Cutting Costs on Home Improvement Projects
Studies show that the average homeowner annually spends from $2,000 to $10,000 on major home improvement remodeling, and from $100 to $2,500 on replacement and repair projects. For most of us, that's a lot of money and can take a real chunk out of a parent's income. However, with some planning and a little work, there are ways you can beautify your home and still cut costs.
Setting a Realistic Budget
The trick to a successful home improvement project is in creating a realistic budget. Don't freeze up – "budget" does not have to be a scary word. Think of the popular TV shows like Trading Spaces and While You Were Out. Those programs set a strict budget, and the designers must complete their projects within that amount.
Start the planning process by deciding how much you can realistically spend. You'll want to decide if your project is a do-it-yourself (DIY) job or if it will require hiring a contractor. You'll also want to choose your preferred materials and look for ways to save money to get the most bang for your buck.
Whether you will use money you have set aside or money from a home improvement loan, you'll need to consider the complete project and add a contingency of at least 10 percent of your total, which is a cushion for unexpected or unplanned expenses.
Bill Lewis, guide to Home Repair at About.com, says that the first rule regarding money for a home improvement project is to have enough on hand that you don't have to worry about it. "For additions, renovations and major repairs such as roof replacements, take your highest estimate and double it," he says. "If you can't cover a payment due on Friday until Monday, you may not have workers on Monday. Financing should be arranged in advance if you need it. Successful contracting includes successful cash flow management."
In addition, your budget should cover each category of work to be done, says Don Prather of Prather Construction in Valley, Ala. "Go to a bank that handles construction loans and ask for a copy of a standard construction cost-breakdown form to learn about the categories you will need to consider, such as electrical, plumbing, heating, rough carpentry, masonry, appliances, hardware, flooring, etc.," he says. Manage your budget throughout your project by keeping a running total of remaining funds so that you can stay on track.
Matching Your Project to Your Budget
Next, list your project needs and wants and then prioritize them. For example: You need more efficient use of existing space; to replace outdated fixtures, appliances or plumbing; and improved traffic flow. You want a more aesthetically-pleasing room and to add more functionality and organization.
Set your goals and then decide what you must do and what compromises you can make. Re-organizing a room may be more important than having new appliances if your budget restricts your desires. Eliminating unnecessary tasks will bring your project into focus and help you stay within budget.
"I am in the process of remodeling our house...," says Mike Adcock of Tamarac, Fla. "We considered replacing our kitchen cabinets, then considered replacing just the doors. The cost was out of this world. I found a way to get what we wanted within our budget by learning how to refinish our kitchen cabinets."
DIY (Do It Yourself) or a Professional Contractor?
When considering do-it-yourself projects, weigh the scope of the project against your know-how. If your project involves structural changes to your home, such as building a deck, bedroom addition or retaining wall, you will need a building permit. If you have no experience with projects of this scope, consider hiring a professional who will take care of the permits and meeting your area's building codes.
If your project is not too complicated, do some research to decide if you can do it yourself. Home improvement stores offer "how to" classes free of charge on a regular basis for all sorts of DIY projects. Take a class to boost your confidence, and get to work. Do-it-yourself projects can be very exciting, cost-efficient, challenging and deeply satisfying.
"Research your project no matter how simple you think it is," says Virginia Seefried of Atlanta, Ga. "I thought painting the entryway of my home would be a relatively easy DIY project. I wanted burgundy walls and the paint clerk at my local home improvement store recommended that I prime the walls first. Either he didn't know what he was talking about or he mixed the primer up wrong, because it dried with a glossy finish and the paint wouldn't stick to it. I ended up having to sand the primer to rough it up and still had to paint three coats to get it to stick and cover the wall. I should have gone with my instinct or checked other resources first. It would have cost less and been an easy job if I had just skipped the primer because it was just base white walls to start with."
Cutting corners on cost is great, but you should never sacrifice safety or quality workmanship just to save money. That said, here are some creative ways to cut costs:
- Get to know your local contractors and inquire about buying their surplus materials.
- Web sites like www.build.recycle.net have classified-style offerings on used or surplus building materials.
- Find salvage building materials, carpet, lighting, appliances, etc. by searching the Internet or your local yellow pages for retailers of surplus, seconds and discount building materials.
- Watch for home improvement, paint, lumber, lighting and décor sales and take advantage of discount warehouses.
- Garage sales, thrift stores and antique shops are great resources for low-priced materials.
- For DIY projects such as sewing, painting and building shelves you could form a home improvement cooperative with your family, friends and neighbors to share talents and help each other on your projects.
- Refurbish instead of replace. You can paint appliances, dye carpets and slip-cover furniture for a fresh look.
- Use free home improvement online tools and calculators like those you'll find at http://www.letsrenovate.com/sf/tool-set.html .
Improving your home doesn't have to cost you a second mortgage. While you may not end up with the castle of your dreams, your home will still look better and your wallet will thank you.
Calculating a Home Improvement Budget
The National Association of the Remodeling Industry (NARI) says that moving costs between 8 to 10 percent of your current home's value. This percentage is recommended as a starting point for determining how much to invest in home improvement rather than moving.
If you plan to use a home improvement loan for your project, use an online monthly payment calculator to determine your loan payment amount.
Call your preferred lender and ask for their set debt-to-income ratio (DTI) for loan approval. Use the following formula to determine your maximum affordable monthly payment for a remodeling loan: Gross monthly income x lender's DTI ratio (.45 if DTI is 45 percent). Then subtract your current total monthly expenses from this result. The remainder is the maximum affordable payment your lender will approve.
Subtract 10 to 20 percent from the total amount you have determined you can spend on your home improvement project. Set that amount aside for your contingency fund. If you don't use it on your project you will have it available for your payments or to purchase additional furnishings or accessories to finish your project.