When the urge to renovate strikes, it tends to come with a lot of power. Most people who decide that they want to renovate want to jump into it immediately, but that isn’t always possible. In reality, there are a few key factors to consider when setting up your home renovation budget.
A quick Google search will show you that a home renovation project is not always cheap. In truth, it can come at a fairly high price tag depending on what you would like to do to your home and the products that you choose. For this reason, knowing your budget in advance is incredibly important. Let’s explore how to land on a perfect budget.
What is a Renovation Budget?
A home renovation budget is the maximum amount of money that you would like to spend on your renovation projects in general—but that doesn’t mean that you should spread yourself too thin. When you set out to find a good renovation team with good labor costs, you want to be realistic about what an appropriate budget is for you.
If your budget feels a bit light for work, you might want to save money or use one of the many available financing options to increase your budget.
Why Budgeting Matters
At the end of the day, your budget will likely determine exactly how your renovation goes. It will influence the kind of services that you can have done—and it will play a large role in determining what kind of products you can choose while you are renovating. Higher-end products and materials can dramatically influence the price of something, sometimes adding tens of thousands of dollars to the estimated cost.
Your budget will act as a guiding light as you begin to piece together the fine details of your renovation. Knowing your budget in advance is important because it will determine how your renovation planning session goes. If you don’t know your budget, you will require more time with the contractor team, which might add more expenses to the home renovation costs. Figuring out what you are willing to pay and even how you are going to pay can help you to get the ball rolling in no time.
How to Find a Good Budget
Consider the Location
Your location will play a large role when it comes to your investment for one big reason: it plays a big role in the value of your home. If you are going to invest in some big upgrades for your home, you want to make sure that your home is worth the investment. Consider what homes in the area are going for before you make a decision.
Unfortunately, if you plan to sell your home, you will find that upgrades are a touchy subject. If your home is in a bad neighborhood or one that is not increasing in value, the money that you spend on renovations might not come back to you. While that doesn’t need to discourage you from making the investment in the first place, it is something to keep in mind. However, if you live in a thriving area, you might just find that simple home renovations can give your property an even bigger boost.
Be Realistic About Home Value
Another major consideration is the actual value of your home. In the same way that a home with upgrades in a bad neighborhood won’t go for much, a home that has a relatively low value might not be able to return the money that you spent on renovations. If your home can only be sold for $250,000, you probably won’t want to invest $75,000 in renovations.
It is easy to assume that remodeling projects will add value to your home—and a lot of the time, this is true. However, if your home is not a high-value home, big renovations might not be the right approach. People searching for a home like yours will likely have a budget truer to the base home value independently of the remodeling project. While an upgraded home might be worth it for you, it might not suit the interests of future owners, particularly if your renovations are customized to your tastes.
Consider Future Plans
Your plans for the future of your home will play a big role in how much you will want to spend on renovations. First, consider if the home that you are planning to renovate is well and truly your forever home—and you want to be honest.
Most homeowners spend money and renovate their homes to breathe new life into them because they aren’t quite ready to invest in a new space—but you need to look to the future with an honest heart. If you plan to renovate a home that you have the intent to sell at some point, you will generally want to consider this while budgeting for your renovations. You want to make sure that the investments that you make today will mean that you make more money on a sale down the line.
If the home that you are living in is your forever home, the sky is the limit. When you renovate a home that you know for a fact will be your space down the line, you can spend as much as you want. Custom or more expensive upgrades are always a great investment because every aspect of your renovation is for you and you alone.
Look for a Realistic Industry Standard
When budgeting, you also want to consider the industry standards in place. The average cost of renovations can range from $25,000 to $125,000 depending on what you choose and who you work with—but you need to be realistic here.
The majority of homeowners will talk to a few contractors when getting a gauge for their budget. This is a wonderful idea, but it can be fairly confusing. When you ask for quotes from contractors, you might see a pretty big disparity in pricing—and this should make you think twice.
Before you build your budget around the lowest bidder, you will want to consider the reality of what an unusually low bid means. It isn’t a pretty one.
In a lot of cases, the contractor that you are talking to might not be including certain fees or material costs upfront. In the end, you might very well see the price that you were quoted skyrocket—or you might receive less-than-satisfactory work. Cheaper is generally not better, especially if someone offers a significantly lower price than high-performing companies in the area.
Working with a general contractor means establishing a relationship, which means that you should always talk with at least a few to find the right fit. When you work with a contractor, comfort and communication are crucial. But, talking to multiple contractors can also help you to find a realistic quote for your renovation.
Comparing bids is a great way to have cost estimates for your individual project. If you notice that one contractor wants to double what another wants, that should be a topic of discussion. If you notice that someone is offering a much lower price, you should question that in case there are some hidden costs.
When you compare bids, you gain the ability to find a great price range for your budget. Once that is done, you can compare those bids and the individual teams they came from. Using all of this information, you can pick a reasonable budget that accommodates the changes that you would like to see.
If you are working to nail down your ideal budget with a contractor, remember to be transparent with them. A common mistake that homeowners make is assuming that if they express an interest in a lower budget, they will get a lower quote from the contractor, and this just isn’t true.
When you are honest with your general contractor about budgeting interests and limitations, you give them the ability to find the best possible plan for you. This means that they can help you to make the decisions that maximize what you want without going over budget. Contractors—especially good ones—are not looking to overcharge you, but they do need a realistic understanding of your budget before you can truly talk business.
Consider the Quality of Contractor for Your Projects
As we have mentioned, your budget is the main guiding factor for your renovation, which means you want to choose a reasonable budget rather than looking for a lower deal. Unfortunately, when you invest less in services like this, you run the risk of getting low-quality work that might actually lower the value of your home.
Renovations are not cheap, but they are an investment—and one that you want to take seriously. When you don’t invest in high-quality work, the truth is that you likely won’t get it. Companies that charge significantly less than top performers are known to be a point of confusion for homeowners. In a lot of cases, you might end up with limited options for your renovation—or you might just end up with bad work.
While you don’t need to work with the most expensive contractor, remember that a lot of the time, you get what you pay for. As you outline your budget, consider what you truly want to see from the renovation. Renovations are a very serious investment, so working with a top-performing group can be beneficial. Any time you consider a renovation, spending a large amount of money should be expected.
A big kitchen renovation or bathroom renovation can come with a very large price tag, which is why you truly need to consider your budget in advance. You might not have an exact number, but having a general ballpark estimate per square foot can help you to communicate more clearly with your contractor, so you get the best renovation for your investment.
Remember, spending money on a remodel is an investment. Whatever you put into it should come back to you in one way or another, so choose wisely when settling on a budget. A high-quality renovation from a team that you can trust can be a real game-changer.