The Realty Geek's Blog

Home Remodeling Costs: Smart Investment or Money Pit?

No doubt, home makeovers and remodeling projects can prove fun, rewarding, and even therapeutic. There's nothing quite like the feeling when you have a vision, turn your creativity and abilities loose on the project and see it through to completion. Home renovations have even created millions of dollars for investors, and increased the value of homes substantially for homeowners across the U.S.

The bad news: Remodeling has also been a headache for many, and sometimes costs far more than ever imagined. Before you decide to remodel your home, calculate your estimated home remodeling price. If the cost is low and the added value from the renovation is high, the project is a smart investment. Sometimes, however, you might be sinking cash into a money pit.

How to Estimate Home Remodeling Costs

Renovations and home improvements notoriously cost more than anticipated. The news continuously reports the latest school, church or public building running over budget. It happened at Madison Square Gardens and the Rose Bowl. It happens in homes everywhere. It's almost a requirement.

Well, not quite. If you are planning a DIY adventure and want to keep the experience stress-free, take the time to prepare an accurate home remodeling cost estimate. This will also help you decide how you want to finance your remodel.

Price the tools you will need in addition to the basic materials and any little extras. While the big things – power saws, plywood, cabinets – may jump out at you, it's the little things – nails, adhesive, trim – that may break your budget.

Making a detailed sketch or plan will not only help you to organize the project, but also to identify the materials needed and estimate the costs. Break everything you need into categories and leave a space for cost. When you do the math on paper, the numbers seem more “real,” and it's harder to underestimate the total cost.

If getting your hands dirty, so to speak, really isn’t your thing, then make sure you get quotes from several contractors, no matter how charming or flashy the first one is. Don’t fall for a low-ball price, either. Check with friends, neighbors and co-workers, as the Federal Trade Commission suggests, for recommendations on local contractors. Always remain wary of door-to-door contractors, those who pressure you, make “too-good-to-be-true” offers, or raises other red flags. Screen contractors by conducting Internet searches of their name or company and checking with the Better Business Bureau.

Always allow an additional 5 to 25 percent overage in your home remodeling costs, including the labor if you hire professionals to do the job. This gives you a cushion for mistakes, underestimations and overtime.

How to Minimize Costs

If you suddenly realize your “fun” home makeover idea is going to end up costing more than you anticipated, don’t give up right away. There may be a way to reduce costs and still transform your home without breaking the bank.

Your itemized price list will help. Look it over thoughtfully, visualizing the project and considering which items you can do without, or possibly substitute for a lower-cost item. Get creative: Can you find “recycled” wood or bricks and similar building materials? Would urbanite – broken chunks of concrete from demolition sites – work for your walkway? What about opting for paint-grade cabinets in your kitchen and finishing them yourself? If you don’t have the budget for the remodel you want, consider downsizing the project to make it more affordable.

Be prepared to spend more on the things that will last and will be harder to redo in the future. Concentrate on where you can improvise and where you can substitute without losing quality, only price.

What tools can you borrow from neighbors or family members to keep your costs down? Are there large tools you can rent more affordably at a rental center? While there's usually more than one way to do anything, you must never take shortcuts where safety is an issue.

If you're new to remodeling and the project is more than splashing paint on the walls and landscaping the front yard to boost your home's curb appeal, consider investing a little time on your DIY knowledge. There's abundant information available online, in TV programs and even college courses. A world of knowledge is available to help you accomplish your vision.

Are Home Remodeling Costs Worth It?

If money isn’t an issue and you are remodeling for your own pleasure, then go right ahead. A less stressful, more harmonious home environment can affect your quality of life – and perhaps the planet as well if “green” remodeling methods and materials are incorporated. Some green projects could even save you money in the long run.

However, those who aren’t blessed with bottomless pockets or a generous budget need to seriously weigh the cost versus the benefit. This is especially challenging for small remodeling projects. In the end, is it better to remodel or simply leave it alone?

The right answer varies. Ask yourself questions: What are your future goals and needs? If you plan to go from childless to full house in the next few years, you may need to remodel or even move to a larger house with plenty of outdoor space. If you plan to move in the next five years anyway, think seriously about whether the remodeling cost will increase your home value enough to make it worthwhile. Certain home improvement projects – such as kitchen improvements or adding bathrooms – increase home value more than others.

Home remodeling costs can be controlled. Remember, you can pick up the project and put it down as you have the cash. On the other hand, buying a larger home means not only closing costs and moving, but potentially higher mortgage payments and utility bills. 

Comment balloon 1 commentEric Proulx • October 19 2012 09:31PM
Home Remodeling Costs: Smart Investment or Money Pit?
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