You’ve developed a wish list for your ideal kitchen, bathroom or master bedroom.You’ve gleaned inspiration from magazines, the web and cable TV, forming a vision complete with your dream cabinets and favorite flooring. But before you get carried away, it’s essential to tackle the more daunting task of budgeting. Create a thorough, realistic remodeling budget from the start so you and your bank account can be happy long after the paint dries.
“I think so many people put the cart in front of the horse and hire someone to design their dream space, then get the number and try to figure out how they’re going to afford it,” says Rick Bartelt, owner of Bartelt: The Remodeling Resource, Delafield, Wis. “That’s really backward.”
How much should I spend?
The prospect of a remodeled dream home is exciting – all the more reason to carefully plan a budget and get the results you want
Before remodeling, homeowners should determine how much they’re willing to increase their monthly expenses, Bartelt suggests.
They also should be mindful of why they’re remodeling. For instance, is it for an expanding family? For personal enjoyment? To increase the home’s value? This will help determine the amount of money that is wise to invest in the home.
If the homeowners are planning to move in a few years, it is especially important they consider the value of other homes in their neighborhood and stay within reasonable standards.
If you plan to spend more than $50,000 to remodel, “you better plan on being there for 10 to 15 years to get that return on investment financially,” Bartelt says.“As for the enjoyment factor, they might see the payback in one year.”
How much will it cost?
To get a realistic idea of the potential price of a project, a little research can go a long way. One useful resource is the annual Cost Versus Value Report, a chart issued by Remodeling Magazine, which is widely used in the industry.
The report provides data on the average cost of popular remodeling projects and the value they recoup upon resale in all regions of the country. It also issues national averages – the typical midrange kitchen remodel in 2013, for example, costs just less than $54,000, with 69 percent of that retained at resale.
No matter how hard homeowners try to set and stick to a budget, unforeseen problems or opportunities often arise in the remodeling process. That’s why many professionals suggest people designate 10 percent of their budget as contingency money.
“I think the cushion is two-part,” says Josh Fiester, a project development manager at Melton Design Build in Boulder, Colo.“Five percent should be for problems that come up, like when you open a wall and find rotted lumber. The other 5 percent should be for opportunities that arise, like, ‘We should put a window here.’ This is a creative process.”
How do I stick to the budget?
A remodeling company that is thorough and up front at the start will ensure you have minimal unexpected cost increases.“You want to have someone whose goal is to make sure you’re happy at the end, not give you a cheaper price up front to get you excited,” Fiester says.
When choosing the remodelers, remember that good work comes at a cost, Fiester adds:“You don’t get to have the fastest, the best quality and the cheapest.”
And with the proliferation of discount deals on sites like Groupon and LivingSocial, it’s easier than ever to be tempted by low prices.
“As a consumer, you have to read the fine print,” says Jason Gettum, vice president of Gettum Associates, a remodeling company in the Indianapolis area.“If they say you can get a $5,000 bathroom for $2,500, it often means one of two things: Either the contractor is going to go out of business really soon or you’re not going to get everything you want.”
Gettum suggests reading reviews of the company, chatting with past clients and checking if it is a member of a local builders association.
While you may be looking to create your dream home, be careful when setting your expectations.“People with really low budgets see these TV shows where people get lovely remodels done in two days,” he says.“It just doesn’t happen that way.”