I argue that how to budget, and what things actually cost, are the most mystifying aspects of a renovation project. Where should you invest, and where should you save? How do you ensure your project doesn’t get way out of control and you spend more than you have?
After completing my own extensive home renovation on a tight budget, here are my tips to maximize each dollar and keep your bottom line intact.
1. Actually set a budget. When I visit homeowners for design consultations, the question of budget is often a head-scratcher. Yes, you might be unclear about what things cost, but you do know how much is in your bank account, or how much you are willing to borrow to complete your project? Before you even start dreaming up anything, have a specific number in mind. If after doing some research and you realize it’s going to cost much more than you thought, then decide if you need to de-scope, or finance the rest. The question of whether or not to finance the project is totally individual, but from personal experience the end product and increase in quality of life is very worthwhile.
2. Add 20% to that budget for reserve. It is super essential to have a reserve fund when tackling a project of any size. With the many factors that come into play in a home renovation, there are a multitude of things that can occur that will increase your budget. In my own home, we realized part way through that we needed to waterproof a portion of the house — which increased our budget by $10,000. In client projects, surprise items that can increase the budget include mould removal, asbestos removal, pest control, and water damage. Having a reserve can allow you to tackle these surprises without sacrificing other aspects of the project.
3. Consider these often neglected items. Experience has shown me that there are a few things that can easily get omitted in an overall budget strategy. Here are a few often forgotten about questions to consider when building your budget:
Where will you live when you renovate? A rental can cost anywhere from $1,000 to $3,000 upwards pending size and location.
Will you eat out if you will be without power/water? While seemingly nominal, these costs can add up.
What will you do with leftover junk? If you need to purge a lot of garbage either before your reno starts, or after it is complete, consider a service like JustJunk.com that will remove unwanted items professionally for reasonable rates.
Will your energy bill go up? Often with increased upgrades like additional appliances and lighting, your monthly bills may be slightly higher than you are used to.
Do you need storage? If completing an extensive reno, you will need to store the contents of your home in a secure location. Either use a moving company that offers secure storage at their location, or on-site storage units like PODS that get placed on your driveway for you to pack and access yourself.
4. When budget is tight invest in the items attached to the house, save on moveable pieces. When a budget is on the leaner side, I suggest that clients invest in the items “attached” to the house (i.e. items that cannot be removed without ease, like backsplash, counters, light fixtures, window coverings, etc.) Experience has shown me that these are the things that are easy to visually “get used to”, and if you settle on a cheap light fixture as a “for now” piece, you are really unlikely to change it out later on. Pillows, furniture pieces, etc. are relatively easy to switch out (and in my house get changed around all the time!) and can either change with your mood or as your budget increases.
5. Keep communication open. The best strategy to keep your bottom line intact is constant communication. Everything that impacts price, including contractor fees, change orders, material fees, designer fees, etc. need to be recorded in a centralized manner like an excel spread sheet, and as the consumer you need to be made aware of changes to the budget as they happen on a real-time basis. I love contractors who use online project management software that won’t allow work to proceed without a digital client signature approving a change order. Keep all costs centralized so you feel in control of the important decisions that will impact your home, quality of life, and bottom line.
Content courtesy of http://www.torontosun.com
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