out what you can afford.

Renovations can be pricey. The average kitchen renovation costs $20,000 according to HomeAdvisor. The average bath renovation costs between $6,000 and $14,000 depending on what you have done. If your square footage is significantly higher, they may, of course, cost more. Renovations always depend, in part, on square footage. A kitchen renovation for a space of more than 300 square feet, for example, may cost well over $30,000, depending on how much work you have done, and the materials you use.

A new roof will run you an average of $18,488 according to Remodeling Magazine. A remodeled basement costs upward of $61,000. Adding a deck will cost more than $9,000. Converting an attic to a bedroom costs nearly $48,000. Spruced up vinyl siding costs more than $11,000.

Be aware that many factors contribute to costs in addition to square footage. Finishes and material vary in cost. Types of fixtures and appliances cost different amounts as well.

Per Houzz, always add roughly 20 percent as a contingency budget. Remodels are famous for always costing more than originally estimated and for taking more time. Finding termites when a wall is torn down, for example, is going to cost more, because you are going to need an exterminator and perhaps damage repair. Issues like that add up, so always plan for a 20 percent addition.

Get Estimates

So now you have a list of what your ideal renovation entails, which professionals you will need, and a ballpark budget. What now?

Next, call three professionals of every type and ask for cost estimates. If you are remodeling your kitchen, call three contractors, explain what you are looking for and ask for estimates. Do not worry, giving estimates is part of their process, and gives you an opportunity to see if they can meet simple tasks on time and in sufficient detail before hiring them. If you are adding a gazebo, call three architectural firms instead. Finding the right professionals for the job at hand is key to a successful experience.

Be sure to give all three the same list to estimate. You want renovation cost estimates that are comparable. If one contractor is asked to estimate granite countertops and one is asked about tile, you will not be able to tell how inexpensive or costly the granite may have been among the three.

Research professionals. Ask friends and family for references. Look at reviews online. Renovations can cost a significant amount of money, and you want to make sure you spend it wisely.

Be honest about your budget. You do not want to engage contractors for more than you can spend. The point is to enjoy your renovation, not to go bankrupt as hammers swing. Tell them approximately how much you have to work with. Good professionals can make suggestions about how to work within your budget. Perhaps a full kitchen remodel will be within your means if you use a laminate flooring rather than wood, or hold off on new appliances until next year.

Review and Revise if Necessary

After you get all the quotes, roll up your sleeves on some calm weekend morning, sit down and review them. Be critical but fair.

If the estimates came in well within your budget with the 20 percent contingency included, all is well and good. Pick the best person from the references you called. Be sure to factor in price, rapport and quality.

But it is also common at this point to need to revise renovation plans. If the quotes are above your budget, there are many ways to make it work. Here are three strategies:

Do It Yourself

If you are comfortable with doing DIY, it will certainly cut costs. Make a plan to do it yourself. Be sure to factor in that a DIY project may be more time-consuming. That means it may also disrupt your home for a longer period of time.

If you replace the cabinets on the weekends, for example, it may take a month from start to finish rather than a crew taking a few days. A key is to stay within your expertise range and only tackle those projects you have a degree of confidence that you can complete well.

Scale It Down

You make a list of everything you want early on in part so that you can revise it later. If your bathroom remodel included repainting, new fixtures, a sauna and a sunken bathtub, what do you feel comfortable scaling back on if you need to stay within your budget?

Be creative with how you scale back. The estimates can really help you here. Perhaps deciding to go with new chrome fixtures instead of brushed pewter will allow a small sauna, especially if you paint the bathroom yourself.

You can also scale renovations down by deciding to do them in different time periods. In the bathroom, for example, you might want to replace the fixtures and repaint one year, add the sauna a few years later and go for a sunken bathtub when the budget is available.

Consider Cost-Saving Methods

Consider some cost-saving methods as well. Often suppliers will charge less for floor models or models about to go out of production. Stores have clearances for renovation material just as they have clearances for everything else. If you can time the purchase of tile, carpet or flooring to a sale, why not?

Ask if your professionals are amenable to discount pricing in their less busy months. Contractors, for example, are often heavily booked in the late spring and summer, because that is when most people want renovations. They may be less busy in the fall or winter, and therefore more likely to negotiate.

Other Home Renovation Considerations

There are other important factors you should consider before embarking on any home remodeling project and they include the size of your home, its age, and any permits you may need. Check out the details below for more specific information.

Home Size

Obviously, the larger your home is, the greater potential there is for a higher costing renovation. Extra or larger spaces take more materials and time to overhaul so consider this into your budget before taking on more than you can financially handle.  In addition, reworking substandard or incorrect labor or fixing issues can exponentially increase a budget on larger spaces.

Property Age

You would think the age of your home should not matter but it can play a big part in a home renovation. The older the property is, the more risk there is that contractors will find outdated materials which can generate a host of potential hidden costs. For instance, wiring in older homes is not always up to current code. If you plan on tearing out or cutting up a room, you need to plan for the likelihood that a contractor will find something that is not up-to-code that may need to be replaced.

Obtaining Permits

There are few things that will shutdown a renovation project quicker than not having a the correct permit(s) for the task at hand. If you skip the permit you could face large fines, the project is halted, and you could be forced to put the space back to its prior-to renovation stage. Whether your project is electrical, plumbing, structural, or something else, obtain the necessary permits and have piece of mind knowing you are working within the existing provisions according to applicable laws and rules.

Whatever your reasons for renovation, developing a renovation plan with a workable budget is a big project! Use this step-by-step guide to get the renovation you want at the price you can afford.

More Home Renovation Resources 

HouseLogic – Budgeting for Remodels

Kevin Vitali: Key Renovation Tips

David Martin: Home Features Buyers Want

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Key Steps To Take To Create A Renovation Budget

About Anita Clark Realtor

Anita Clark has written 587 posts on this blog.

Anita is a residential Real Estate Agent in Warner Robins Georgia, with Coldwell Banker SSK Realtors (478) 953-8595, aiding buyers and sellers with all their real estate questions on her Warner Robins blog.