WHETHER you are renovating your dream home or flipping a property, budgeting is crucial to your success, and these tips will help you keep on track.
Failing to budget and to stick to a budget can mean the difference between a successful and unsuccessful project, not to mention potential financial disaster.
Budgeting can mean the difference between losing and making money, between stressing out completely or feeling comfortable with the financial situation you have assumed since beginning your renovation, be it big or small.
Before you can even begin to establish a budget for your project, you will need to seek financial advice from your lender.
Get your finances in order and then decide on the amount of money you are comfortable spending.
The same rule applies even if you do not need to borrow money to finance your project.
1. Do not spend more than you can afford.
Try to find a realtor or even better several realtors you can trust to give you an estimate of what the property could expect to be valued at after the renovation - at least this will give you a ball-park figure on which to base your estimates.
2. Do not overcapitalise.
Remember, if you over-capitalise you may have to keep the property significantly longer than you anticipated for the market to reach an acceptable level for you to sell, if and or when you decide to do so.
Once you have decided on the dollar figure you are happy to spend on your renovation, make a commitment to do everything you can throughout the project to stay on budget.
Always add a bit extra to you costings to allow for things not going according to plan, because they never do
3. Allow for overspending - it always happens!
Always add a bit extra to you costings to allow for things not going according to plan, because they never do.
I would recommend adding 10 per cent to your total estimated cost to allow for overspend - you MUST have a contingency budget. This money is not part of your estimated spend, it is an extra amount held to cover unforeseen costs that have not been budgeted for.
Budget for everything you possibly can, before any contractor sets foot on your property. You will save yourself thousands, both in time and in unanticipated expenses if you plan and do this accurately.
Not budgeting results in never ending overspending and can create financial and emotional stress, if not disaster, if not addressed.
Renovating is more difficult to cost than a new build, because there are often problems with older properties that are not apparent until work has commenced.
I have spoken to various builders about quoting for renovations and many seem hesitant to quote for jobs due to the ‘unknowns’.
It is however important to endeavour to do costings for the project within reason, adding a contingency for problems.
There definitely needs to be an understanding of the budget you have to work with, an adjustments made accordingly as the project progresses.
4. Your contractor needs to be made aware of, and must respect your budget. Hold regular meetings held to ensure that you remain on target.
Project overspends may even mean scaling back your plans in order to remain within budget.
I try to get estimates for different aspects of my renovations as I can in order to budget.
Any number of jobs within the renovation can take longer than expected and can cost much more than estimated.
Having an accurate estimate for every component of the build will allow you to pull back in some areas if need be, having overspent in others.
5. Time means money on any build. Use it wisely.
Our largest renovation project spanned almost three years (with sanity breaks in between) and ended up costing significantly more than we had expected, which was financially and emotionally stressful.
We were also living in the property during the renovation, which added even further to our stress. I attempted to project manage (if you could call it that) the renovation, and take full responsibility for the monster it became.
The most significant problem with this renovation was that we didn’t establish a realistic budget to begin with, and we didn’t have an suitable plan.
Basically, we made it up as we went along. We (I) had effectively created a monster that grew hungrier and hungrier as it grew, devouring our savings along the way.
One problem led to another, new problems were constantly unearthed and we had no adequate contingency.
It was an organic process of the worst kind! With this experience in mind, I cannot stress strongly enough the importance of these aspects of renovating:
BUDGETING and PLANNING.
"Looking back, I can’t believe that I undertook such a major project with such inexperience, and in such an unprofessional manner. It certainly was lesson learned the hard way. I threw myself in the deep end!"
I have made a commitment to myself that all future projects I undertake will be smaller and more manageable, allowing me to get in and get out as soon as possible (without living in a demolition site!).
I will factor costs for living out of the home as part of my budget, and only undertake a large project if I have the funds to live off site for the duration of the renovation.
This is my pledge!
6. Allow space in your budget to enjoy styling your masterpiece.
Enough of the doom and gloom!
I thoroughly enjoyed the styling component of our renovation and it was a thrill to see my vision brought to life.
At the beginning of the project I compiled at life-size vision board covering an entire wall of our living room (before I discovered Pinterest!). It was my go-to place for inspiration and allowed me to show the contractors what I hoped to achieve for each different room of our 'new' five-bedroom home (it was a three-bedder when we bought it).
I'd say it was the greatest contribution I made to the project, without doubt.
It was exciting and extremely rewarding to watch the vision I had compiled in my head and on my vision board materialise.
One of the greatest compliments I had about the renovation was when a friend told me that my house looked like the wall of images I had had in my living room.
Not that it was a copy, it wasn't. It was a culmination of inspiration from designers, stylists and homeowners featured in my favourite magazines - to whom I am extremely grateful!
Budgeting to style your home is extremely important, especially for fittings and fixtures that are not easy to change.
Tiles, floor coverings, bench-tops etcetera must be carefully chosen and within budget.
"This was another mistake I made during our large renovation - I bought things I loved without considering them as part of our overall budget (don't mention the designer bathtub!). I let my heart rule my head during many purchasing decisions."
I justified my purchases by reiterating that this was our forever home and that these products would be ours forever, enriching our lives!
Turns out, it wasn't our forever home and now someone else is enjoying my forever products!
It is important to style your home with things you love, however it is also prudent to shop around and compare prices and if necessary, substitute products with similar alternatives.
"Your styling budget will also vary considerably based on whether you intend to live in your home or sell it."
It's like comparing apples with oranges as they say.
It is a treat for the senses to be able to bring your beautiful new property to life with furnishings, artwork and accessories, but mementos and photographs should be reserved for family homes, with a more generic decorating approach appropriate for properties to be sold.
Styling your own home is something that takes time and careful consideration.
"A home is a melting pot of both old and new. It is about the people that live it in as much as the materials that it is created with."
Even if you purchase new furniture and artwork, your personal touches will remain a feature and will you edit your spaces as you enjoy living in your new home and building memories within it.
7. If you do plan to buy new furnishings and accessories for your home immediately post renovation, make sure you have enough left in your ‘kitty’ to do so!
You've worked hard. Enjoy the fun part!
"Budget for this too. There's no point decking out one room fabulously only to find you can't afford to put any furniture in the next!"
8. Budgeting and planning require lots of homework.
As with most things in life, preparation is key.
There are countless books and online resources to help you budget and plan for your renovation - use them. Swat. Do the preliminary work and your project's success won't just be based on luck and a big wish.
For large scale projects enlisting the help of a professional at the planning and budgeting stage will be well worth the cost.
Renovating with love,