Planning a Home Renovation
People choose to renovate their homes for a number of reasons – to enhance and refresh, to create additional space, increase energy efficiency or boost the resale value of their home.
But as with any major project, proper planning is key to making sure you get the most value out of your renovations without spending more than you can afford. Home renovators often do some level of basic financial planning before they start but far too many end up blowing past their budget and not realizing the cost savings and higher resale values that they hope for.
If you’re considering a home renovation project, consider these tips before getting started.
Create a plan and carefully review it – Decide on the renovations you want to do and why to confirm that they all make sense.
If the goal is to increase the value of your home for resale, reach out to a variety of experts to confirm what changes will actually help. Spending $10,000 on new hardwood floors might seem like a good idea to you but what if the perfect buyer really wants carpets instead? You may be far better off dropping your sale price by $5,000 instead.
Renovations that make your home more energy efficient (and therefore spending less on monthly heating bills) might sound like a simple upgrade but do the math to see how long it will take to break even. This type of renovation will pay off far better if you plan to stay in your home for a long time.
Budgets are important – Once you know what you want to do and that it makes sense to move forward, you need to ensure that you have the money to pay for it!
Creating a budget is the logical next step but it must be realistic and well researched. Extra expenses may arise so be prepared by setting aside a contingency of at least 15 to 25 per cent of your total budget, depending on the size of the project.
Setting up a savings plan and waiting to being until you have the full amount required saved is ideal. Be very wary of financing a renovation as adding to your debt load for a renovation rarely makes financial sense.
You might also determine what parts of the project you can tackle on your own. Sweat equity is a great way to save money!
Do your research – Choose a contractor carefully and don’t make a decision based on a single recommendation. Make sure you get multiple quotes to help figure out what a reasonable price is. If possible, try to visit current projects of the contractor you’re considering.
If part of your renovation project is to improve the energy efficiency of your home, look into grants and rebates offered by the government as well as local utility providers.
Depending on the extent of your renovation, you may need a building permit. If you live in a condo or other strata type development, the building management company can identify what approval you may require.
Taking on a home renovation project can be rewarding but many people find that they don’t get the financial results that they had hoped for. A well-researched budget and plan can go a long way to avoiding financial repercussions that can have very long lasting effects.