Setting a Realistic Home Remodeling Budget for Your Home
Hello, I’m Caleb with Dansie Design Build. Today I want to talk to you about how you can set a responsible, reasonable, and realistic budget for your home remodeling project. You should ask yourself three questions or ask someone else when you’re considering setting a budget for your home remodeling project. Now, setting the budget is one of the most important things you can do right from the very first day when you start considering what you would like to do.
Question 1: How Much is My Home Currently Worth?
The first question is, how much is my home currently worth? Now, we’re not talking about how much you’ve sunk into the house or how much you’d like to get out of the house if you sold it, but how much is it worth on today’s market terms? So asking a licensed real estate agent helps you figure out what the market is doing and what your home is currently worth.
Question 2: What is the Value of Homes in Your Neighborhood?
The second question along those same lines is, what is the range of values of the homes in my neighborhood? For example, let’s say that your realtor says your house is worth $500,000 on today’s terms, and in your neighborhood, homes are going anywhere from $400,000 to $600,000. Based on that information, you could safely assume that you could spend up to $100,000 to get your house up to the $600,000 mark in renovations and adding to it or whatever you want. That’s the first way you can get a pulse on what your budget could be or what it should be. So many people do that, and they’ll go off that information.
Question 3: What Are you Willing to Invest in Your Home?
Now, the other thing you could do is ask yourself, what am I willing to spend or invest in my home to get it how I’d like it to be? That could be less than what the market’s doing, or it could be more. If it’s your forever home and you’re excited about the views and the neighbors and just living in that area, it could be worth spending more.
Keep in Mind the Return on Investment (ROI) if You're Going to Sell Your Home Immediately After Remodeling It
Remember that if you plan on quickly selling your home, only some of the money you invested in the remodeling project will immediately be in the home’s equity. It will take some years for that to build up in the equity portion of the home sale if you are planning to sell soon. I would probably recommend, if you’re looking to move relatively more quickly, to minimize the amount that you put into it because it will be difficult for that to come back very quickly, especially if there’s a market downturn that will lengthen the amount of time that it takes to have the equity return. So that is one thing to consider.
Cost vs. Value Report from the Home Remodeling Magazine
The other one is the cost versus value report. The Home Remodeling Magazine does a cost versus value report every year, and you can get on their website and download the report for your metro area or zip code. That will give you a massive list of all kinds of home remodeling projects that you could do to your home and the average cost for that project; it includes basic to a more luxurious level of quality for the specific project. You have three different numbers, an entry-level, an average, and a more luxurious cost, and then actually be able to see the anticipated recuperation rate of that project. Then that would be on day one if you turned around and sold it immediately. Then again, like we’re talking about, if you hold onto the house for some years, then that equity would build. But, that is a valuable resource that everybody should look at because it will give you a reasonable and reliable estimate of what those types of projects you are looking to do will cost in your area.
Hire Someone to Create a Design Plan for Your Home Remodel
The best way to figure out how much your project will cost would be to hire someone to create a master design plan for your home, for your entire vision of what you’re looking to have done. That could be an architect or someone else in the design field. We also offer these services to draw plans and have these kinds of meetings and conversations to help our customers get all their ideas on paper so they can start moving forward.
Next Step, Hire a General Contractor
The next step in figuring out the cost would be to hire a general contractor that is familiar with remodeling, that’s good at it, and that does remodeling to be able to go through those plans and the whole design concept and everything that you’re looking to do, and then be able to put together a budget for the job. At some point, their budget may be much more than anticipated, and it’s usually that way. So there must be some compromise, usually between the total scope of work and the total cost you’re looking to spend. So that’s the compromise you have to come up with and then be prepared when that budget comes back to value engineer, is what we call it, and be able to choose where the money should be spent and where it should be pulled out of, and get the project dialed into where it works for your pricing and also works for the entire scope of work, what you’re looking to do.
Contact Dansie Design Build for Your Home Remodel
If you’re looking for help with drawing plans and getting a master design plan for your property, or you’re looking to remodel your home, you can contact us today, and we’d be happy to help you get that put together. Thanks for your time today, and have a great rest of your week.
