Sticking to a budget is always a challenge. Creating a budget for a large project you’ve never done before is an even bigger challenge. When it comes to home renovation costs, building a feasible budget requires a detailed plan and plenty of research.
Fortunately, we’ve done most of the leg work for you. Simply follow the steps below to create a remodeling budget that will keep you from overspending on your next renovation.
How Much Does It Cost to Remodel a House?
According to HomeAdvisor, the average cost of renovating a home that is 1,000 square feet is $19,000. For homes in the 3,000 to 4,000 square foot range, the average cost climbs to $87,500. Renovations made to an older home tend to cost more than a newer one, especially if the wiring, plumbing and other features aren’t up to code.
Typically, you can expect to spend at least $10 to $60 per square foot on any renovation.
When you’re deciding on your home renovation budget, it can be easier, and more affordable, to prioritize projects by room and build a budget around the cost of each individual project.
Average cost to renovate:
- Kitchen $4,000 – $60,000
- Bathroom $2,500 – $25,000
- Basement $11,000 – $30,000
How Much Should I Spend on a Home Renovation?
To get an approximate idea of what your remodeling budget should be, consider the value of your home as a whole. You don’t want to spend more than 10 to 15 percent of your home’s value on a single room. If you spend more, the value of the renovation will not proportionally add to the value of your home.
For example, if your home is worth $100,000, the maximum you should spend on a kitchen or bathroom renovation is $15,000. If your house is worth more, the spend on a renovation could be higher.
“Most of the time, it’s really hard for a homeowner to know where to start. I recommend bringing in a design build contractor early on in the process. In their initial consultation they can talk about your needs and priorities and help guide you through a project that is realistic for your budget.”
Determine Financing Before Finalizing Your Budget
Before setting the budget for your home renovation, you need to determine how you are financing it. If you are paying in cash, taking out a loan or applying for credit, the budget of your renovation will need to fit within the limit of your available funds.
Once you know how much you can afford to spend, set aside 10 to 20 percent of your available funds for unexpected expenses. This is important. Something will go wrong or cost more than originally projected. By setting aside a percentage before beginning, you know you will have the funds available to finish your project no matter what happens.
Once you’ve decided how much to spend, use the following steps to create a detailed plan and budget.
Steps for Creating a Detailed Home Renovation Budget
Step 1: Prioritize Remodeling Needs
The easiest way to stay on budget during a renovation is to know exactly what you want. Create a list of everything you would like the project to include and then separate items into wants and needs.
Step 2: Create a Detailed Remodeling Plan With Cost Estimates
After setting the goal for your home renovation, create a detailed plan that includes expected costs. This will help you build a remodeling budget and communicate exactly what you want with your contractors.
Build a spreadsheet that includes each portion of the project and the estimated cost for labor and materials. To develop cost estimates:
Step 3: Request Bids From Multiple Contractors
Now you know what you need, what you want and what you can afford to pay for each item. It’s time to find a contractor that can complete your project within your budget.
Find local companies with good reviews and ask them to create a bid for your project. Get bids from at least three companies to accurately compare the costs.
These are some important tips to keep in mind.
