How to Make a Home Renovation Budget

Category : Real Estate
Posted By : Ambrose Onyango
Posted Date : 27 Nov 2018 13:07 hrs

It can be daunting for an inexperienced homeowner to make a renovation budget that is realistic for an upcoming project. Many formulate budgets that are grossly exaggerated or inadequate with the result that the renovation work keeps being postponed for lack of resources, or the work commences and becomes a black hole into which resources sink endlessly. Learn how to make a home renovation budget by following the steps below.

Decide What You Want

One of the most important steps needed when creating a budget for any renovation project is the decision on the work you want done. For example, are you interested in enlarging your existing kitchen? Do you just want to paint the bathroom and replace older fixtures? Has the roof reached the end of its service life and you want to replace it?

The possibilities of what can be done during a home renovation project are almost endless. Moreover, no two people are the same, so each is likely to have unique interests that they would like to attain during a home renovation project.

It is therefore helpful for you to write down everything that you would like to attain when you renovate a section of your home. Don’t worry about cost at this stage. Instead, look at this phase as the creation of a wish list.

Identify the Necessary Equipment

The nature of the work identified in the step above may not warrant the involvement of professionals. In that case, think about what equipment you require to execute the project. For instance, you may need a compactor in case you to plan to install pavers in your yard. Similarly, you may need a mini-bulldozer if you plan to dig a trench to improve the drainage on your property.

Look at the list of the tasks you want to accomplish and write down what kind of equipment is necessary to perform each of those tasks. Consider visiting an equipment hire yard near you in case you want to know the different options available for doing the work on your list.

Make sure that you have sufficient skills and experience before choosing the DIY approach to get the home renovation done.

List the Professionals You Need

It may be hard for you to do all the necessary work on your own during the renovation project. Consequently, you need to come up with a list of the different professionals whose help is vital during the project. For instance, you may need to hire an architect if you want to add an extra bedroom to your home.

The laws of your area may also limit the extent of the work that you can do as a layperson. For example, many jurisdictions insist that only licensed electricians are allowed to do electrical work during home renovations.

Decide How Much Money You Can Spend

Another important step when learning how to make a home renovation budget involves assessing the money that you are willing to invest in the project. It is wise to decide how much you have available before the renovation work begins because that information will set the limits of what you can or cannot do during the renovation project.

An example of how a ballpark maximum amount available can help is when you are buying materials for the renovation. You will resist the urge to buy the most expensive fixtures if you know that your resource envelop cannot absorb the higher cost of those pricy fixtures.

Additionally, remember to add an extra 20-30 percent of your budget for unexpected costs as the work is going on. For example, the contractor may discover rotting baseboards as he or she replaces the flooring material. The contingency fund will cover the cost of installing new baseboards. Similarly, termite damage may be seen as a foundation for an extension is being dug. The cost of hiring pest controllers will be covered with that extra money you include in your budget.

Get Estimates from Professionals

You have written down what you want, and you have some resources earmarked for the renovation project. What next? Contact at least three professionals and ask them to prepare cost estimates for the work available.

Ensure that all professionals receive the same list so that you can compare what they are proposing to charge for the work. For instance, it would be hard for you to compare one estimate to another if each of the professionals generated an estimate for different flooring materials. It is best to compare apples to apples.

Review the Estimates and Your Goals

The sixth step in the process of creating a budget for a home renovation project entails reviewing the estimates provided and the goals you formulated earlier. Don’t rush this review process because any mistake you make at this stage can have serious implications on your budget.

Check each item on the estimates and compare what each contractor has indicated for that item. Identify the items where each contractor has indicated competitive prices.

Next, look at the list of your goals and think about the changes that you can make in order to stay within the resource allocation you had made. Several options can be explored in this regard.

First, you can scale back the scope of the work so that the expected expenditure reduces. For instance, continue using a shower if the cost of installing a bathtub exceeds your budget.

Secondly, you can adjust your plans and do the work in phases instead of doing it all at once. For example, the most urgent work can be done now while the rest of the changes can be implemented two years later.

Vet and Select a Contractor

Call the references provided by the different contractors and confirm that they will do the work to your expectations within the set budget. Talk to family members, colleagues and friends about any contractors they recommend for such renovations. Be thorough as you vet those contractors so that your final choice will be the best.

Make a Final Budget

Meet the selected contractor and agree on a final budget for the renovation. The final budget agreed upon should reflect the adjustments you make regarding the scope of the work and the materials selected.

Include a contingency fund in that final budget so that any unexpected costs can be covered without jeopardizing the work originally planned. Remember that a budget is a living document which can be revised periodically based on the evolving situation. Consequently, don’t be rigid once a budget has been agreed upon. Work with your contractor to save as much as possible so that the final cost of the project stays within the budget.

Now you know how to make a home renovation budget. Use this information and be systematic as you plan for every renovation project you want to do in order to take the guesswork and worry out of the home improvement process. Remember to get all the necessary permits to avoid running into legal problems.

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