Home improvements can be expensive, but sometimes they are a necessary expense. Whether you’re sprucing up a home in which you plan to live for a while, or making necessary improvements in order to turn it into a rental property or sell it, careful planning and budgeting are crucial.
How Will You Pay For The Improvements?
This may seem like putting the cart before the horse, but you really do need to know how much you will realistically be able to spend on a renovation or remodel. And after you’ve set a budget, you’re going to have to figure out exactly how you will pay for the improvements. If you don’t have the cash on hand – and few people do – and you don’t want to put your project on a credit card, you have several other options that will vary depending upon your credit rating and where you live.
Before you seek any form of financing, you will need to know – and be able to provide written proof of – how much the project will cost. If you hire a contractor, you’ll need to submit written competitive bids, preferably from two or more contractors. If you intend to take on the work yourself, you’ll need to get price quotes from suppliers for all the materials. You will also need to be able to convince any lender that you have the expertise and ability to properly complete the project. In both cases, you will want to borrow twenty percent more than the hard estimates to cover any unforeseen additional expenses – and there will likely be additional expenses, such as the requirement that you obtain permits that you might have overlooked. If you intend to sell the house at some point, you will need to be able to show that the project will increase the value of the house sufficiently to at least offset the expense.
Once you have all your numbers added up and documented, you will need to start looking for the best financing deal to cover those costs. If you don’t need a massive amount of money, and if you have bad credit or for some other reason can’t get a traditional home improvement loan, an installment loan of some type may be a good choice. The interest rate will be higher than a shorter term loan, but you will have more time to pay it off.
You’ll need to determine the loan terms that will be most favorable to you, including length to repay, monthly payment amounts, and the total cost of the loan, including interest and any fees. Just as most lenders require or at least encourage you to get multiple bids for labor and materials, you will want to get multiple bids from different lenders, and just as you need to vet any contractor you consider hiring, you will also want to look for reviews from previous borrowers before selecting a lender. Fortunately, there are websites that simplify comparing the offerings of different lenders and finding honest reviews.
It’s important that you make a commitment to pay off the loan on a timely basis and not make it – and the renovation project that the loan is funding – any more expensive than necessary. Of course it is also important to stick to your budget.
Cutting Costs Without Cutting Corners
Renovation projects are notorious for cost overruns, but you can keep these to a minimum by following a few basic rules. Most construction project bids are based upon square footage plus special materials, fixtures, and finishes. With this in mind, here are a few things to consider.
- Try to make the area you are remodeling as space efficient as possible. This might involve being flexible in deciding the layout and design of appliances, storage areas, and entryways.
- If you’re hiring a contractor, consider putting some “sweat equity” into the project. If you’re reasonably handy, you can remove old cabinets and fixtures yourself, rather than pay the contractor’s demolition crew to do it. If you’re not that handy or lack the time, contact a local charity that builds or refurbishes homes for the poor, such as Habitat for Humanity, and see whether they would be interested in providing the labor to remove the unwanted items for use in one of their projects.
- Tap into experts’ knowledge and resources. Even if you aren’t having an architect provide you with a full set of approved drawings, many will, for a relatively modest fee, look at your project and give you some pointers. If you are hiring a contractor, ask him or her for suggestions as to how the project could be improved or made less costly while still achieving the desired result.
These are but a few examples of ways you can both improve your project and minimize the cost. There are, of course, many more ways you can achieve this result, and the savings you realize could be significant.
Renovating To Sell
There’s often a significant difference between renovating the home you live in and renovating a home for the purpose of turning it into a rental/investment property, or selling it. Obviously, if you properly maintain a home while you’re living in it, you’ll probably have less work to do when getting it ready for sale or lease. However, even a properly maintained home is susceptible to having flaws that you might overlook, but which buyers and renters notice. There are a number of quick and relatively inexpensive upgrades you can do that will significantly improve the appeal of even an average looking home. Start with a few of the least expensive, and go up from there.
Improve curb appeal – Jazz up the outside appearance by making certain that the lawn is mowed and any plants are healthy and attractive. If the paint is faded or peeling, get it painted. If the paint is in good shape, consider having the exterior of the house, including the driveway, sidewalks, porches, and patios pressure washed. And make certain to clean your windows and replace blinds or curtains if they are broken, faded, or otherwise deteriorated.
Freshen up the kitchen and bathrooms – These are the most important parts of the house. Consider repainting or refinishing cabinets or replacing cabinet doors. If they are in bad shape, consider replacing them. Replace old door and drawer hardware.
Give the mechanicals a tune-up – Repair or replace any dripping faucets. Have the climate control system checked and if necessary, repaired or serviced.
Upgrade the entryway – Quality hardware on the front door, and an attractive entryway, make a great first impression of the interior.
At the very least, you want the house to look fresh and clean. Floors should be in good condition. If the floor coverings are worn, faded, or damaged, see about refinishing or replacing them, as appropriate.
You might not need to spend a lot of money to make the house look considerably more appealing, whether to prepare it for sale or to rent more readily, or just to make it a more pleasant place for you to live. By being careful in your choices, you can do a lot with your house, without doing harm to your budget.