Remodeling and Construction Budgets

Thorough planning helps to ensure the success of a construction or remodeling project. A detailed, accurate budget will prevent you from wasting money or depleting your funds before contractors can finish the work. You'll need to carefully research the relevant costs and evaluate your financial situation. Follow these tips to get started:

Priorities

If you hope to maximize the resale value, design a bedroom, kitchen or bathroom that suits your locale. Buyers expect to find luxurious homes in wealthy neighborhoods. On the other hand, someone in a relatively poor area won't pay as much for a high-end interior.

  • Avoid controversial colors
  • Consider transitional design
  • Prioritize convenience

Do you intend to remain in the same home for six years or longer? If so, don't treat the resale value as a major priority. Popular styles may change before you move elsewhere. Design a room based on your specific needs and preferences.

Expenditures

Estimate how much money you'll pay for each portion of the project. Homeowners often spend around one-fifth to one-third on labor. Other expenses differ depending on the room type. For instance, windows represent about one-tenth of a kitchen remodeling project's price.

Don't overlook smaller expenses. While the work is underway, you might need to pay for a storage unit or even a motel room. Other additional costs range from taxes to phone jack installation fees.

  • Transportation expenses
  • Design and consulting fees
  • Hinges, handles and knobs

Remodeling Budgeting Limits

Consider all of your income sources, living expenses and savings when you establish a spending cap. Set a limit that leaves enough extra cash for emergencies. Don't spend any more money, even if you feel a temptation to request further improvements.

Devote about one-sixth of your budget to unforeseen costs. This will prevent hidden problems from ruining your project. For example, workers might find water damage or hazardous materials. Some homeowners also face unexpected delivery fees.

Many people use a combination of cash and loans to pay for these projects. Think about taking out a second mortgage if you itemize tax deductions. You could subtract the interest from your taxable income. Finally, be sure to obtain the funds soon enough to pay for supplies and deposits.

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