With the real estate
market heating up, it appears that American homeowners are ready to start
remodeling again.
After years of
decline, home-improvement spending increased 9% in 2012, according to the Joint
Center for Housing Studies at Harvard University, which predicts a double-digit
surge for 2013.
Planning to get in on
the renovation revival with a project of your own? You'll want to utilize a
tool that some home appraisers say was too often neglected during the last
housing rush: a budget.
Establishing a project
cap and looking for painless ways to reduce your overall cost will stop you
from spending more than you can hope to recoup when it's time to sell.
Here, a primer on
setting -- and sticking to -- a renovation budget:
Find your number. To figure out
what's safe to spend, you'll need to determine how much of your home's value is
represented by the room you're planning to redo, says Omaha appraiser John
Bredemeyer, a spokesperson for the Appraisal Institute, which sets national
standards.
In general, says
Bredemeyer, the kitchen accounts for 10% to 15% of property value; bathrooms,
5% to 10%; half-baths, 5%, and a finished basement or attic, 10% to 15%. To
calculate your cap, multiply that percentage by your property value. So if
you're planning, say, a major kitchen reno on a $400,000 home, you wouldn't
want to spend more than $60,000.
Use your local
municipal tax valuation or a site like Trulia.com to gauge how much your home
is worth. You'll typically get a conservative estimate from both because
they're often slightly behind the market. And, of course, budget to spend less
than the calculation if that's more than you can afford.
Limit major
construction. When remodeling existing space, you can trim your outlay by
minimizing changes to the footprint, says Charleston contractor Mike Eippert.
Any wall you don't move or remove will save $3,000 to $5,000. Ask your
contractor if it's possible to avoid stripping open the walls and ceilings.
That could save you another $2,000 to $5,000, even after workers make some
temporary holes to snake in new wiring and pipes.
Similarly, putting new
bathroom or kitchen plumbing fixtures and appliances in the same spot their
predecessors were located could slash your project cost by $2,000 to $3,000,
says Kansas City, Mo., contractor Paul Young, because the existing pipes and
electrical lines can be reused.
Do the right things
yourself. Homeowners
often tackle interior painting themselves because it is low tech, requires few
tools, and comes at the end of the project, when funds may be running low. Good
move. That could save you more than $1,000 a room.
If you want a bigger
sweat-equity bump, consider doing your own demolition too, says Bruce Irving, a
Cambridge, Mass., realtor and renovation consultant.
As long as you can do
the job correctly and safely, pulling out appliances, plumbing fixtures,
cabinets, and tiles could save you $2,000 to $5,000 or more. Check
diynetwork.com for a how-to refresher, and be sure to walk through the process
with your contractor before you start.
Look for savings on
the priciest items. You don't have to forgo upscale features to keep your project
affordable. If you want stone kitchen countertops, for one, choosing a simple
squared-off edge profile (called "eased") rather than a more complex
pattern could save $500 to $1,000, says Adrienne Dorig Leland, a kitchen
designer in Eau Claire, Wis.
Ask local appliance
retailers about scratch-and-dent and open-box sales; the damage may be minor
and in a low-visibility spot, and you could trim $200 to $1,000 per appliance.
For a high-end
commercial range, try an appliance reseller, like Green-Demolitions.com, where
you could pick up a lightly used Viking, say, for 25% to 50% of a new one's
$6,000 price tag. Knowing your kitchen centerpiece didn't bust your budget will
let you enjoy cooking on it all the more.
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