How to Budget for Your Home’s Construction Project
Renovations improve the function and appearance of your home. Bathroom and kitchen remodel are popular among homeowners. Yet, these construction projects can be costly. In fact, the average price for a home makeover is about $46,891. So, here are some tips for staying on your budget during your renovation.
1. Start With a Plan
Before even deciding on a design, develop a solid construction plan. It should include elements such as blueprints, a work schedule, and all necessary materials. Without a plan, you’ll have to make costly decisions on the spot. Plus, changes can be expensive and time-consuming.
After you have the construction plan, research your specific home improvement project. Know the costs associated with it. For example, the average price for a bathroom renovation is about $10,000. Remember to factor in costs for any necessary permits.
Projects that alter your home’s structural layout require a permit. You can obtain these through your local municipal office. Also, keep in mind your project timeline. If you renovate during the off-season, there are lower supply costs.
2. Keep in Mind Additional Costs
Many people focus on the material costs. While it’s a significant portion of the budget, there are other expenses to contend with as well. These include things like labor and cleanup costs. The price for labor depends on several factors, such as the season and the location. This is one area of your budget you don’t want to cut corners on. A reliable professional will help you select the right materials for your home.
Another thing you may forget is factoring in site cleaning expenses. During this process, special tools haul away all the waste materials. The average cost for this project is around $500.
3. Compare Estimates
Before selecting a contractor, get multiple estimates. That way, you can ensure you’re getting the best deal. Check online for estimates, ratings, and reviews. You can also use sites such as Fixr to connect with local professionals. Ask your friends and family for referrals as well.
Look for a full-service construction company, which could help prevent scheduling conflicts. These companies also provide more accurate budgeting during preconstruction. Their budgets include administration, site preparation, labor, and material prices.
4. Create Your Budget Before Construction Begins
As you start designing, determine your budget. Get estimates for all the materials you plan to use. Keep in mind market changes will influence supply prices. In addition, budget for any new furniture and window coverings. Also, remember to factor in expenses for lighting and bathroom accessories.
5. Factor in Unexpected Costs
When making your budget, include room for unexpected costs. There may be hidden structural damage or you may change your mind about a design element.
If you have an older home, it costs more to bring it up to code. So, to prevent any stress, have these funds available before starting the project. Put aside at least an additional 10-25% of your budget.
6. Pick Upgrades That Improve Your Home’s Value
Take into account the return on investment (ROI) of certain upgrades. If the project has a high ROI, you can spend a little more. Kitchen remodels have a high ROI of 81.1%. Garage door replacements, window upgrades, and deck additions add value as well.
On the other hand, for projects with a lower ROI, try to find cost-effective strategies. For example, try to buy the materials second-hand.
7. Consider Builders’ Risk Insurance
This type of insurance protects your project from the consequences of property damage. In addition, it can help cover costs not directly related to construction, such as lost sales.
Having builders’ risk insurance prevents you from going over budget if something should occur. You can buy insurance coverage through companies such as The Hartford or Insureon. The policy typically costs around $1,000-$4,000.
8. Review All Your Financing Options
With the high price tag of renovations, research your financing options. These often include things like equity loans or cash-out refinancing. You typically need 15-20% equity in your home to qualify for a home equity loan. Some companies have specific financing options such as pay-over-time.
9. Determine Your Non-Negotiables
To help you stick with your budget, prioritize certain features. For example, do you want energy-efficient appliances? Then consider splurging on these items and cutting back on others.
When choosing non-negotiables, consider the style and layout you want. Also, determine what features you can wait for. You could leave a basement unfinished until you decide how to use the space.
10. Choose Finishes Before Construction
This may seem like a last-minute step, but completing it early prevents overspending. You want to pick out all the details, from the bathroom tiles to the kitchen faucet. Before choosing materials, research the different options and prices.
Also, think about your home’s style. For a more modern look, go for matte black or brass finishes. For farm-house-style homes, wooden elements work well. Planning your materials allows you to adjust your budget and see the areas you can cut back.
11. Regularly Check In With Your Contractor
Checking on the progress of your project can put your mind at ease. Plus, it allows you to ensure your contractor is staying on budget. Take time to remind them of your vision and let them know if you want anything changed. If you have updates, get these in writing.
Having open communication with the builder is essential. That’s why you should get to know them before hiring them.
12. Keep Track of Your Spending
Keep track of all your expenses and what you have paid for. This will allow you to catch any overspending right away. You can use a notebook to create a list of your monthly costs.
If you want to go digital, create an Excel spreadsheet. You can also download expense-tracking software on your computer or phone. There are also mobile apps such as QuickBooks and Rydoo you can try.
13. Find Updated Pricing
A general internet search for renovation costs is a good place to start. Yet, it’s not the most reliable for specific price points. These national averages change due to fluctuations in labor and supply costs. To find updated information, evaluate competing bids, and talk with designers and trade professionals.
14. Let Things Go
Trying to create the perfect home causes lots of pressure. Spending too much time focusing on small details wastes time and money. Before splurging on items, consider the value they bring. For example, a fancy bathroom tile adds style but doesn’t enhance the function of the space.
How to Stay on Budget
Creating a budget is essential for any home improvement project. Sticking to it is easier said than done, but you can manage your expenses well if you follow these tips to successfully finance your next remodel.
In case you have any architectural, structural, and MEP design requirements, or need subtle home additions or home improvements for your home, feel free to contact us. We provide you with the full permit set design + T24 for your home additions.
Rose is the managing editor of Renovated. She’s most interested in sharing home projects and inspiration for the most novice of DIY-ers. These are the values she developed growing up in a family of contractors.