tips to set a budget for your home remodel
11.8.24
Tell me if this is just me or if you feel the same way. Often times the hardest part of doing something new is taking that first step. Get that foot forward and the rest just flows! When I set the budget for our home renovation project, this was no different. Honestly, I diddle-daddled for what seemed like forever (well…probably because it actually was!). But I realized the road ahead seemed so daunting because I didn’t know how much everything would cost. Once I got down on paper what was needed to be addressed, determined how much it would cost, it gave me more confidence to tackle it.
This process is not perfect but it definitely helped me clear the haze while tackling budget planning.
Define the scope of work and goals of the project clearly
Make a list of all the spaces you want to address. Include even the areas that are may not be addressed during this phase (if you decide to phase out projects). The point it to get on paper every single area that you see needs/wants work.
Identify the priorities within each of these spaces. For instance, the kitchen will be completely gutted down vs. the laundry room needs washer and dryer only and all else stays the same.
Be clear with these necessities and wants. The more precise you are, the easier it will be to pinpoint what areas deserve your attention.
Research estimated construction costs
Get online for an idea of what a similar size project costs, potentially with similar style and materials that you’re interested in. If you know of any friends or family that have done recent project, ask them to share with you what their building cost were just to give you ballpark.
Take all of this with a grain of salt. This is only to give you an idea of cost ranges. Every project is unique. And not all builders are the same. This exercise is simply to get a quick idea of what the market is currently charging in your area.
Research companies and get multiple bids
Look for builders whose style, workmanship and reviews align with what you are looking for.
Make certain that they are insured and bonded.
It is always recommended to get at least three quotes. I would even suggest getting a fourth or fifth if time and patience allows. It will help you with cost comparison, evaluating quality, spotting inconsistencies, and leveraging for negotiations. Make sure that with each contractor you are walking them through the same list in order to get a fair apples-to-apples comparison in the end.
Ask if they provide itemized costs. This will help you find a missing/unneeded component.
Ask if they past clients who are willing to talk to you about their experience. And better yet, sometimes companies will have a list of satisfied clients who are more than happy to have you over to show you their project.
Prioritize your needs vs. wants
Now that you have a much better grasp on your project costs from various builders, this is a good stopping point to clearly identify what you want vs. what your budget and timeline allows.
Create an itemized budget
Break down the costs for each area of the project: materials, labor, permits, furnishings, accessories, storage units, and lodging if you are staying offsite.
Be specific! Account for the big ticket items like cabinets, countertops, appliances, plumbing fixtures, to flooring. All the way down to the smaller but just as important items like cabinetry hardware, switch plates, door stops, window treatment, and every single major piece of furniture.
Plan for unforeseen expenses/costs
We can plan, plan, plan and somehow something will still make its way up and catch us unexpected. That’s just the nature of our industry.
Set aside a contingency fund to cover unexpected expenses, like structural issues or material shortages. I use to say 10%-15% of the overall budget but I would suggest 15%-20% now. If it’s an older home potentially 25%.
Determine your path to fund the project
Now that you know what you want completed, received various bids, figure out how much of the renovation will be covered by savings or financing options (like a home equity loan).
Whatever path you choose, make sure that you have the funds on hand before your start the project so that you can keep the project on schedule and can pay your builder accordingly.
Track everything!
If you have a budgeting software to help keep you in check that’s amazing! Otherwise a simple spreadsheet that allows you track expenses and update costs as they come in will do the job. I used Excel but Google Spreadsheets is great too.
Record all expenses as soon as you can and do an overall budget check once a week to see if you are within budget or if you can allocate funds to other areas to make room for other expenses.
Stick to the budget
We have this term called “scope creep” in our industry. And it’s why we plan, plan and over plan with the goal to avoid this nasty thing that is no fun! How best to avoid this is to design upfront, purchase everything per the budget, have rady onsite and leave it alone.
I will be honest here…confession, I did my best, but we did loose track of said budget somewhere along the way! There were unforeseen structural issues that ate up the contingency early on in the project. And then there was other unforeseen yet preventable budget issues like that fact that I fell in love with material that was not allocated for :)
Do your best and adjust as needed! It’s not an exact guaranteed science. Plan as best as you can to avoid as much headache as possible. But know that it’s OK if things don’t go as planned. Just be ready to adjust as needed.
I hope this will help you when you take your first step!
Chat soon, friends! -Cat