When you decide to renovate your home — whether to sell or make improvements — setting a budget can be a challenge.
Knowing what you want to accomplish may be the easy part but avoiding the bad advice out there and determining what you can actually afford takes research and detailed planning.
Consider these tips from the National Association of the Remodeling Industry member contractors to help build an appropriate remodeling budget.
Identify your project scope and ideal budget
Start by creating a list of everything you would like to include in your renovation then separate your list into wants and needs. From there, determine a proposed budget for the project based on how much you’re comfortable spending and your home’s value.
“Get your bids after you know what the project is,” said Michael Anschel, principal of OA Design+Build+Architecture.
Meet with remodelers
Set up a meeting with a local remodeling company and share your proposed scope of work and budget to see if it’s feasible. An experienced, professional remodeler who is a member of an organization like NARI can share feedback on the costs in your area and any challenges involved with your project based on experiences with homes like yours. Once you have a better understanding of the true scope of the project, meet with other contractors to gather a few estimates to compare.
Beware of low estimates
When evaluating companies for your project, remember estimates you may find online don’t typically doesn’t account for regional variations, the cost of various types of labor and necessary permits.“Cost estimates you find may be national averages that are lower than the costs in your city,” said Bjorn Freudenthal, homeowner advisor at New Spaces. “Also, they may only account for the cost of the replacement materials, not other costs like changing the floor plan or updating electrical, plumbing and HVAC systems.”
The COVID-19 pandemic has also caused some materials to rise in cost, so it’s important to account for these increases.
Ensure you have proper permits
Not all projects require permits, but it is important to determine if your project requires one from your city or county. Make sure you (or your contractor) obtain one, if necessary, to ensure the safety of the work and its compliance with building, construction and zoning codes.
“If a homeowner or contractor pull permits and something goes wrong, the homeowner is liable to fix the problem,” Anschel said. “This additional cost could be a large percentage of the original job, and maybe more.”
Understand your timeline
The purpose of your renovation can impact the long-term value of the project. Making updates to prepare your home to sell, for example, is a more immediate cost than updating a space you will spend time in for years to come.
“When the homeowner is looking to stay 7-10 years or more, it impacts lifetime value because you can spread the cost out over a longer period of time,” Steenlage said.
Find more tips for your next remodeling project, and member contractors in your area, at RemodelingDone Right.com.