Approximately 30% of homeowners spend more than they plan to during home renovations. If you aren’t prepared, the process can become frustrating. Here are ways to ensure that you stay within your renovation budget.
Stick to Your Limit: Setting a budget is the most important part of renovating. Make sure you price everything out first. Ask friends and family what they paid for their new bathroom renovation or finished basement and try to learn from other experiences-both good and bad. Be wise about your investment. Experts may advise you to keep your renovation between 20-30% of your home’s market value to guarantee a return on your investment. Buyers can spot a shoddy renovation so if you’re going to spend more money, you need to make sure that the workmanship is impeccable and that the materials used will increase the list price. If not, you could be sitting on a property for months as you watch your investment disappear in carrying costs while you wait for your home to sell.
Know Where Your Money is Going: After you’ve met, checked references and secured a written estimate from at least three licensed, insured and bonded contractors, be meticulous when it comes to drafting the contract. The bigger the project, the greater the chance that it may go over budget, so have your expectations clearly established from the start. Discuss an estimated time frame for the job, settle the payment terms, and secure warranties and even talk about how your existing property will be protected once the work begins. Most importantly, write it all down and watch out for the low-ball quote. Get a detailed breakdown and scope of work and define anything that may be considered “extra”, such as upgrading the quality of paint used. If you’re doing the work yourself, keep a detailed account of all your expenses and receipts so you can stick to your set budget for your home renovations.
Set Up a Contingency Fund: A good rule to follow is to put aside an additional 20% of your budget to accommodate costs that will inevitably occur. The cost of renovating can vary and you never know what you’re going to find behind the walls or in other areas of your home. Changes are allowed, but know when to draw the line and try to stick to as many big decisions as possible to avoid climbing material and labour costs.
Scale it Back: Scaling back is not as hard as people make it out to be. You can still get an amazing look without spending a lot of money. It is okay to use an inexpensive title, for example, to avoid paying higher than necessary prices for materials. When your renovation is complete, don’t be shy about inviting a realtor over for an evaluation. If you’ve managed to stay roughly on budget and on time, you might be pleasantly surprised by the result.
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