Four Steps to Creating a Budget for Your Major Remodeling Project

Money JarDiscussing budgets is probably my least favorite thing I do with clients. When budget time comes, the client is oftentimes high with emotion from making the decision to do a major remodel, and has often consumed way too much HGTV and Houzz. I can relate to the home remodeling high. I’ve been remodeling my home into my dream home for the past 7 years, and at the current pace, well, let’s just say it’s going to be a while before it is finished. My major concern is that when I am done, it is going to be time to start over again! But I do enjoy thinking and exploring all the aspects and watching the shows for new ideas.

The problem is that most often, the reality of the cost of the dream is a sticker shock surprise, even for me. I go to great effort to educate the client on why it costs so much, and most often, they get it. I’ve been called a buzz kill, a dream crusher, and have had some people get mad at me because what I was telling them didn’t match their expectations. I always tell them, regardless what you think, it costs what it costs.

Here are the four steps to figuring out your major home remodeling budget:

1. Make a master plan, or hire someone to do it for you. A master plan gives you a high view of your project. List all the rooms in your house, go into each one and make a general list of what you’d like done. Click here to learn more about master plans.

2. Do your research, and don’t be optimistic. Google is a great tool—simply ask how much the project you are thinking of costs. You’ll see a lot of great articles that discuss the reality of the cost. Don’t kid yourself; be realistic. Another great tool is Remodeling Magazines’ annual cost-of-project versus return list. I will tell you it is full of holes, and exceptions, but it is a good barometer of what to expect. Click Here to view their 2014 report.

3. Pay a Design/Build Remodeling Contractor to create a master plan and budget for you. It can take 30 to 40 man-hours of work to create a master plan and budget for a major remodeling project. Paying someone to do this work helps ensure that it is accurate, and reduces budget overruns. Once the plan is done and you’ve paid for it, it is yours; put it out for competitive bids. This will help you understand if the price is fair or not.

4. Remember, you can eat an elephant one bite at a time. If you find the master plan has busted your budget, break the plan down into digestible pieces. The fun is that while you are doing a smaller piece of the master plan, you have the rest of it to dream about and continue to plan, giving you more reason to ingest HGTV, Houzz, and Google.

Have Fun!

Mike