So you’re planning on renovating your existing property and you’re wondering how you should manage your expenses. After all, it’s easy to get carried away when you have plenty of exciting ideas in the works. Most renovation projects end up costing more than initially projected because people fail to create a comprehensive renovation plan. If you want to have a successful renovation, then you need to set a realistic budget that won’t compromise on quality nor lead to overspending. Here are a couple of smart spending tips to ensure your renovation is timely, measurable, and attainable.
- Decide which renovations should be on top of your list
The need to renovate your home is probably attributed to improving your current living standard. This may be upgrading an old bathroom or just needing more space in general. Either way, it’s important that you prioritize all of your renovation goals so you don’t get sidetracked with smaller projects. For example, if you wish to renovate your kitchen space, focus on that first. A general rule of thumb is that the bigger the remodelling task, the higher it should sit on your priority list.
It’s always easier to micro-manage small tasks as they require less thought and preparation. But for the main projects, it’s best you give your full attention to ensure everything is going according to plan, budget, and schedule.
- Weigh in the cost vs. value on each renovation
If you plan on selling your home in the future, then you may want to maximize your return on investment. After all, it’s not worth spending $30,000 on a kitchen renovation if your property won’t sell for more than you paid for. Many websites offer a cost vs. value report to help homeowners determine if their renovation goals will yield great returns down the line. This should be a good indicator of whether or not your renovation projects are worth spending the money on.
The same thing applies if you’re planning on staying in your property for the long-term. Just because you want a huge kitchen remodel, it doesn’t mean you should pull the trigger. Again, it’s about weighing the cost vs. value of your renovation projects. You want to spend your budget on remodelling goals that will actually prove useful to you.
- Choose how you’re going to finance your renovation
The hard part about budgeting for your renovation is how you plan on financing it. Take a close look at your finances and see if you have enough cash to cover for the entire project. If so, that’s good news. If not, then you’ll need to borrow some money for the expenses. Unless you know someone who’s willing to loan you a hefty amount of cash, we suggest using a home equity loan to fulfil your remodelling goals.
Of course, there’s always the option of using your credit card to finance your renovation. It’s the most recommended option out there, but if you have a solid plan to pay off your credit card, then it’s a possible consideration.
- Extend the buffer of your original budget
It’s good to have a fixed budget for your renovation. The more specific you are, the fewer the chances of overspending. But if one thing’s for certain, it’s that your remodelling goals will cost more than you initially anticipated. Unexpected things can occur and if you’re caught unprepared, then the project’s quality may be affected (or in the worst case, unfinished).
This is why you should consider extending the buffer of your original budget and add 10-20% just in case things don’t go according to plan. Every good renovator knows that having a contingency plan is crucial for covering unforeseen events like groundworks and structural issues.
- Obtain bids from multiple contractors
If you plan on working with a shop fitting contractor, it’s a good idea to obtain bids from at least two more others to compare prices. Most contractors charge anywhere from 10-20% of the project’s total cost and this includes the materials, permits, labour, etc. Be careful when a contractor offers you a too-good-to-be-true estimate. If two contractors say that the renovation will cost $30-40k but the other one says it can be done for $10k, it could be that the contractor is inexperienced or they’re just lying to you.
You can also opt for a fixed-price contract that will help you stick to your budget even more. While this may cost more than a standard contract, you do get the benefit of not having to worry about anything at all. You just have to wait for the renovation to be finished and any overspending or delays will be shouldered by the contractors.
For those who have really tight renovation budgets, don’t feel bad about cutting costs. You can fit your remodelling goals without compromising on quality by sourcing gently used or refurbished materials. You can also time sales and wait for the prices to drop to get good deals. Overall, setting a realistic budget is key to a successful renovation and when you follow these 5 tips, you can eliminate the risk of overspending and under delivering.
