Home renovations can enhance your lifestyle and increase your property value, but they can also be costly. Careful planning can help you avoid overspending and incurring more debt. Here are ten financial tips to help you renovate your home thoughtfully.
1. Figure Out Your Budget
It all starts with figuring out your budget. Determine how much you can afford to spend on any given project and then stick to that number. Assess your income, savings, and expenses and figure out how much you're able to put toward the renovation. Factor in materials, labor, and permits. Do as much research before you begin as possible so that you know what to expect.
2. Think About the Long Term
Don't only focus on here and now. Think about the long term, as well. Consider moving forward with upgrades that will add value that lasts, such as energy-efficient updates like installing modern windows, upgrading insulation, and/or adding smart home systems. These types of upgrades can save you money over time by lowering your utility bills. Using durable materials for floors and countertops, for example, will expand the life of updates and prevent the need for premature replacements in the future.
3. Explore Less Expensive Alternatives
Durability is key for the long term, but that doesn't mean you have to opt for the most expensive materials. You can often find options that are just as reliable with a similar look and feel that don't cost as much as the higher-end options.
"High-end materials can inflate your remodeling budget, and there are frequently less expensive alternatives available that can give you similar looks and feels," says James Glave at This Old House.* "Instead of investing in expensive hardwoods such as mahogany, for example, consider using Lyptus, a sustainable eucalyptus hybrid that looks similar but is available at a fraction of the price."
4. Explore Secondhand Options
Don't rule out secondhand options when you're renovating. You don't necessarily need brand new materials. Check out salvage yards, Habitat for Humanity's ReStores, online marketplaces, etc. for things like doors, light fixtures, flooring and other items before overspending on what you could get for significantly less. You can save money, and it's also an eco-friendlier choice. It can even lead to more unique and interesting design choices.
5. Prioritize Essential Upgrades First
If your budget is limited, try to prioritize essential upgrades first. Address critical repairs like structural issues, foundation problems, leaky roofs, and old plumbing. These are the types of issues that are most likely to give you major (and costly) problems if not taken care of. If all of that is in good shape, you can look at addressing more cosmetic items like fixtures and paint.
6. Get Multiple Quotes
As with any other purchasing experience, it's a good idea to shop around. Don't just go with the first contractor you encounter for a variety of reasons. Get multiple quotes.
"How do you hire a home contractor? Start by asking around for recommendations or searching online," suggests Ramsey Solutions.** "Try to find at least three legit contractors in your area, then request project bids and timelines from each of them so you can compare pricing. This isn’t all about going with the lowest bid, though. Cheaper isn’t always better if you wind up with a shady contractor who takes several lunch breaks a day and leaves you with a half-finished project. Do your research on potential contractors by checking their insurances and certifications, contacting references and interviewing them yourself."
7. Plan for Hidden Costs
Take potential hidden costs into consideration as you plan your renovations. You never know where these might arise. For example, you might discover water damage that you were unaware of that needs to be addressed. Set some amount aside for unforeseen costs as a financial cushion if you're caught off guard.
8. Ask About Financing Options
You don't have to solely rely on your current savings to pay for renovations. Explore options such as a home equity line of credit. Ask your banker for help. Some contractors will also offer their own financing or payment plans. Financing can help make your projects more affordable by allowing you to spread payments over time.
9. Do It Yourself When Possible
Of course, you can always DIY (do it yourself) if you have the skills. This can save you a great deal of money on labor, but it does cost you your own time and effort, and many projects are best left up to the professionals. Taking on things that you aren't qualified for may lead to costly mistakes, not to mention safety hazards. Assess what you're actually able to get done on your own and weigh that against the costs of having contractors take on these tasks. For smaller, less dangerous work, it may be worth attempting on your own. Look up tutorials on YouTube for help.
10. Monitor Your Spending
As your renovations proceed, keep a close eye on your expenses and make sure you stay on budget. Consider using budgeting software to track payments, purchases, and invoices. Review your finances and identify areas of overspending so you can make the necessary adjustments.
Renovations can be financially overwhelming, but they don't have to be if you set a budget and make smart decisions. Don't forget to plan for unexpected expenses, and above all, stay safe!
* https://www.thisoldhouse.com/cabinets/21018036/21-ways-to-save-on-your-house-remodel
** https://www.ramseysolutions.com/real-estate/home-renovation-budget