Rising inflation and material costs make it challenging to create a renovation budget for a home remodeling project. The National Association of Home Builders (NAHB) reports a 20.4% rise in building material costs since 2020, with oriented strand board (OSB) and lumber leading the increase.
Despite these numbers, home renovations are still worth the potential price tag. Houston-area homes are selling high, and even if you don’t plan on selling right away, renovating your home can increase its value and offer you a renewed space to live.
However, setting and managing your renovation budget in today’s fluctuating economy is essential. Learn how to establish a renovation budget suitable for today’s economic climate to raise your home’s value and create an enjoyable space for your family.
Establish a Budget
You must establish a budget before starting any renovation project. A budget sets a baseline for spending and helps guide you in making decisions about materials and builders.
Renovation budget amounts differ depending on your renovation, but on average, you can expect to spend between $10 and $60 per square foot. It’s best to overestimate your costs, as most renovations run into obstacles and delays that can cause you to go 20% to 30% over your initial budget.
To secure financing for your project, work with a lender, such as a bank or credit union to get a personal loan or home equity line of credit. If you have cash available, verify that you can easily access it to pay for materials and labor as needed.
You’ll also need to plan on compromising on materials and timelines. Most DIY renovations don’t go as planned; however, if you work with professional builders like Big State Construction, you can achieve your desired results.
Research the Cost-Benefit of Your Project
When setting a budget, research the cost-benefit for your project. This analysis allows you to understand how much you can spend without cutting into the value the project adds to your home.
Keep your budget for renovations within the following percentages of your home’s value:
● Kitchen – 16%
● Basement – 15%
● Main bathroom – 7%
● Backyard or patio – 5%
For example, if your home is worth $250,000, plan to spend no more than $12,500 on a backyard remodel or $40,000 on a kitchen remodel.
Take into account the purpose of your remodel when determining the cost benefits. Are you renovating your home for personal reasons or looking to increase your home’s resale value? A kitchen renovation can bring in 81.1% ROI, so it is likely worth the costs.
You might also consider the disruption a renovation can have on your daily life. Depending on the scope of your renovation, you must prepare for eating out and possibly temporary relocation.
Plan Early and Know Specifics
Accurately budgeting for a renovation requires planning early and knowing the project’s specifics. Decide on desired layouts and finishes and price the materials. Understand the limitations of your space, budget, and HOA requirements. For example, your HOA might not allow for specific outdoor paint colors or fence installations.
Outline your project’s timeline and understand your financing needs. Obtain financing as soon as possible to avoid funding issues midway through a project. The more thorough you plan and identify your project’s specifications, the fewer surprises you’ll have as you start your renovation.
Finalize Your Selections
After structuring your budget and familiarizing yourself with the project details, it’s time to finalize your selections. In today’s economic climate, it’s ideal to pre-order materials and appliances so you have them ready and accessible for builders. Placing orders early avoids issues with supply chain disruptions and creates a streamlined construction process.
Finalizing and ordering materials and appliances early helps you establish costs before diving into the renovation. With these components taken care of, you can better account for other renovation costs, prevent delays, and easily adjust your materials onsite when needed.
Know Your Limits
When starting a renovation, it’s crucial to know your limits. Always make room in your budget for surprises with contractors and materials. Work with a professional construction company that uses proper inspection protocols to avoid unnecessary fixes in the future. Most importantly, approach your renovation with patience and flexibility.
Prepare as much as possible, but recognize that the project will take a few twists and turns before completion.
Start Your Renovation Project With Big State Construction
Big State Construction has been remodeling Houston-area homes since 2017. We are passionate about supporting Houston’s continued growth and booming housing market. Our projects include residential and commercial renovation and construction.
Contact Big State Construction today to discuss your renovation project budget and goals. We’ll work with you to renovate your home or commercial space to elevate its value and design.