Questions about budgeting are the most common I get in regards to remodeling. It can be difficult to estimate the investment of a remodel, as there are many factors involved and no two projects are the same, yet it is a crucial part of beginning a new project. My goal with this post is to give you a simple formula that will help you create a remodeling budget catered to your project and needs. This is a method that I have found works well in creating realistic expectations, but keep in mind that you won't know the true numbers until everything is priced out and in a lot of cases, finalized.
1. The first thing to consider is your values. What are the things that will matter most to you with your remodel? Consider your thoughts on:
paying cash vs. financing
the amount you are truly willing to invest in the project
quantity vs. quality
function vs. aesthetics
Preservation of elements in the home
It is also important to consider the needs of you and your family and the use of each space. Which spaces in the home will be used most often? What areas carry the greatest importance for you? Will the climate you live in effect how the space is utilized? These are all important elements to consider when creating a budget for your remodel. The most important spaces often take a greater investment than less meaningful or less used areas.
2. Consider the scope of the project. What kind of work will go into this remodel? Is there a need for new cabinetry, countertops, appliances, flooring, paint, furniture, fixtures, etc.? Are walls moving and are plumbing and electrical changing? Does the home need significant repairs? Will there be any additions to the home? Is there a need or desire for custom elements?
3. Consider what professionals you may need to involve in the project - designers, contractors, plumbers, electricians, installers, painters, movers, specialists, etc.
4. We then will break your budget down into spaces. Now that you've thought about your values, the scope of the project, and the professionals you may need, you should have a fairly good idea of what work will go into the project. So, we can start calculating. Below I have listed approximate percentages of a home's value that are often spent on each room when one is remodeling. Note that the larger and more intricate the scope of your project, the higher end of the range you will be consuming. Take your values, the scope of the project, and the hired professionals into consideration with these percentages.
Kitchens: 10 - 13%
Bathrooms: 0.5 - 4% for each bathroom (powder rooms typically cost significantly less than a master bath would)
Laundry/mudroom: 1 - 4%
Living Rooms: 1 - 4%
Dining Rooms: 0.5 - 3%
Bedrooms: 0.5 - 3%
Basement: 5 -10%
5. When I am working on a project, I also tell my clients to figure in a budget for accessories. Accessories tie it all up into a finished package. This budget is completely your choice and can be elaborate or simplistic.
6. And lastly, but importantly, figure in a budget for problems that may arise. Especially in older homes, there could be water damage, electrical issues, foundational issues, etc. that may eat up a chunk of your budget. I advise my clients to set aside 5-7% of their budget just in case. This can be an added cost, or subtracted from other rooms, depending on what each individual client can afford.
7. Add up all of the rooms and extra expenditures in order to create your project's budget. To help you with this, I have written up a case study below.
So, what does this look like? Say I bought a turn-of-the-century home that was $500,000 that needs extensive remodeling. I am wanting to preserve the home, make it functional for my family, and increase its value. There is a kitchen, 4 bedrooms, 3 bathrooms, a laundry/mudroom, a living room, and dining room. I am getting all new furniture, cabinetry, appliances, fixtures, and restoring the wood floors where possible. I value preserving the historical elements of the home, and I am willing to pay skilled artisans and other professionals to repair them. I live in the northwest and I have a large family, so having a nice mudroom to enter the home and a large kitchen for everyone to gather is important for me and I'm willing to spend more in those areas. Due to the scope of the project and the elements I value, I figure on using some of the higher percentages listed in areas such as the kitchen and mudroom, and middle-range percentages in the areas where I am less willing to invest. My breakdown looks like such:
Kitchen: $500,000 x 13% = $65,000.00
Master Bath: $500,000 x 3% = $15,000.00
Kid's Bath: $500,000 x 1.5% = $7,500.00
Powder Bath: $500,000 x 0.5% = $2,500.00
Laundry & Mudroom: $500,000 x 4% = $20,000.00
Living Room: $500,000 x 3% = $15,000.00
Dining Room: $500,000 x 1.5% = $7,500.00
Master Bedroom: $500,000 x 1.5% = $7,500.00
Kid's Bedrooms: ($500,000 x 1%) x 3 = $15,000.00
Now we add it all up. In this case, we are looking at $155,000. Looking at my expected expenditure, I don't want to spend much above that amount, so I decide to reserve part of that budget for problems that may arise. Because the home is very old and many repairs are needed, I save 7% just in case we run into any problems ($10,850). In order to compensate for that, I decide I really don't need new built-ins in the living room at this time and can do with painting the existing ones. If I have funds left over from this reserve, I may just decide to put them towards the built-ins! When it comes to accessories, I am willing to add an extra $800 to decorate the home. So overall, the amount I am willing to invest is $155,800, and I have $144,950 to spend on my home remodel.
Analyzing your project like this can save you a lot of time, money, and frustration. It will help you know what to expect when going into a remodel, what elements you can afford, and reveal what you are truly willing to invest in. It will also allow you to be prepared for the worst and help you to make wise purchases. Please keep in mind that no formula out there is perfect, but this will give you an excellent start and greater confidence when beginning your remodel! And, as always, feel free to schedule a Design Consultation with me in order to help you with your budget, answer questions in regards to your remodel, and to get ideas of what can be accomplished in your space!
With love always,