How to Plan and Budget for Your Home Renovation Project
One of the big projects (and expenses) families can tackle is a home renovation project.
We see Fixer Upper, Rehab Addict, Good Bones, and other shows on HGTV and everything looks incredible after the work is done, but those prices sometimes…
So we're stuck trying to figure out, how do we update our homes without getting stuck with this huge debt over our heads?
That's why I'm glad that Barret Teague, Consumer Lending Analytics Manager at Coastal Credit Union, is walking us through the process.
You can watch the video here or go through the notes below!
Creating a Budget for Your Home Renovation Projects
Elle Martinez: It all begins, first of all, with the budget. So whether you're saving up for a small project and you want to pay in for you- maybe looking for something bigger and need some help with financing, you got to have a realistic budget.
How do you do that when maybe this is your first project, for example?
You know, not everybody is going to renovate the kitchen every year. So when they renovate, it could be their first time. How do you get a ballpark figure of how much to expect for renovation or project?
Barret Teague: You know, the the total cost of the project. They're either going to pay cash or they're going to look to finance it in some way and it's really kind of hard to back into. Well, this is how much I can afford for a payment and then try to extrapolate that out to a loan amount and then get in touch with somebody that can do something that fits in your budget.
You know, really the best thing to do is to just go big and kind of map out what you want and get in touch. Reach out to some contractors. I prefer personal referral myself.
You reach out to them on your maybe your neighborhood Facebook page and see if there's someone else in the neighborhood who can testify that so-and-so does great work.
Invite them out, talk to them about what you want to do and just start getting some cost estimates, you know, and those cost estimates, you're either going to feel really good about the information that you get or you're going to realize that maybe you need to dial things back a little bit.
Yeah, but it really just starts with getting some numbers from some real people that are gonna do the work.
Getting Estimates for Your Home Renovation
Elle Martinez: I did notice like a couple of years ago we renovated our basement. It was a cylinder block and wanted to finish it up a little bit more so we can use it as a workspace. And we brought contractors in. And originally what we said is we're still in the planning phase, but can you give us an idea? You know, that way they knew they didn't have does squeeze us in as quickly as possible. It's like whenever they had some downtime to get an idea of how much it would cost.
And people may be surprised. It could be dramatically different between contracts that you talk to for a project. But it's it's definitely a good eye opener. I think.
We might feel like going for the cheapest is the best, but I had some really good conversations with contractors and I felt more comfortable with a slightly higher number because I felt like when they talked it over with us, they considered more than what could go wrong. But have you considered this is a possible cost here or possible expense here?
So great advice on, you know, checking out contractors. They don't mind giving, you know, estimates to hopefully develop that relationship.
Just let them know. You know, this is that the timeframe right now or this is the stage we're in
Getting ROI on Your Home Renovation
Elle Martinez: I do know we see these kitchens and I've read in a couple of places like, for example, they can be pretty expensive or go for the bathrooms. Maybe tens of thousands of dollars. But I also know that it's not necessarily going to give you the most bang for your buck come when it's time to sell the house.
So are there certain renovations or projects that tend to give a good return that you've noticed or there's any of them where they look nice, but you're not going to get all of that money back that you put in?
Barret Teague: I'm not an expert in that, but I have spoken recently with a good friend who is he's the owner of a company called Property Specific Realty, and that's really that's exactly what they do.
Kitchen is number one. But the thing that surprised me about the kitchen is the best investment that you could make is. Changing how the kitchen fits with the rest of the house, right? Yeah. Creating an opening, creating, creating an open gathering space rather than necessarily changing the footprint of, you know, let's take this little section here and flip it around and make it an island. The best investment you can make is to open it up.
Not everybody loves that. But then you have to consider your motivation for why you want to refinance, why you want to renovate?
are you making an investment to get the best return down the road? Or are you personalizing it?
Those two things don't always work together. You know, you could you could love. You could have an heirloom piano that you love to have in the kitchen and redesign your kitchen around this piano. Nobody else is gonna like that.
Most people like that openness, you know, from one room to the next. And if you can do that, that's really going to get you your best return.
The next thing on the list was adding square footage where it makes sense, you know, like you did in your previous home or the previous project. You know, you finished square footage in the basement. Yeah. But if you have a walkout attic on the second floor per square foot, you're gonna be able to get a better return on that one than the basement, because just it's just how appraisers look at. Master bathrooms are a big one.
When you're looking at a guest bathroom that you're really just kind of checking a box, do you have it or not?
So I wouldn't put a lot of money into that. But your master bathroom for sure. And if you're able to create a walk-in closet in the master bedroom, that's another big one.
So maybe you have a closet and it's a small closet and you can change the layout so that you can so that it's a walk-in and make it a little bigger than you're gonna get a pretty good return on that too.
Ready to Tackle Your Home Renovation Project?
If you're getting ready for a home renovation project and you live in the Triangle area of North Carolina, please check out Coastal Credit Union.
Besides having competitive rates with savings, they also have loan options for home improvements, including a home equity line of credit (HELOC)!
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