Budgeting For Home Remodeling
So you’re looking forward to a new home improvement project! Perhaps you’re contemplating a minor project, such as laying down a new kitchen floor. However, because the new floor will clash with the cabinets, you decide to renovate them as well. And, while you’re doing it, why not throw in a stunning kitchen island? Your $5,000 dream makeover project quickly ballooned to $30,000—yikes!
You’ll need a plan to keep your home improvement spending under control. We’ll show you how to develop a sensible budget and make sensible selections that add actual value to your property if you want to accomplish a beautiful remodeling without going bankrupt.
Bring your calculator with you!
How Much Is Home Remodeling in 2021?
Your home remodeling job might cost anywhere from $25 to $250 per square foot, depending on the type of room you restore, where you reside, and whether or not you’re comfortable with a hammer. But what does all of this add up to?
Remodeling on a 1,000-square-foot property will likely cost $20,000–$80,000, while renovations on a 2,000-square-foot property will likely cost $30,000–$200,000.
Oh, no! It’s a good thing you’ve planned beforehand.
Keep in mind that the cost of a home remodeling project is determined by a number of factors, including the size of the room, the type of work required, the cost of materials, and the scope of the project. So, if you want to turn your basement into a bowling alley or install a jacuzzi on your roof (no judgment), the cost of your project may be far more than the national average.
Here’s a ball park estimate of how much it costs to remodel depending on the type of project:
Cost of an Average Remodeling Project
Kitchen Remodeling
a range of $25,000 to $50,000
Bathroom Remodeling
ranging from $10,000 to $35,000
Basement Remodeling
a range of $15,000 to $60,000
So, if you want to renovate your kitchen, bathroom, and basement, you can expect to pay between $30,000 and $90,000. If, on the other hand, your bathroom takes precedence, focus solely on that project and put the others on hold.
The most efficient way to generate a home remodeling budget is to set out and price the renovation work you wish to accomplish. Obtain quotes for each job, rank them in order of importance, and begin a comprehensive budget for the item you want completed first.
What Should I Budget for a Home Remodeling Project?
As a general guideline, don’t go crazy renovating a room or two for half the price of the property—it won’t bring a balanced value to the house. The best method to figure out how much to spend on a home remodeling is to start with your present monthly budget.
Let’s imagine you make $100,000 a year and live in a $300,000 home. In an ideal world, you’d spend $80,000 renovating a few rooms, evicting the squirrels from your attic, and repairing the racoon damage to your roof. If you set up $2,500 every month for remodeling, you’ll be able to complete half of them in the first year!
What is the Best Way to Pay for a Home Remodeling Project?
Cash is the best way to go if you want to save money on your renovation job. Sure, you’ve heard of sophisticated debt-inducing financing choices like a home equity loan or a home equity line of credit (HELOC). But debt is a complete moron! Remodeling isn’t worth borrowing against what you currently own (equity) in your property to pay it back—plus interest!
If you have consumer debt, you should focus on paying it off first and building up an emergency fund of 3–6 months’ worth of spending before embarking on remodeling. The money you were putting into your emergency fund can then be used to save for renovation projects.
Budgeting for a Home Remodeling Project in Three Easy Steps
Use these wise strategies to generate your home remodeling budget to get your project moving:
- Make a list of all of your projects and rank them in order of importance. Obviously, if a room in your house is out of balance and producing problems, you should prioritize that project. Alternatively, if you have a strong desire to renovate a certain place, start there. However, if everything else is in order, start with the most popular house renovations, which add the greatest value to your property and provide the greatest satisfaction to homeowners.
House value: If increasing property value is your primary goal, prioritize projects that will net you more money when you sell your home than you spent on it. Home remodeling such as a new roof and wood flooring, for example, earned renovators 6–7% more at resale than they spent on the improvements. New roofing also came out on top of a list of 20 remodeling projects for assisting in the sale of a home. 5
Enjoyment: If you care more about enjoying the results of your remodeling project than whether it earns back the full dollar amount you spent on it when you sell your home, you could choose projects like kitchen or closet remodeling, which both scored highest out of 20 for homeowners who were satisfied with their remodeling projects.
- Cost Estimates in General. Now is the time to get your calculator out—this is where the fun begins! Now that you’ve picked which renovation to tackle first, calculate the total cost of the job, including all of the labor and supplies required. This will require some investigation, so get a cup of coffee and settle in.
Remember that you won’t know the precise pricing until you speak with genuine contractors (see #3). However, doing some research online will provide you with some rough figures so you can be realistic about what you can accomplish with your budget.
You’ll have a better picture of how much money goes where for your renovation job if you do this. It can also show you how to save money in one area while splurging in another. You may, for example, forego new flooring and instead invest in luxurious marble worktops.
- Collect bids from contractors. You’re now ready to speak with a contractor. Find at least three reputable contractors in your region by asking around or searching online. Request project bids and timetables from all of them, and then compare prices.
Avoid being swayed by the lowest bid since you can find up paying for a shady guy who takes multiple lunch breaks a day and leaves you with a half-finished project. However, if the contractor checks out and the bid is within your budget, go for it.