Home renovation

What you can do now to plan a home renovation later

Like everyone else, you’ve been spending a lot of time at home over the past few weeks. And you probably know all the flaws in your home best: the outdated kitchen cabinets, the frayed carpet in the family room that needs to be replaced with hardwood, the guest bedroom that needs to be converted into a dedicated office.

Perhaps the idea of ​​a renovation has crossed your mind. But this couldn’t be the right time for one, could it? Actually it depends.

In Washington State, much home building is now permitted. But whether a specific project is considered suitable is a matter largely determined by owners and contractors.

“Putting a roof back on is critical,” said David Merrick, president of Merrick Design and Build in Kensington, Maryland.

Merrick, who is also chairman of the government affairs committee of the National Association of the Remodeling Industry (NARI), said contractors are more likely to take on exterior rather than interior projects. In the case of a client looking to renovate the basement of her townhouse in Washington, D.C., the decision was made to wait until late spring or early summer when everyone would feel more comfortable.

If you choose to wait until the pandemic subsides, experts say, you can still use that downtime to plan your project and get on your contractor’s radar.

“If you have a four- to five-month schedule, you can talk to friends about who they’ve used and check out Angie’s List reviews of their performance,” said Kermit Baker, project director at Harvard’s remodeling program. . “You can do your due diligence as you prepare to prepare the project.”

Once you have decided what work needs to be done and when to do it, be sure to place your order immediately. “If you wait until September to place your order, [contractors will] have five months of orders ahead of you,” Merrick said. Then it will be “difficult to get the contractor to call you back”.

Here are some other factors you can consider ahead of time during this lull.

Budgeting and financing

Probably the best thing you can do is not to get too caught up in the aesthetics, but to invest a significant amount of time focusing on the logistics.

“Every home improvement project is going to cost more than you think and take longer than expected,” Bob Harkson, chief financial planner at Phase2 Wealth Advisors in Gig Harbor, Wash., told The Post in May 2019. Harkson said said the biggest problem he sees with his financial planning clients is that they haven’t budgeted enough.

The tricky thing about home improvement is maximizing your return on investment. You want to spend money that will pay you back when you sell your home, but not overspend beyond what a buyer would be willing to pay you. So how do you find the sweet spot?

Experts say kitchen and bathroom renovations are among the projects that give homeowners the best returns. According to Remodeling magazine, kitchens recovered 62.1% and bathrooms 67.2%. The others include: 70.8% for the windows, 75.6% for the siding, 68.2% for the roof and 75.6% for the terrace.

Dan DiClerico, a smart home expert for HomeAdvisor, a New York-based home improvement platform, offered this rule of thumb: “You should spend about 5-15% of your home’s value on kitchen renovations.” , DiClerico told the Post in May. 2019. “So if your house is worth $300,000, you should spend $15,000 to $45,000 on the kitchen. A bathroom renovation should cost around 3-7% of your home’s value.

If you like analysis, HomeAdvisor’s Home Spending Report offers data and charts to help you determine if your budget is in line with what has been paid by other homeowners pursuing similar projects. Another useful source is the Remodeling Cost vs. Value Report, which offers searchable databases to compare renovation costs by zip code.

“The more thorough you are in the planning stages, the more likely you are to stay on budget for your project,” DiClerico said.

A major part of planning is to allow for surprises. Sonu Mittal, head of retail mortgages for Citizens Bank in Plano, Texas, said you should allow an extra 10% for unexpected expenses.

So how do you pay for a home improvement project? Methods abound. Here are a few:

Savings: It is the simplest because it does not require approval or the payment of fees and interest.

A 203(k) loan from the Federal Housing Administration (FHA) or Fannie Mae HomeStyle Renovation: “An FHA 203(k) loan provides flexibility because you can finance up to 97.75% of the value of the improved home,” said Catherine Holtman, operations support manager for Embrace Home Loans in Middletown, RI, to the Post in May 2019. “There is a simplified version for upgrades up to $35,000 that are non-structural and a standard version for major renovations, including structural changes.

Home Equity Line of Credit (HELOC): This gives homeowners flexibility in that they only pay interest on the line of credit they use and closing costs are minimal.

Refinancing by collection: Borrowers should keep in mind that closing costs for cash refinancing are higher than a HELOC, but interest rates are lower.

Personal loan: A personal loan is better for borrowing small amounts because it has to be repaid sooner. They have higher interest rates than a HELOC.

401(k) loan: The loans have a low interest rate. Financial advisers advise against this type of loan because they must be repaid immediately if the borrower leaves his business.

Credit card: This is a simple way to pay for a project. However, they come with high interest rates.

Take on a big project

Before embarking on a major renovation, you should take the time to determine the best approach given your budget, schedule, patience, willingness and ability to do some of the work yourself. Here are seven methods:

Design-build firm: These firms, made up of designers and architects, can manage the project from start to finish and oversee all subcontractors. The downside is that they can be expensive.

Kitchen designer: These companies specialize in kitchens and can often provide a more custom look for your project.

General contractor : A general contractor is ideal for people who know what they want but need someone to manage the project. Due to their relationships with suppliers, general contractors can often get discounts on supplies.

Kitchen specialty store: These retailers offer discounts on kitchen components and accessories and on personalized services.

High-end design agency: It’s for owners who want the best of the best and aren’t shy about paying for it.

Supermarket : Stores such as Home Depot and Ikea can often get special labor discounts and can usually offer their services at lower prices than general contractors.

DIY: For people who want to save a ton of money, have more time, and be close at hand.

If you’re pursuing a bathroom remodel, for example, keep in mind that 50% to 75% of the cost of the project will be labor. It is therefore important to educate yourself on how to negotiate labor costs or hire a contractor who can do so.

Working with limited dollars

If you’re looking to start small to get your feet wet, Zillow has some suggestions on lower-cost projects that can give you more bang for your buck. For example, Zillow says spending $3,000 on curb appeal projects such as painting and landscaping can net $3,500 when selling.

Zillow also recommends that when renovating for sale, you try to incorporate the latest design trends into your home.

When trying to prioritize limited dollars, Zillow recommends that you just ignore the basement. Basement projects, according to Zillow, only make 50 cents on the dollar, even when a bathroom is added.

Justin Pierce, real estate investor and real estate agent, suggests homeowners who choose to manage their own projects use a construction diary to stay on top of the project and give them a check-in with contractors in case something goes wrong.

“Keeping a journal has really helped me,” Pierce wrote in a Washington Post column in July. “If things go wrong, it can be useful in court or in arbitration. Contractors, especially shady contractors, are good at complicating the issue or adding doubt to your mind. They blame the delays and increased costs on the weather, extra work, inspectors and the client. You might be shocked to receive $10,000 in change orders on final accounting. It’s impossible to unravel six weeks later. It’s best to write things down as they happen and share milestones and your understanding of them with the contractor. »

Pierce said the log should include the start date, major milestones, inspection dates, subcontractor work schedule and change orders.