When dreaming up a home renovation, it’s easy to become overwhelmed as to where to begin. Instead of stressing, let us help you prepare! Keep reading for our top tips on how to create a plan to pay for a home renovation.
Pick your projects
The number one goal with any renovation project is to increase the value of your home. It’s important to choose popular projects that will outlast trends and that transcend your personal taste (although you should, of course, love the final product). But how do you know what is a worthwhile project in which to invest?
First, we recommend checking out the Cost vs. Value report that Remodeling publishes annually. It’s a clear snapshot of which upgrades are consistently trending upward and seeing a significant return on investment, and which are falling in the ranks. For example, manufactured stone veneers increased in resale value in 2020, with an average of 95.6% of costs recouped upon resale. That’s a signal to you to check them out and see if they might be right for your home!
Second, we recommend speaking to a local expert to get their insight. Real estate agents, contractors, and architects have their finger on the pulse of what your local housing market is seeing at any given moment and can provide valuable insight into the direction your area is headed in terms of home design. They can also provide helpful feedback on prioritizing home improvement projects to ensure you see a return on investment.
With your ideal list of projects in mind, you can start reaching out to contractors for quotes. We recommend reaching out to at least three contractors who come highly recommended by friends or family. Request quotes and timelines from each one, but keep in mind that the lowest bid shouldn’t always win if the quality of that contractor’s work isn’t up to snuff. Quality workmanship is so important, particularly when it comes to big alterations to your home. Also, remember that a good contractor will work with you to make a plan for your home renovation and will be willing to outline their estimate in writing. They know that everything can’t happen all at once and will help you determine what makes the most sense as your starting point.
Determine your budget
Now that you have cost estimates from a few contractors, it’s time to determine what you can afford. Seeing those estimates may have been unnerving, or it may have been a relief. Either way, keep in mind that generally, home renovation projects will take more time than initially planned and can cost more than expected as a result of unforeseen hurdles. Also, remember that you’re looking to increase the value of your home without spending a huge percentage of the value of your home so that you can recoup those costs when you sell. With all of this in mind, and armed with the quotes from your contractor, start doing some math on what you can afford to spend.
Prioritize your projects
Since it’s unlikely that you’ll be able to afford to accomplish all of your projects at once, you’ll want to prioritize your project list. There are a few ways you can go about this:
- Prioritize by sense of urgency. Is something in your home leaking, smelling or rotting? There’s your first project. Projects that address safety concerns or make an unlivable area of your home livable are considered urgent.
- Prioritize by expense. Depending on your financial situation, it may make sense to save for and start with your most expensive project, or it may be more feasible to accomplish smaller projects as you save for your most expensive one.
- Prioritize by prominence. If nothing is particularly urgent and cost isn’t a huge concern, you could prioritize your projects in order of how frequently they will be seen by others. For example, if you need to replace your siding and renovate your master bathroom, replacing your siding would come first since neighbors, guests and passersby will see your siding infinitely more than your bathroom and this will offer stronger curb appeal to potential buyers.