You’ve got a few extra bucks saved up and a house that’s in desperate need of an upgrade. So, you decide to put it to good use and plan a renovation. The only problem is, you’re not sure you can afford the costs.
Whether you’re fixing the place up for better enjoyment or trying to increase the property value to make a decent return on a sale, you don’t want to go into debt on the project.
Ultimately, the best thing to do is create a budget to ensure you stay within your financial limits.
1. How Much Can You Spare?
Before getting carried away with ideas and consulting contractors for estimates, you need to know exactly how much money you have to dedicate to the renovation. Start by analyzing your budget template, bank account, and credit card balances.
The idea is to figure out what funds you have available compared to other savings goals and everyday expenses you’ll have to cover.
If you don’t have much in the account, reviewing your credit card balances will let you know how much you can charge to the card without maxing out.
2. What Other Financial Resources Can You Use?
Many homeowners choose to finance property renovations using other financial resources like a loan or line of credit. There’s nothing wrong with these methods as long as you can afford to repay the debt in a timely manner.
Again, review your monthly budget to see how much you can spare for installment payments. That way, you don’t agree to a loan that will cause issues with your other obligations.
3. How Much Does The Renovation Cost?
Now you know how much you have set aside and how much you can safely use to pay for financing, so you can start looking into renovation costs.
The amount you’ll need will depend on a few factors, including the type of renovations you want done, the size of the room, who you hire to complete the project, and the quality and types of materials used.
A quick online search will give you a general idea of what the bill may look like. For example, a kitchen renovation can range from $10,000 to $20,000, while new flooring could cost anywhere from $2,500 to $14,000.
You can get a more accurate estimate by consulting a few contractors in the area to provide a quote.
4. What’s Excluded From The Estimate?
Many homeowners end up getting the surprise of their lives when they receive the bill, and it’s hundreds or even thousands of dollars higher than the original quote. That’s because some expenses aren’t included.
When creating a budget for a renovation, you must account for things like unexpected damage, timeline extensions, and living expenses if you’ll have to relocate during the project.
For instance, if you’re having your kitchen remodeled and the contractor runs into plumbing issues, you’ll need to have those repaired, which is an additional expense.
If you and your family have to reside in a hotel for a few days because you don’t have access to the kitchen, you’ll need to include the cost of the room, longer commutes, and food.
5. How Can You Save On Renovations?
If you’ve determined that a renovation is more than you’d like to pay, there are ways to cut the costs. You can complete some of the work yourself or opt for more affordable materials, supplies, and finishes.
You can also break the project up into smaller assignments that you complete over time. For example, you could install new flooring in your bathroom one month and then install a new sink and tub six months from now.
Whether you’re trying to enhance your residence’s comfort, function, or aesthetic appeal or get it up to par for sale, the right renovations can help you accomplish those goals.
Be that as it may, renovations aren’t cheap. Before you bite off more than you can chew, homeowners are encouraged to create a budget answering the questions listed above to ensure their finances are in order.