Home renovation

6 Ways to Avoid Costly Home Renovation Mistakes

Many of us are spending more time at home in 2020, which could mean having more time to tackle home improvement projects. But home renovations aren’t just a way to fill time; you want the results to be worth the hard work. The key to any successful project is careful planning, including a financial strategy, long before the power tools are released.

About 3 in 5 (61%) U.S. homeowners have taken on home improvement projects since March 1, spending $6,438 on average, according to an Aug. 18-20 NerdWallet survey conducted online by The Harris Poll of 1,414 homeowners.

Whether you’re outfitting your home with a new office or classroom, or undertaking long-standing upgrades such as painting or installing new flooring, here are six tips to help you make sure that you are heading towards the right project, in the right way. .

1. Consider ROI

Any project can be worth your time if doing it makes you happy, but if you’re planning to sell your home soon, be sure to focus on projects that offer a good return on your money. Many renovations cost thousands of dollars, but won’t increase the value of your home by the same amount.

For example, it costs about $50,000 to add a new bathroom, but homeowners typically recoup only about 54% of the cost of the increased home value, according to Renovation Magazine2020 cost/value ratio of . A minor kitchen remodel, on the other hand, pays around 78% of its cost, so this type of project might make more sense.

Consider calling local real estate agents to ask them about the return you might receive from a home improvement project. Some local markets or neighborhoods may reward some upgrades more than others.

2. Create a budget

You don’t want to run out of money in the middle of a home improvement project. But unless you’re careful, your project can get more expensive while it’s underway. This finest tile may add just $7 per square foot, but if your kitchen has 100 square feet of floor space, watch out! To avoid running out of cash, add up your expenses before starting the project. Then add 10 or 20% to the total to account for cost overruns.

To get an idea of ​​how much you’ll need to spend on a specific project, look at what others have spent on comparable projects using a project estimate calculator or by browsing sites like HomeAdvisor or Renovation Magazine.

3. Choose the right financing option

Since March 1, 34% of homeowners who took on home improvement projects used available money to fund those projects, 25% used money they had saved for those projects specifically, and 14% used the money they had saved. money from their economic stimulus check, according to the NerdWallet survey. As long as these projects aren’t funded at the expense of larger expenses, using spare cash or savings can be a good way to avoid paying interest on your home improvement project.

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Explore all your options

If you need to finance your project, carefully explore your financing options. These include a home equity line of credit, personal loan, cash refinance, or even credit cards. But they come at varying costs depending on the interest rate and how long it will take you to repay the loan. A home improvement finance calculator can help you weigh these costs and make an informed decision.

4. Research contractors

If you’ve decided to hire a professional, get written estimates from various contractors. As these estimates come in, check their references and ask about their references. At a minimum, make sure every contractor is duly licensed to do the work on your home. You can also find out about their membership in professional associations. Many reputable contractors belong to trade groups such as the National Association of the Home Improvement Industry or the National Association of Home Builders.

A good contractor will guarantee the work and offer a warranty. You can check out Better Business Bureau reviews to see if other people have complained about the companies you review. If there were any complaints, check how they were resolved.

When selecting a contractor, be sure to get your agreement in writing.

5. Obtain home improvement permits

Permits help protect your home and your safety. Without the necessary approvals to perform work on your property, the renovation may not meet local building codes. It could even affect your ability to sell your home in the future. Contact your municipality to find out what permits you need for your renovation project. And follow up to make sure your contractor has the permits in hand before starting work.

6. Understand the price/quality trade-offs

You’re probably looking at paying hundreds or thousands of dollars for a renovation project. It’s understandable to look for ways to save money, but don’t automatically cut corners by using the cheapest materials.

Discuss with your contractor the trade-offs between quality and price for your project. You are probably better off selecting the best quality products that fit your budget. Otherwise, you might be stuck with expensive repairs after a few months because you skimped on quality.

A home improvement project can be a big boost to your home’s aesthetics and market value, if you avoid costly mistakes. By setting a budget, researching contractors, and making sure your upgrades use quality materials, you can avoid costly pitfalls and enjoy your home’s new design.

Methodology

This survey was conducted online in the United States by The Harris Poll on behalf of NerdWallet from August 18-20 among 1,414 American homeowners aged 18 and over, of whom 883 have completed renovation projects since August 1. March. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For full survey methodology, including weighting variables and subgroup sample sizes, please contact Anna Palagi at [email protected]