How to Set a Budget for Your Next Remodeling Project

When remodeling a home, it’s been said that the reason we establish budgets is merely to make estimates to break! Well unfortunately that tends to be truer than not. You might be wondering why, and I am here to provide you with some answers and a few insights on how to establish a budget and stay within at least 5% of that number.

The first and foremost challenge we all face with any remodeling project is having unrealistic expectations when estimating what it will cost. I have met with countless numbers of potential clients over the years and at their first meeting they tell me what they feel is appropriate to spend for remodeling their kitchen. My question to them has always been something to the effect that I appreciate their estimate and would they be so kind to walk me through their process and how they arrived at that number?

Home Depot and Lowe’s all come to mind with their answers. Nothing is further from the truth than using numbers from these resellers, however I do understand. It is so much more than buying cabinets, countertops and accessories. Besides most of our clients want upscale cabinets so they are beautiful, durable and flexible with many built in accessories.

What they do not take into account is that when hiring a professional Design Build Remodeler, one must also include labor, shipping of materials, costs of liability and workers’ compensation insurance, project management, design and overhead. The trades such as electrical, plumbing, tiling, HVAC, and drywall are required by law to also carry the costs of insurance, liability, permits, inspections, and overhead as well. These are all professionals, and through a team effort with your professional remodeler, they will get the job done correctly and to code. In the end, the proverbial saying, “you really do get what you pay for” holds true.

As I mentioned in my article last month, one of the best ways to establish a budget is to start with the design. The design will control everything, but more so, it will provide you with a realistic and firm budget. I am sure you are telling yourself, that sounds great but we have no idea how to design a kitchen, much less come up with a budget from it. I would sit down then with your Design Build Remodeler and go through your design requirements and set up a proper budget.

In trying to figure this out, the first step is asking yourself what do you want in a kitchen remodel? The full replacement of an entire kitchen with all new upscale cabinets, unique lighting fixtures, floors, granite countertops, windows, appliances, a possible new island, sinks, wall changes, and various new appliances along with other exclusive treatments such as special treated ceilings and walls, is something that will last for years to come and well worth the investment.

When building an actual budget that reflects the kitchen we just described, figure around 20% – 30% of your home value for a full upscale new kitchen for home values that are $ 500,000 or less. For homes that have values that exceed $ 500,000, I would suggest using at least 25%-35%.  This will provide you a baseline to steer from and you can adjust from there based on your meetings with your remodeler. They will guide you to products and choices that best fit your budget.

Set aside another 10% of the gross estimate for unforeseen wants and desires. When you start shopping with a professional for a full build out, you may discover other things you really want and for the items you selected, prices recently have gone up dramatically and you may need to reset your expectations or your budget.   I hope this sheds some light on your how to start establishing a budget, however the best way is to sit down with a licensed professional Design Build Remodeler and work together in building what it is you really want. Anything can be adjusted to match your desired outcome.

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