Is renovating your home on your to-do list? Quick – think of the most important thing to consider? Matching the backsplash to the cupboards, unfortunately, is the wrong answer. The most important task for any would-be renovator is getting what you need to get done and getting it done under budget.
Lucky for you we assembled an easy-to-follow checklist to make sure you’re next reno comes in under budget.
This step has two components. The first is to identify what’s getting renovated. This in itself is a difficult discussion and may change as you move further down the list. The second is determining a budget. It’s responsible to set a maximum amount that works in conjunction with your financial plan, and that has a built-in contingency for potential additional costs and possible time overruns.
Now put the two together. Once you’ve set a dollar amount, determine your renovation priorities and start working within the number. You may decide that getting ten small things done under budget is more beneficial than getting that one big job done. Regardless of choice, you need to feel good that the decision is achievable within time and dollar constraints.
Let’s find some contractors! Inviting multiple contractors over to get quotes is a crucial part of the renovating process, as it will help weed out any unrealistic quotes, both high or low. Regardless of where you find your contractor, be it word of mouth or referral, it is crucial to vet them before signing a contract, and don’t forget to sign a contract.
For a list of contractors, call your friends, check your local builder’s connections, and be sure to check with the better business bureau. For a complete list of local contractors, as well as examples of their work, check out Bench.Dog.
Be sure to have an agreement in place to keep both parties on the same page. This will help keep you both on budget and on task while giving providing a foundation if anything changes.
Make sure discussions with contractors happen sooner than later in the renovating process to let you digest your options and identify what upgrades you should consider. Take this chance to talk to your realtor for insight on which upgrades will benefit a future home sale, as well as how much to plan on saving for pre-sale updates when that time comes.
A common misunderstanding is just how much materials will cost, let alone the service cost to execute the renovation. This brings us to the do-it-yourself option into consideration. In some cases, this is a viable option, while in others, it can be devastating as a poorly constructed project will undoubtedly cost more.
On the materials front, the accuracy of contractor’s quote will affect the possible over or underages, which reinforces the importance of financial contingency. That’s why both transparency and communication with your contractor are crucial to staying on plan while understanding of any unknown issues that have arisen.
With the ever-standing possibility of unknown issues arising, it is common to have to choose between renovation jobs. Within every home upgrade, several choices must be made that will directly impact the overall cost of renovating. For example; the finishes chosen should satisfy your style and your budget while aligning with what your neighbourhood will support on resale.
This fact needs extra consideration because several upscale renovations can have diminishing returns based on what your neighbourhood homes ultimately sell for. To exaggerate the point, don’t put $500,000 into renovations when the houses around you only sell for $350,000.
The financial components to consider with a renovation are not always apparent. Take a look at the following list before you get started:
Quotes: If you take time from busy contractors, this may cost you money. in some cases may cost money. Be sure to be cognizant of this prior to requesting multiple quotes.
Permits: A proper renovation should have permits. Without permits, the city may force you to undo all the paid work, resulting in financial and emotional pain.
Over/Underages: The amount of time or materials (or both!) will undoubtedly fluctuate from the initial quote. Be sure to have a contingency plan in place to help mitigate this reality.
‘The Unknowns’: Whatever lies beneath the drywall, flooring, or siding, will affect the path forward. Unknown water damage and shoddy work from previous contractors, for example, will lead to additional costs.
Addition, Subtraction, and Changing Plans: As you progress through renovations, you may have a change of heart and deviate from the original plan. What this does is amplifies the importance of excellent communication and planning with your contractor. Multiple trips to the lumber yard, returning materials, and drafting new drawings will all have impacts on your bottom line.
Lodgings: If you need to rent or stay in a hotel, prolonged construction will impact the bottom line. This is an often overlooked expense, and the initial budget should account for this potential cost.
Financial Returns: Will any added home upgrades provide financial returns during the eventual sale of the house? Or do the day-to-day benefits and added house contentment offset any economic losses on the renovations. This is an important question to ask before proceeding with renovations.
As a realtor, there are many considerations concerning financial returns. If you spend $10,000 on a kitchen, will you realize a return on investment upon resale? The answer to this question, as you would expect, is very fluid. Did you overpay or underpay for your home? How has the market acted since your purchase? What is your home worth right now?
The support for prioritizing your upgrades can come from analyzing the sale of comparable homes in the surrounding market. Specifically, you should look at homes that have sold for more money or have sold quickly (ideally both). Pairing your wants and needs with what has proven to sell in your market will certainly provide some peace of mind in your pre and post-renovation home.
Have more questions? Looking for a list of contractors? Not sure on the value of your house? We can help. Contact us here.