Remodeling isn’t easy, but it can be necessary, especially if your home is older or you bought a fixer-upper, knowing you’d have to make it your own.
Before you can embark on your remodeling adventure, you have to know how much it will cost and, more importantly, have a plan for budgeting your expenses.
According to the 2024 US Houzz & Home Study by Houzz Research, 56% of homeowners took on home renovations in 2023, spending a median of $24,000. That’s up from $18,000 in 2021, and not a small expense for most homeowners.
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Where to Begin Budgeting for a Remodel?
As with all things, the best place to start a budget is at the beginning — and for remodeling, this means getting a feel for the scope of your project. Unless you put firm boundaries on where your project begins and ends, it can be difficult to really estimate the costs that will be involved. Do you plan to overhaul the entire house or take it one room at a time? Knowing the size of the project, as well as assessing the condition of the house, can help get the budget framework started.
Without a budget, you can get into trouble, and without a realistic one, it’s easy to get in a lot deeper than you expected. According to Houzz Research, 39% of homeowners report going over budget on their remodels, and 24% admit having no budget to start with. Building a remodeling budget is as crucial a step as doing thorough prep work.
Take advantage of free online remodeling budget tools to help you draft an initial budget, but don’t stop there.
“Having a clear and realistic plan is essential, especially for those new to DIY projects,” says David H. Schulz, broker/owner at Schulz Realty in Naples, Florida. “This ensures that the project is feasible and stays within your budget. Consulting with professionals can provide valuable ideas and help define the scope of work, which will assist you in creating a realistic budget that prioritizes your needs over your wants.”
Defining the project parameters is just the first step. Once you know where your boundaries are, you have to fill them with the materials it takes to get the job done, says Schulz. “After identifying your project and its scope of work, the next step is to conduct thorough research to determine cost estimates. While many online cost calculators can offer rough estimates for various types of projects, it’s crucial to conduct in-depth research on your project options and associated costs.”
There’s more to consider than just the cost of your project today, though. Remodeling, especially large or significant remodels, can have knock-on effects that may cost you for years to come.
“Homeowners will want to consider both the short- and long-term costs, as well as any unexpected costs as they plan their home improvement project,” says Lauren Wybar, a certified financial planner and wealth advisor executive at Vanguard. “Short-term costs could include contractor fees or home improvement supplies. Long-term costs could be increased property taxes or utility bills depending on the state in which you reside and the scale of your home renovation project.”
According to the home improvement network and information site Angi, renovation costs about $15 to $60 per square foot on average, but that range can grow even wider depending on the quality of the materials used and the custom or high-end finishes you want.
Here are some of Angi’s estimates for each room of the house:
— Living room: $5,000–$10,000
— Bedroom: $1,500–$5,500
— Kitchen: $14,550–$40,400
— Bathroom: $6,600–$28,000
— Basement: $12,023–$34,497
— Home theater installation: $10,000–$60,000
— Attic: $4,600–$16,400
— Garage: $1,500–$50,000
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Expect the Unexpected
Planning for what you know will go into your remodeling project is one thing, but what about the things you don’t yet know that you don’t yet know? There are myriad problems that can crop up or issues you may create yourself if you go in without good planning. It’s important to budget for these unknowns as well.
“I think one main thing homeowners should know when planning their remodeling budget is to always overestimate the cost of your materials by 15%,” says Brian Rudderow, real estate investor with HBRColorado.com in Colorado Springs, Colorado. “This way you will pad in some pricing and leave room for errors. Additionally, I would suggest watching out for price fluctuations on materials like windows and roofing.”
When it comes to remodeling, many surprises can pop up due to the age of your home. This is why it is so important to have a healthy amount budgeted for overage.
“Remodeling is one surprise after another,” says Lou Manfredini, Ace Hardware’s home expert in Chicago. “Especially if you are doing work in an older home, say 50 years or older. Methods, codes and age all play a role in this.”
Inexperience can also play a part in your overall costs, says Manfredini.
“I had a friend out of state who wanted to install their own windows,” he recalls. “They bought them from a big box store and put them in and sent me photos and it looked great. A few weeks later in a rainstorm, the windows were leaking and damaged a bunch of drywall. He thought he fixed it, but the issue still was occurring. A few months later, I visited and the issue was that he installed all the picture windows upside down. The frame was actually guiding the water in. A big mistake that cost a lot of money to fix.”
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Stretch Your Remodeling Budget
It’s important to properly plan your remodeling budget, but there are also some ways to make your remodeling dollars go a lot further. For example, you can repurpose the materials already in your home, such as repainting cabinets or buying new cabinet doors, rather than renovating the entire kitchen. But you can also plan your savings in such a way that it grows without you doing anything, which will also stretch your budget.
“If you plan to undertake a renovation project within the next year or two, now is a great time to get specific about your goal and to start saving with intention,” says Wybar. “One thing to consider is where you’re storing your savings. You may be able to earn a higher return on your savings with an alternative savings vehicle than you do with your traditional bank account, so I encourage you to shop around.”
Wybar also says that with a long remodeling horizon, you can take advantage of special sales or other promotions when they arise.
“Your renovation project may involve the need to purchase new appliances, furniture or other fixtures. Keep in mind that you may be able to take advantage of 0% interest monthly payments through the merchant if that makes sense for your situation.”
Manfredini emphasizes that sometimes more is less. It’s important to know your limitations and not attempt work that’s beyond your skill set. Doing so will only result in needing to hire a pro to fix your remodel. Even if you spend a little more on the pros, you may save a lot of money in the long run.
“I think it’s important to set some guidelines for any project a homeowner attempts,” he says. “It’s important to know your limitations. If a homeowner has never framed a wall, hung drywall, attempted electrical or plumbing work, these are areas where professional help is needed.”
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How to Plan a Remodeling Budget originally appeared on usnews.com
