Welcome back for part 2 of our two-part series stressing the importance of a budget. In our last post, we covered the reasons behind why setting a budget is so important. Today, we’re going to get into how to get started by asking five questions that will help you on your way to setting up an appropriate remodeling budget.
Where to Start
Now that you know why creating a budget is so important, you’ll need to know what to do with this new information. Here are some important questions to consider:
1. How Much Money Do I Have?
Have you been setting aside money for this project? Planning to use your holiday bonus? Taking out a home-equity loan? First, take an inventory of how much money you’re willing to spend and where it’s going to be coming from. Without knowing your source of cash flow ahead of time, you won’t be able to accurately plan for the things you need, want, or require unexpectedly in the project.
2. What Do I Want to Spend?
You must understand that this is a very different question from #1. Just because you have the money doesn’t mean you should spend it all on this project! If you’re planning to move within the next year or so, you may want spend just enough to increase your resale value, and save the rest for your forever home. Make sure you’re keeping the long-term plan and big picture in mind. In addition, you want to consider the return on your investment that this remodeling project will bring. No project, no matter how well-planned and executed, will return 100% of your investment, so you need to decide how much you’re willing to invest versus how much you will eventually recoup.
3. What Could Go Wrong?
Home remodels are notorious for unexpected problems. Mold, plumbing, electrical…whatever it may be, take into account that something could, and likely will, force you to remodel and spend more than you expected. Fortunately, due diligence and research can help you to determine how much these situations could end up costing and allow you to plan for it accordingly. MDV recommends having an extra 20% set aside for a contingency budget.
4. Quality Vs. Quantity
Do you want quality? Quantity? Bare bones? None of those options are better than the other, but it will determine how much and where your money will be going. Answering this question early on will help you to avoid making costly decisions on the fly. Make sure that you are clear about what you want and decide on compromises among family members before the stress and emotions that come with construction are high.
5. What Is This Going to Cost?
It seems obvious, but it’s easy to get caught up in the details and forget to see what the average cost is for projects like yours. So be sure to do your research, get quotes/estimates (we offer a free estimate!) and be willing to compromise between your needs and your wants. Once you are comfortable with a ballpark idea of the cost, be sure to get a more precise estimate.
Budgeting may be the least fun aspect of remodeling, but it is definitely the most important. If you are looking to start a remodeling project, be sure to contact the professionals at MDV Remodeling. Oh, and use this blog series to help you get a budget together!