Step 3: Define your budget.
Many of us are thinking about our budgets these days. It is hard not to. If you are considering renovating your home or putting your current home on the market, defining your overall budget for updates is crucial. Material costs for permanent finishes such as wood flooring, tile, stone, and countertop materials are on the rise. Labor costs have also gone up due to current demand. Making and sticking to a budget will make the renovation process less stressful.
Ask yourself this question.
To begin to get a handle on your overall budget, one basic question to ask yourself is, how long will you remain in your home? The answer to this question can fall into several categories: 1) less than five years; 2) more than five years; and 3) this house is an investment property that may be used as a rental or sold in less than five years.
Less than five years.
If the answer to that question is less than five years, don’t over-build your home with expensive materials that may not pay back when you sell your property. Do some quick research to find out what types of finishes are being installed in homes in your area and what the final sales price of those homes were. This will help you understand if higher quality materials are expected by buyers in your area and what those materials are. Are quartz or marble countertops “expected” from buyers, verses dated granite patterns? Are lighter finishes selling better than darker ones? Is there a way to creatively work with most of the existing finishes but give a refresh to the space?
More than five years.
If your answer to the question is that you will be staying in your home for more than five years, you are really renovating for your specific needs and your choices can be more specific to your taste. I say this with words of caution. Beware of trends as they come and go quickly.
My recommendation is to pick timeless finishes for large swaths of areas, such as flooring, countertops, backsplashes, and shower/bath wall tiles. These finishes are expensive to change and disruptive to your life. If you love a current trend, go small and install something easier to change out, such as a backsplash in a laundry room or the laundry area flooring. Perhaps a backsplash to a bar area. Perhaps changing the interior wall color of your closet areas. Personalize with an eye towards an easier, less expensive change if you decide to put your house on the market after five years.
If you are working on an investment property, speed is everything. Do a bit of research. Find out from local realtors or realty sites online the finishes that help sell a home quickly and which types of finishes are being sought after by buyers. Many flip or renovation shows on television focus on trendy, eye popping finishes. These programs may be in markets that have that type of demand from buyers. Think Las Vegas or Los Angeles, which are all about creating theatre. Define what your local area demands.
I love looking at houses and have gone to many flips or resale properties in my local area. I find that many of the interiors look formulaic in their finishes and most do not compliment the style of the home. I have seen some interiors with dated details or low-quality finish work. Be careful not to slip into this mindset. Set your project apart by considering what really sells homes. Give buyers value. At the end of the day, buyers want a solid, well-constructed home with timeless finishes, so they do not have to embark on a renovation project right after they purchase a property. All these considerations will affect your overall budget.
For those on tight budgets.
Renovation is expensive. For those of us on tight budgets, here are some thoughts that might help. Even if you change only one thing in your home, it will have an impact. That one thing doesn’t have to be big. Focus on one area or room if your budget doesn’t allow for a whole house renovation.
Focus on the most important area for you or your family. Kitchens are typically the most expensive areas to renovate but you can save money by keeping the layout of the sink and appliances. Check your local real estate blogs and find out which types of renovations will give you a higher return on investment when you finally sell your home. If you are not selling soon, focus on the room renovation that will give you the biggest peace of mind. Currently it might be more important to freshen up a room for kids to use as home study areas since schools are closed and classes are online. This type of refresh can be done affordably by changing paint or adding wallpaper, adding effective lighting, adding good ventilation, or just adding furnishings such as desks, a well fitted chair, bookcases, and rugs for sound dampening.
Here is the thing about renovating. Most people come up with a number in their head of how much they think they want to spend on a renovation project and then they start shopping. This is not helpful and will get you derailed very quickly. It is important to make a budget. Physically making a budget is not a “fun” thing to do but you will have much more control over your project if you do this. I use excel software for budgeting, but you could use any software that allows you to track material and labor costs in your area. List every material, the amount of square footage or linear footage material needed to do the job and add them up. Contractors may be able to get discounts on materials and pass the savings on to you, don’t be afraid to ask.
Don’t forget to include items in your budget like permitting costs, which will apply to certain projects in many areas, dumpster fees, cost for items like grout or waterproofing behind shower walls, tool rental, etc. if you are doing these projects yourself.
If you haven’t done any construction projects on your home lately, it is difficult to know how much a project may cost. In this case you can define the project in specific terms and get several estimates from contractors or installers. When you have those estimates, enter them into the overall budget and keep refining to get the costs to come in line with what you can afford. If the estimates are coming in remarkably high, ask the contractor what can be done to reduce the costs.
Thoughts on conservation.
There is no question that renovation can be hard on the environment and can add to the landfill if you don’t consider other options. In my local area, the Goodwill Restore will take certain building materials as donations and resell them. This might be a great option if you are limited on funds and looking for small amounts of material to install or looking for a place to repurpose your materials from your renovation project. Check options in your local area so you limit the amount of waste going to the local landfill.
It is extremely hard to “un-install” materials in a way in which they are not destroyed. I find myself questioning the way in which home construction is being done. I find our current system doesn’t allow for homeowners to change up their surroundings easily and inexpensively, but this is a topic for another post.
Here are some thoughts on things you can do to help conserve resources, 1) salvage as many permanent finishes in your home as possible; 2) use salvaged materials in your renovation project; 3) purchase new materials made from renewable sources and 4) question how much square footage you truly need in a home to live comfortably.
After identifying which finishes will remain, as discussed Step 2: Identify which finishes will remain, this third step, defining the budget, is critical.
Sometimes all our choices for permanent finishes costs more than what we can afford. The only way this becomes clear is when an actual budget is prepared.
I try not to look at budgets as ways of limiting what I can do, but rather, a tool which allows me to direct how and where I want to spend money. This budget tool allows me to change out items, such as tiles or wood flooring options and see the immediate impact of the cost on the overall budget. The good news is there are lots of options at lots of price points to choose from.