Setting a renovation budget and plan

Going along with the last post on renovation loans I thought it would be important to discuss how to set the budget. Let’s say you have been dreaming of that new kitchen with shiny new appliances but don’t have any idea how much all of this will cost and what is too much to spend. So with all these questions swirling where do you start?

The first step would be consult with a realtor. I know some might not agree but hear me out first. Before you plan and set your budget you have to know where to start and what finishes will bring you the most value. If you have a goal to live in the home for the next 5 years, you definitely will have resale value on the mind.

Let’s take the kitchen as an example. You plan to rip out all the dated cabinets, new tile on the floor and put new countertops and appliances in. If the area you live in has an average sale price of $300,000 then you should stay away from marble countertops with waterfall edges and custom cabinetry. It would be nearly impossible for you to recoup the renovation costs in those 5 years. You could spend a fortune on a kitchen and never make a sizable enough dent in your value to see any return on your investment.

If the average home price is $300,000 and you spring for granite counter tops, shaker cabinets that are mid-grade, there is a good chance your investment will yield you a return when it’s time to sell. The key underlying fact is where did the neighborhood value come from?…..your realtor.

After you have decided the plan and what finishes make sense for your area, it would be best to reach out to a contractor for prices. It is important to get multiple prices to make sure you are getting the best deal for the scope of work. After you have made it this far you’ll have to decide financing, like we discussed in the prior blog renovation loans are an option or you could use a home equity line of credit. I won’t get into it too much because it should be an item for a later date.

Now that contractor is lined up and financing is good to go work can begin. I have always found that before you start you should brace for the unknown. Pulling apart any room that is aged you never know what you will find, so planning ahead for the unknown is always important. I hope that this info was help to some of you and best of luck with the new renovation!