Fixer-Upper: How to Budget a Home Renovation Project

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Fixer-Upper: How to Budget a Home Renovation Project

how to budget a home renovation

Now that the economy is regaining its strength, more and more people are becoming interested in investing in their homes through renovations. While you can certainly increase the value of your home while making it more comfortable through a renovation, you’ll also want to make sure that you spend the right amount of money so that you don’t dig yourself a hole you can’t get out of while also having the ability to make the alterations you want.

Determine What Financial Resources you have Available

Your own financial situation will have an effect on how much you should spend on your home renovation. Oftentimes, when families don’t have enough in savings for a renovation, they pay for repairs and projects they can’t afford. An alternative to going into debt because of your renovations would be to go over your finances and figure out what projects you could afford each month. Then, if you are using a contractor, you can sit down with them and create a calendar that goes along with your budget—planning a project or two each month according to what you can afford.

Determine What Effect your Improvements will Have on the Value of your Home

The amount your improvements will increase the value of your home is affected by what areas you choose to renovate. The amount of your home’s value comprised by each room in the general case is as follows:

— Finished attics or basements: about 10 to 15 percent.

— Kitchens: about 10 to 15 percent.

— Full bathrooms: about 5 to 10 percent.

— Half bathrooms: about 5 percent.

Determine How Much to Spend on Each Room

Usually, it’s best not to spend more on one room than the amount a room will contribute to your home’s total value. This means if the value of your home is $600,000, and you’d like to renovate your basement, you shouldn’t spend more than 10 to 15 percent of $600,000, or $60,000 to $90,000, on the renovation. Otherwise, you might not be able to get the money you spend back.

Do Your Homework

If you aren’t familiar with home renovation and aren’t sure about how much certain projects, equipment, parts, or labor should cost, don’t go blindly into the process or you could get ripped off. With the world wide web at your fingertips, look at sites like Houzz.com for design ideas and remodeling tips, and then consult contractors to get multiple estimates. Before you start renovating your home, make sure you do your homework in order to ensure that your money is well spent and you get what you want.

Save Money Wherever You Can

You can use a few common-sense techniques in order to save money painlessly on your renovation. First, do work yourself whenever you can. Putting your skills to use and applying paint, installing trim or crown molding, putting in new windows, or doing other work can save you thousands of dollars. Avoiding the removal or addition of walls and not making dramatic changes to the footprint of your home will do the same thing. However, doing your own work will only save you money if you know what you’re doing.

By putting these ideas to use, not only will you be able to get the most out of your investment, you’ll have a more comfortable space that you and your family can enjoy. Whether you’re staying in your home or planning to sell, a renovation done correctly and with a correct budget can produce lasting and satisfying benefits.

 

written by: Dixie Somers