How To Budget For Home Renovations

There are a variety of reasons for renovating the home that you live in. While most people do renovate their own home to improve their quality of life, you might also renovate or add new features to increase the overall value of your home. When doing home renovations, it's important to try and stick to a budget. That way you can know that your home renovation will not only improve your own life, but also improve your home's value without breaking the bank.

Average Costs For Home Renovations

The average cost per square foot for various home renovations depends a lot on what area of the house you are working on and where the real estate is located. If you are working in the kitchen, bathroom or other area that requires plumbing work, your project will likely cost more than if you are just painting a few walls to spruce up a bedroom.

HomeAdvisor gives the following approximate ranges in home renovation costs for home upgrades in the following areas:

As you can see, there is a wide range of remodeling costs, so these numbers should be used only as a ballpark or starting point as you plan your project.

Developing A Home Renovation Budget: Steps For Success

Now that you have an understanding of how much average renovations typically cost, you can start to create your project budget. One of the first thing that you will want to do as you plan your home renovation budget is to follow a few key steps:

1. Create Your Project List And Prioritize Projects

First, decide what you want and need, what you are willing to spend more on and where you’re willing to cut back your budget. This can differ between projects and is personal to each renovation and your own specific situation. Be sure to consider what you want done first (for example, kitchen needs to be done before the basement gets finished) and be realistic with your timeline for completing your whole list.

You'll also want to take a look at which home improvements add the most value to your home as you decide which projects you tackle. A kitchen remodel or full kitchen renovation usually provides the most resale value, though a bathroom renovation or addition also often has a good return on investment. Consider getting a value report from a lender or trusted real estate agent to see what projects have good payback value in your area.

2. Estimate Home Renovation Costs

Next, consider what materials you want to use, appliances you’ll need, lighting, paint, flooring, furniture, etc. The more detailed you can make your cost estimate plan, the easier it will be when talking to contractors. Make sure to research any permits you might need and their associated project costs, and to factor in labor costs. Include a contingency or buffer in your budget to account for any unknowns you might need to mitigate. And if you’ll need to board pets or stay in a hotel during the renovation, make sure to add a line item for accommodations to your budget.

3. Get Quotes From Contractors

Unless you have extensive experience working with a particular general contractor, you'll want to get quotes from multiple contractors before deciding who to go with. Don't always choose the lowest contractor's bid either — low-ball offers might not be worth the added stress or expense if something goes wrong, so be wary of deals that sound too good to be true. Look for reviews from other local homeowners and ask each general contractor if they offer a warranty on their work.

Determine How You’ll Finance The Projects

It's also important to consider how you'll pay for your home renovation or remodel. There are a few different options that you can choose from. If your estimated cost is low, you might be able to pay for your project with cash or by using rewards credit cards. If you have a more high-end project, you might look for a home equity loan, a home equity line of credit (HELOC), a cash out refinance or a personal loan for home improvement.

Securing financing may take some time so it's important to consider this early on in the project, before there are holes in the walls.

Ways To Save Money On Your Next Home Renovation Project

If you're looking to save money on your next home renovation in order to increase your overall return on investment, here are a few ideas:

DIY What You Can

If you have the knowhow, you can take on parts of a renovation project like demoing existing flooring or cabinets and removing them, painting, installing new hardware, etc. Consider refurbished or used pieces if you can to save money and cut down on your environmental impact.

Plan, Plan, Plan

The more you have planned out, the better your renovation will most likely go. Don’t be alarmed if some unexpected hiccups occur, that’s normal with every project. Just make sure you have the budget and the flexibility to deal with them as they arise.

Buy Materials Yourself When They’re On Sale

If you know the materials you want to use, like countertops, cabinetry, faucets, tile backsplash, laminate flooring or wallpaper, consider buying it when you see it on sale or special. This is another area where having a detailed plan before you start work can help you save money.

The Bottom Line: When It Comes To Renovation Costs, It Pays To Plan Ahead

Taking on a home remodeling project can feel like a bit of a daunting endeavor, but by taking some time to think through the steps and plan ahead, you can increase your odds of a successful project. Whether your home renovation project is a bathroom remodel, replacing the kitchen cabinets or redoing your basement, make a plan for what you need, get bids from various subcontractors and decide on your financing. Consider a home improvement personal loan as one option for funding your next home remodeling project.