Step 1: Think about your desired end-result
The first step of a remodeling project is to imagine the end result. Followed by project costs, budget tracking and contractor timelines.
Some key remodel questions to reflect on include:
Who will use this space? How will they use this space? Why am I renovating it?
When remodeling a space, understanding the target audience and their specific needs is crucial. This process will guide the project towards a successful outcome that meets the user’s requirements and the space’s primary function. For instance, a growing family’s design needs will differ from those changing an Additional Dwelling Unit into a rental studio. Therefore, identifying the user and their purpose for the renovated space is a crucial step towards your remodeling goals.
Are there any natural or weather elements I need to consider? Are there any quirks I need to consider, want to include, or can do without?
In addition to considering the target audience, it’s essential to understand the physical context and preferences of the space. For instance, if natural sunlight is lacking in the current space, it may be a top priority for the remodeling. Similarly, you may want to maintain or conceal exposed brick, or utilize the vertical space provided by high vaulted ceilings. By taking these physical factors into account, you can create a remodeling plan that maximizes the potential of your space.
What are some key design elements I would like to have incorporated in my project? What types of designs or functionalities inspire me?
To achieve the desired end-result, it’s essential to seek inspiration from existing designs and spaces. Are there other buildings or homes that inspire you and align with your vision? If you’ve visited physical locations that caught your eye, consider taking photos of the elements you liked. Just make sure to ask permission if the property is private. You can also conduct online research to collect inspiration. We recommend creating a visual “collage” or Pinterest board to organize all your ideas and inspiration. By compiling these notes and images, you can create a clear vision for your remodeling project.
Step 2: Decide on a project budget and begin tracking everything in your remodel
The second crucial step in any remodeling project is setting a budget. It’s essential to determine the project’s financial scope before beginning the design process. This helps avoid costly delays or setbacks down the line. To create an accurate budget, you’ll need to revisit the plan multiple times. For example, you may need to re-visit the budget when meeting with your architect or general contractor. So that you better understand the build-out cost estimates. By creating a solid budget, you can stay on track and ensure your remodeling project meets your financial goals.
Avoiding budget pitfalls and remodel delays
Proper budgeting is crucial to avoid the potential issues that come with an unfinished remodel. Running out of funds before completing the project can cause significant problems, such as difficulty accessing additional funds after agreeing to a loan and drawing out money. It can also result in continued interest payments on the loan on top of other expenses like mortgage or rent while staying elsewhere. Depending on the project’s scope, your home may not be deemed livable by your local building department, delaying your move-in until the project is complete. This delay may also require updating expired permits, incurring additional costs. By establishing a realistic budget, you can prevent these setbacks and ensure a successful project.
Gather information through research
When budgeting for a project, it’s essential to research and consider several factors. First, research the average cost of similar remodel projects to gain an understanding of the expected expenses. Second, determine how much you’re willing and able to spend on your project. Finally, consider the payment method for your home improvement, whether it be through savings, a loan, or another financing option. By taking the time to carefully consider these factors, you can create a realistic budget that aligns with your financial goals and ensures a successful remodeling project.
When budgeting for your project, it’s essential to consider all aspects of the process, including materials, labor, and preparation materials like surveys, designs, and permits. You can separate these costs into two categories: “remodel cost items” and “non-remodel cost items.” Be sure to allocate funds for both categories to ensure you have sufficient resources to complete the project successfully. By considering all expenses in the budgeting process, you can avoid unexpected costs and ensure a successful project.
Remodel cost Items
Remodel cost items include the materials and labor directly assigned to the remodel, such as hardware, HVAC, electric, doors, windows, lumber, or tiles.
Non-remodel cost items
Things like insurance, utilities, permit fees, portable toilets, legal fees, surveys, costs to create design plans, and loan interest.
You should also account for anticipated loan interest, and any loan processing fees. It can also be helpful to have a line item dedicated to miscellaneous expenses, or a financial “contigency”. This contingency cushion is for any unforeseen circumstances or changes incurring unexpected expenses. The amount of funds for this contingency can be a percentage of the overall budget for example, you may earmark 10% of a $50,000 remodel as a cushion, putting aside $5,000 for unexpected expenses.
There are sites available with free home remodel cost tools, which will share a range of potential costs, based on the type of work needed, as well as what area the home is located in. An example is the remodeling calc on www.remodelingcalculator.org – but there are many available via a Google search. You can use different tools to get a sense of different cost estimates, to give you a better picture.
Payments
Your choice of how to pay for your home remodel is a very personal decision, and will depend on your financial situation, as well as the size of the project. Maybe you have funds saved and set aside for this specific project. If you do not have funds saved, or if the project is particularly large, a home improvement loan may be the best option for you.
Loan needs vary by lender, and can also rise and fall as a result of market conditions. Some of the key conditions that lenders will identify include a minimum credit score, a maximum debt-to-income ratio, a minimum down payment,
Click here to learn more about key financing options for your remodel project – https://www.bankrate.com/loans/home-improvement/how-to-pay-for-home-improvements/
Some common terms with home improvement loans
Draw request
The process by which a borrower goes through to “draw” upon available funds, up to a limit.
Draw period
The fixed amount of time during which a borrower can “draw” upon available funds.
Draw inspection
The lender will hire an inspector to visit the construction and estimate progress. The inspector will be looking to compare the project’s progress with its timeline, checking the accuracy compared to the original draw request, and change the budget.
Interest rate
An interest rate is the amount a lender charges a borrower, and is a percentage of the principal, or the amount loaned. Interest total is based on drawn amounts that have been advanced, not on the total approved loan amount.
Prime rate
The lowest rate of interest at which money may be borrowed commercially.
Subject to completion appraisal value
A “subject to” appraisal the value of the property based on what the home will be worth. Upon completion of the proposed update. This type of appraisal helps you evaluate the home after the improvements have been made.
Debt to income ratio
A debt-to-income ratio (DTI) is a comparison of how much you owe each month (debt) to how much you earn (income). More specifically, it’s the percentage of your gross monthly income that goes towards regular payments like rent, mortgage, or credit cards.