Before you sell your home or improve it to live in for several years, you’ll have to come-up with a realistic budget. That’s not as simple as many homeowners suppose because there are more costs than just materials and labor. Inevitably, problems will crop-up and thin your wallet a little more.
A mistake that too many homeowners make is not doing their homework beyond just pricing appliances and other features. Labor costs are usually the bulk of the expenses and if, you prepare in the right way, you can mitigate money traps.
To get the most bang for your buck, commit yourself to being open and honest about how much you can spend and don’t play with hard and fast numbers. Justification can be a real path to financial problems in the near future, so understand your goals and how those will impact your spending.
Avoid these Remodel Mistakes
Not only will you have to be dedicated to sticking to your budget, you’ll have to avoid some common remodeling mistakes that homeowners routinely make during such projects. Once you have your plans laid-out, do not change them, unless something comes-up that’s completely unavoidable. Whenever you make changes, you up the cost and sabotage your schedule.
“Busting the budget is everyone’s biggest fear when it comes to renovation. And with good reason. Even if you follow the essential advice we’ve been doling out for years—build in a 20 percent cushion to cover the nasty surprises, get contractor references and check them, banish the words “while you’re at it” from your vocabulary—it’s hard not to end up shelling out more than you want to, even if you want to pen a check for a million bucks.” —This Old House
Don’t fail to plan for your timeline, and be sure to factor in unexpected surprises. Remodeling projects can easily take much longer than you expect and that will not only add more stress to the mix, it will cause anxiety and worry.
Another thing you’ll want to avoid is not being prepared and caught off-guard; so, be sure to set at least 10 to 15 percent aside for contingencies. Practically every remodel produces costly surprises and that can mean a lot of trouble. Last but not least, don’t turn your budget over to a contractor, be vigilant and make-sure to account for every single nickel you spend and will spend.
How to Budget for Remodeling
Start by examining your space and determine what you’re not going to change. This little trick is a great way to cut-down costs in advance of the project. Then, identify everything that can be given a slight facelift, like refinishing cabinets and countertops rather than replacing them.
In addition, this is a good time to go through your closets, garage and other rooms in your home to find things you can repurpose. You’ll likely be amazed at what you come-up with to give something old new life and new use. Then, it’s time to really start planning and produce a realistic budget by doing the following:
- Measure and multiply. In general, remodeling projects cost between $100 and $200 per square foot. For the sake of staying within budget, be sure to add on 10 percent to 15 percent at least for the inevitable contingencies. You’ll also need to pay for permits, depending on your project.
- Know how much you can spend. If you’re paying cash, then you already have the answer. If you’re going to finance the project, then make a strategic money saving move and borrow from your 401(k). This way, you’ll pay yourself back with interest. You can also use a home equity loan or line of credit.
- Get at least three quotes from contractors. After you receive these quotes, ask to see their previous work and check out their licensing status with the state. In addition, look them up on the BBB website, and last but not least, search the clerk of the court records to see if they are being sued.