How To Budget for Renovation Projects

When you purchase a home there are few things to consider. There are some expenses many seem to forget when it comes to homeownership. The largest ongoing expense are improvements and repairs.

It is suggested that most homeowners need to spend 1% to 2 % of the purchase price every year for routine home maintenance projects such as window replacement and roofing repair. If you are looking to do a full remodel then the cost will be more. There are few things to keep in mind when you are determining the financial implications of the project that you have in mind.

The following are a few steps to follow before you get started:

• Define the Project – Look at your home and outline the repairs that need to get done listing them from the most important to the least. It is important that you do the ones that need to get done first if you may have a limited budget.
• Set your budget – Make sure you determine the cost of material, labor, tool and equipment. Make sure and factor in permits and the cleanup cost when determining how much each project will cost you. Also know how much you will be paying out of pocket and what amount you will need to borrow if you are making a large renovation. You will need to factor that in, and see how that will impact your overall budget.
• Select a Contractor – Look for a contractor by getting recommendations from friends and family and make sure and check them with the Better Business Bureau. Make sure any potential any contractors outline their experience doing the type of work you have in mind and be sure they have all relevant licenses. Although we all want to save money, sometime choosing the lowest price needs to be balanced with experience and quality of work.
• Determine the Value – You need to see if the home improvements you are doing are actually going to add value to your home. You must factor in if doing the improvement will make a difference immediately in home value vs how long you plan to stay in the home.

Prioritize your needs when it comes to home improvement and repairs. It is important to make good choices to help improve your home, as well as your financial picture.