Tips For The Best Home Remodeling Project
Remodeling your fixer-upper
If you’re a fan of home rehab shows like DIY’s “Rescue My Renovation” and HGTV’s “Fixer Upper,” you’ve probably imagined yourself in a work-worn tool belt and visor, pencil between teeth, home remodeling that dated kitchen or dingy bath that’s been driving you crazy.
Question is, are you really up for a fixer-upper? Despite what reality TV may lead you to believe, riding solo over a real-life renovation is probably not the best strategy.
“The biggest misconception that someone might take away from watching a DIY show is that they can do everything themselves,” says “Rescue My Renovation” host John “Johnny D” DeSilvia. “I strongly recommend that unless you are experienced in the trades, leave them to the pros.”
And, as if building a budget, drafting a design plan, sourcing materials, assembling a work crew and arranging financing weren’t enough, there’s also the endgame to consider: Will my home remodeling be worth it?
Here are some tips that will help.
Budget with an eye toward ROI
An important first step in any fixer-upper involves fast-forwarding to the last step: how the renovation will affect your home’s value, aka its return on investment (or ROI).
The industry guideline on home renovations holds that your remodel should cost between 5 percent and 15 percent of the home’s current value. The rationale? Spending less than 5 percent could adversely affect the home’s value, while money spent over the 15 percent limit won’t return at resale.
For estimated market returns by region for your specific renovation, check out the National Association of Realtors’ annual Remodeling Cost vs. Value Report. A local Realtor can also provide a community comp (or comparable) for how your renovation might affect your home’s market value.
Remember that classic renovation TV trope where the crew discovers costly surprises in the attic or cellar? Contractor Kenny Grono, president of Philadelphia-based Buckminster Green, suggests homeowners set aside 5 to 10 percent extra as a contingency fund if they’re working with a skilled design/build team. If not, 15 to 20 percent might be safer.
“If they’re more seat of the pants, you know things will probably come up because you’ve inevitably overlooked a lot of details,” he says.
Hiring a home remodeling team
For the DIY crowd, nothing beats completing a home renovation on time, within budget and without forking over 20 to 35 percent for a general contractor.
“If you have the time and ability and are willing to invest in the learning, there’s no question you can do it,” says Tom Kelly, president of Neil Kelly Remodeling in Portland, Oregon. “But that’s three big ifs.”
The chief risk for newbies flying solo is, without previous project experience to draw upon, the results may be underwhelming, if not an outright mess. A solid design/build team can take the worry out of remodeling by:
- Translating your vision into a workable, affordable design plan.
- Working up a realistic budget, including 5 to 20 percent extra for the unexpected.
- Obtaining the required building permits and inspections.
- Sourcing and ordering project materials and cataloging product warranties.
- Scheduling the work crews.
- Problem solving and project adjustments.
Kelly says there are far better, less risky ways to DIY than working as your own contractor. “Doing the demolition at the beginning or the painting at the end by yourself can save some significant money,” he says.
Consider your financing options
Whether you’re looking to customize your home to your own tastes or purchase a fixer for resale, you’ll benefit by exploring the best way to finance your upgrades.
Brendan Coughlin, executive vice president of consumer lending for Citizens Bank, says a home equity line of credit (or HELOC) makes the most sense for homeowners set on improvements.
“When you can borrow at a rate of 3 percent to 3.5 percent, that’s a pretty inexpensive access to credit, especially if you’re going to reinvest that and add value to your home,” he says.
In addition to their typical 10-year draw period, during which homeowners can pay interest only, consumers are free to use a HELOC to consolidate credit card debt or pay for college.
If you’re thinking of buying a fixer, the Federal Housing Administration’s 203(k) Rehabilitation Mortgage Insurance and Fannie Mae’s HomeStyle Renovation Mortgage program can build renovation funds into your home purchase.
“A handful of programs require as little as 5 percent down,” Coughlin says. “It can be smart to keep that extra money aside for your home improvement.”
Pick the right neighborhood
When it comes to fixer-uppers, where you renovate plays a key role in what you’ll recoup on resale.
“Quite simply, you don’t want to have the most expensive house in the neighborhood,” Kelly says. “If you’re buying a fixer-upper, you want one that is going to be the least-expensive house and then build toward the mid-price point. If you’re looking to buy, fix it up and have it be the most expensive house in the neighborhood, watch out!”
What’s the best way to keep your renovation on track? Grono offers these tips to avoid costly missteps:
- Plan big, start small. “Think about your whole house as a system,” he says. “That way, you won’t spend half of your budget on the bathroom when you have other projects to do.”
- Start with a home inspection. If you know you need to update or replace worn or outdated plumbing or electrical systems, you can work those costs into your budget.
- Let your contractor purchase your materials. They’ll get a better price than you will, even with their markup.
- Relocate if you can during construction: “Remodeling is a big inconvenience in your life,” he says. “It’s dirty and there are people in your house all the time who are going to wear on you.”
- Don’t overdo it: “The cold hard fact about remodeling is, the less you do, the better, because you’ll never realize a 100 percent return,” he says. “This has to be something that makes you happy and gives you value because the monetary value is never there.”
Home design idea. Tips for the best home remodeling project