Before you start picking out tile and collecting paint chips, be sure you know how much your project will cost.
Ready for a new kitchen? Anxious to redo the bathroom? The easy part is knowing what you want to remodel and why — whether you’re trying to keep up with your growing family, add office space, or increase your home’s value.
But figuring out how to renovate without breaking the bank can be tricky. Here are five key steps in planning your home renovation project.
As a general rule of thumb, you should spend no more on each room than the value of that room as a percentage of your overall house value. (Get an approximate value of your home to start with.)
For example, a kitchen generally accounts for 10 to 15 percent of the property value, so spend no more than this on a renovation. If your home is worth $200,000, for example, you’ll want to spend $30,000 or less.
Something else to keep in mind: contrary to popular belief, kitchen renovations offer among the lowest return on investment, according to analysis fromZillow Talk: The New Rules of Real Estate. Every dollar you spend on a new kitchen only increases the value of your home by 50 cents.
The highest return on investment? A mid-range bathroom remodel.
Consider loan options
If you’re borrowing money for the project, assess how much the bank will lend you (be sure to shop around!), and determine what type of loan would work best for you.
If you have a one-time project, then a home equity loan might make sense. If, however, you need access to money over a period of time to fund ongoing home improvement expenses, then a home equity line of credit is preferable.
Get quotes from contractors
Some contractors will give you an estimate based on what they think you want done, and work completed under these circumstances is almost guaranteed to cost more. You have to be very specific about what you want done, and spell it out in the contract — right down to the materials you’d like used.
Get quotes from several contractors, tossing out the bid from the one who gives you the lowest estimate. Going with this choice could be asking for problems, as low-priced contractors are known to cut corners — at your expense.
Stick to the plan
As the renovation moves along, you might be tempted to add on another “small” project or incorporate the newest design trend at the last minute. But know that every time you change your mind, there’s a change order, and even minor changes can be costly. Strive to stick to the original agreement, if possible.
Account for hidden costs
Your home may look perfect on the outside, but there could be issues lurking beneath the surface. In fact, hidden imperfections are one of the reasons renovation projects end up costing more than you anticipated.
Rather than scramble to come up with extra money after the fact, give yourself a cushion upfront. Factor in 10 to 20 percent (or more) of your contracted budget for unforeseen expenses, as they can — and do — occur. In fact, it’s rare that any project goes completely smoothly.
Always ahead of the highly competitive RGV real estate market, Marilyn Cortez is a Spanish speaking native of the Rio Grande Valley. Born and raised in Mission, Marilyn is committed to her clients, and is recognized as a Top Agent in the Greater McAllen Real Estate area, and within Keller Williams Realty. Since the start of her Real Estate career in 2007, she has sold over 40 million dollars of real estate. Known by her fellow real estate agents to be hardworking, honest, dedicated and motivated, Marilyn is knowledgeable in all areas of Real Estate and has built her business on results, with more than 70% of her clients being repeat clients.
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"Marilyn was great! She was very personable and always available to discuss my needs and concerns. I was a first time home buyer and she made me comfortable throughout the whole process. If I had to do it all over again, I'd definitely pick Marilyn and I recommend her to everyone I know!"