Home Renovation Reference Guide »RealtyBizNews: Real Estate News
There are many reasons why people decide to renovate their homes. First-time buyers tend to buy older homes that may be out of date. Or maybe you’ve been in your home for over a decade and can’t wait to get off your mortgage. Investors have made big profits with fix-n-flip renovations. Whether you are a homeowner or an investor, the idea of repairing an older home has been popular for many years.
Analysis of US Census data shows that at least half of the homes in America are over 37 years old. New York State has the oldest median home age at 63 and Nevada has the lowest median home age at 26. This means that many roofs, ovens, flooring and appliances have reached the end of their life. Reports show that most people planning a remodel intend to spend $ 10,000 or more. For that kind of money, you need to do some upfront planning.
1. What is going on in your life? Before making any big decisions, think about what to expect from the renovation for tomorrow and the next 5-10 years. Conversion from a 4e bedroom in an office is probably not a good idea if you are planning a family or if you plan to take care of elderly relatives in the years to come. On the other hand, home offices have become very popular as more and more people are working from home. Personal needs matter.
2. Preliminary research:
- List the renovation projects you are considering.
- Chat with friends, neighbors, and even real estate agents about their home improvement experiences.
- Go to open houses in your neighborhood to see what others have been up to. Do some research on the Internet and in magazines to get an overview of possible ideas.
- Look for rough estimates for the ideas you are considering.
- Research how your planned renovations will affect the value of your home.
- If you are planning multiple projects, prioritize them.
3. Cost and budget. Your main costs are for materials, labor and local market conditions. You will need a minimum of 3 estimates and probably recommendations from contractors hired by people you trust. However, you can calculate your rough estimate using online calculators such as https://app.mykukun.com/Home-Renovation-Costs. Online estimates are just the start and you should expect significant cost variations depending on your specific needs, wishes and decisions.
- Once you have a few estimates from the contractors, it’s a good idea to add an additional 30 or 40% to cover changes and contingencies.
- If you are removing or adding walls or making changes to the foundation, you need the professional services of a structural engineer.
- If you want to recoup your costs when you sell, you might want to prioritize your list based on which renovations recoup the most. Typically, in descending order, these are kitchen, bathroom, flooring, master bedroom, and attic bedroom additions.
- Look for financing options if you are not paying everything in cash. Banks typically lend 20-30% of the home’s value (this varies depending on your equity). If the home is valued at $ 300,000 and your credit is decent, you should expect to be able to borrow $ 60,000 to $ 90,000 for renovations.
- Common financing options are a home equity line of credit, refinancing your home (preferably at a lower interest rate), home improvement or personal loans, and credit cards (generally the least preferred).
4. Hire your contractor. Once you’ve decided what you’re going to do and how you’re going to pay for it, it’s time to hire a contractor. This is when you make the final estimate. But always keep a 20-30% buffer in your budget. Prepare a list of questions specific to your project to ask each contractor. General questions include:
- List of references?
- Experience with your type of project and experience near your location?
- Licensed, bonded and insured (their liability insurance to protect you)? Check what you are being told.
- Any comparable projects that you can see? Preferably actual finished projects but at least videos or photos.
- Schedule and budget execution?
- What are the payment methods ? Down payment, milestones, down payment + final payment, materials + milestones, total initial amount (unwanted), etc.
- What is guaranteed and for how long?
- Will you have only one contact person for the status and how often will you receive updates?
- How will any changes that may be necessary be managed?
- Ask how other parts of the house / landscaping will be impacted and protected?
- Ask questions about subcontractors? Make sure the general contractor takes responsibility for the subcontractors.
- How do you welcome the family and animals (if you live in the house during the renovation)? Be sure to mention if you are working from home.
- Call the references to ask if they were happy with the results, budget and schedule, how the issues were handled, how long has the work been done and if they would hire the contractor again?
- Anything specific to your project and your situation.
- Listen carefully to all of his answers. Especially when it comes to changes, budgets and schedules.
- Require a written and signed proposal and contract before work begins. When in doubt, write it down. Make sure all specifications are included. Specify required permits and government inspections. Have a well-written final acceptance clause.
5. Plan how you will live during the remodeling. How will you live with your family during the renovation? Are you going to move? Are you going to put a plastic tarp between your living area and the construction area? Are you going to eat out during a kitchen remodel? How will you protect valuables and heirlooms with workers in the house? Will you and your family be safe from open holes and other obstacles? Is anyone allergic to dust or chemicals (paint and flooring)? Do you need a storage shed? Will you be able to get in and out of your driveway? Make sure your contractor will clean it every day. What else do you need to plan?
6. Manage entrepreneurs. Mistakes will happen. Special orders will arrive late, inspection dates will be missed, and a wall might even be built in the wrong place. Be mentally prepared for these and other issues during construction when your patience is likely to be short. Talk to your contractor regularly and report these issues as soon as you find them to avoid a ripple effect. Keep a list and go back to make sure any errors have been corrected. All changes should be written down and include costs. Keep all communications cordial. If you lose your temper, apologize. Expect the same from him.
Soon you will be cooking in the kitchen of your dreams, showering in luxury or enjoying a high-tech lifestyle.
What are your renovation tips? Please add your comment.
Additionally, our weekly Ask Brian column welcomes questions from readers of all levels of experience with residential real estate. Please send your questions, inquiries, or story ideas to [email protected]
Author Biography: Brian Kline has been investing in real estate for over 35 years and has been writing about real estate investing for 12 years. He also draws on more than 30 years of business experience, including 12 years as a director at Boeing Aircraft Company. Brian currently lives in Lake Cushman, Washington. A vacation destination, close to a national and the Pacific Ocean.