There are lots of reasons why you might be taking on a renovation – increase your livable space or update the look and feel of your home. No matter what the reason you will want to get the most out of your renovation budget and add value to your home.
As you start thinking about your renovation and what you want to accomplish you will need to understand two main things how much is what I want going to cost? And do I have enough money to pay for it? As a result of TV renovation programs most people don’t understand how much a renovation will cost and tend not to budget enough for everything on their wish list.
When budgeting for any type of renovation it is important to keep these 7 tips in mind.
Tip #1: Decide what you want to accomplish
The first step in any renovation is being clear on what you want to accomplish. Take some time to think about how you use the space – what is working for you and what isn’t working. Do you need more prep space in your new kitchen? Do you need to be able to seat 12 for family dinners? The clearer you are from the get go on what you want will help lead the design and renovation. Understand your design style and find inspiration on Pinterest and magazines.
When developing the scope of the renovation project it is important to understand what your “must haves” are and what the “nice to have” items are. Inevitably our eyes are larger than our renovation budget, and having a clear idea on what is a need and what is a want will help you work within your budget. Your designer can help you find compromises on those nice to have items which still maintain the look you are going for but at a price point that will work within your budget.
Tip #2: Have a plan and stick to it
One of the best ways to get the most value from your renovation project is to hire a designer. Their expertise can help you with solutions on how to make the space function better and achieve the look you want to ensure all elements work together. You can expect to pay 5-8% of your total renovation budget on design services – which can include anything from developing the layout of the space to picking finishes.
The planning stage of any renovation is crucial as it allows you to determine where and how you are going to spend your budget. A designer helps to ensure you are spending the budget in the right places for the home and the neighbourhood you are living in. The plan helps to ensure you are spending your budget in the right places and to protect your renovation budget investment.
Having a design plan and 3D images of the renovation concept allows you to see what the finished product will look like. It is better to make changes at the paper stage rather than at the installation stage. Visualizing the renovation helps you to see and budget for the space.
Tip #3: Decide what you want to spend
It is so important we wanted to say it again: most people don’t understand how much a renovation will cost and as a result tend not to budget enough for everything on their wish list. How much you want to spend can be based on many factors such as – how much money you have access to (either through savings and/or borrowing options), the value of your home (you don’t want to over or under renovate based on the value of your home and neighbourhood), and how long you are planning to stay in the home (you may splurge more on some items if you are going to be staying in the home for many years to come and can enjoy those upgrades). This is where a good understanding of your needs and what you can compromise on becomes so important.
You will want to have a renovation budget in-line with the value of the home and the neighborhood you are living in. For example, HomeAdvisor.com recommends for a kitchen remodel to spend between 5%-15% of the home’s value on this project. You don’t want to over or under renovate for your area/ home’s value. A $30,000 kitchen renovation in a $2 million home will detract from the home’s value the same way a $100,000 kitchen renovation in a $300,000 home will not allow the homeowner to get a good return on that investment.
Tip #4: Plan for the unexpected
Most budgets and / or cost estimates are based on what the contractor can see but as soon as you start opening up the space deficiencies may come to light. No renovation goes off without some kind of glitch whether you need to bring outdated wiring up to code or have to deal with water damage behind a wall – you want to have the peace of mind that you can pay to have these items remedied. Take the stress out of the unexpected and have 20-30% above the renovation amount set aside. The older the home the higher the percentage you will want to budget for.
Tip #5: Figure out how to pay for it
Before you start picking out countertops or flooring you need to have a plan for how to pay for your renovation. There are many different options available for paying for or financing your home renovation. Whether your opt for an all-cash, cash credit combination or all credit financing option ensure you understand the impact on your monthly budget, repayment options and rates and ensure you have a plan to pay it off if using credit. Some of the credit options available to homeowners include a personal loan or personal line of credit, mortgage refinancing or a secured line of credit / home equity loan (HELOC).
Tip #6: Choose the right people . . . the first time
Choosing the right firm and having the right design plan can save you money in the long run by not having to pay someone else to fix the first contractors mistakes. When budgeting for a reno and hiring a construction company you need to understand where the money is going. Avoid contractors who throw out a ball park number without discussing with you the level and quality of finishes. Know what you are getting for the price you are paying. If you are hiring a designer find out if they work only for a design firm or if it is a design-build company. The advantage of the design-build model allows one firm to manage everything for you providing continuity and execution of your design. As part of your process ensure you understand who is doing the work, who is managing the project and the trades, and what warranties are offered. And importantly what type of timeline is required for the work you have outlined.
Tip #7: Minimize changes
Major increases to your reno budget can be attributed to changes during the construction phase. Not having a plan or making large changes to the plan during construction can increase the overall budget through change orders, time delays, increased labour costs and restocking fees. That is why it is a good idea to spend the time and effort upfront with your designer to have all of your finishes picked then when construction starts there are no delays or surprises.