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How to Plan a Home Renovation

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After purchasing home, the next most exciting and stressful challenge is often to plan a home renovation. Two and a half years ago, we stumbled upon our dream home at a remarkable price since it was unfinished and needed several repairs. Slowly, we’ve worked on tackling small projects as we’ve had time and money.

Last month, I shared with you our decision to get a swimming pool. Ironically, this plan was born out of our research on a different home improvement project.

The addition I REALLY wanted was a deck. Our eating area off the kitchen has two beautiful French doors…

glass doors in a home leading to the backyard

…that open to a 15-foot drop.

a home deck looking out to the backyard

Since we host a lot of parties in our backyard, building a deck that would let us easily flow from the main entertaining area inside our home to the backyard has been a priority.

a house

Unfortunately, it’s also a very expensive project. Unlike painting a room, replacing the dishwasher, or re-grouting bathroom tile, building a deck was going to take longer than a day and more than a few hundred dollars.

We knew we needed to come up with a plan to avoid making mistakes and wasting time and money. After reading dozens of articles and books and consulting with friends who had undergone major home renovations, we came up with this plan.

a collage of 8 different home scenes with title text reading How to Plan a Home Renovation

Step 1: Research

Before you lift a hammer or start tearing down walls, you’ll need to gather a lot of information before you can decide if now is the right time to renovate.

How much will it cost?

We have wanted a deck since we signed the closing paperwork for our home, but the cost was too high given all the other things we needed to do to the house.

Start with a simple internet search for estimates of how much your project will cost. Then, if those numbers don’t frighten you off, dig deeper to get a better idea of where on the range of prices your project will fall.

For example, a deck can cost as little as $2,000 or as much as $15,000. Since we wanted a larger deck made from composite material (requires less maintenance), we knew our deck would be more expensive.

Don’t forget to take into account other costs associated with your renovation. A new addition to your home could mean extra electricity and water usage – a permanent increase to your monthly bills. Make sure you know you can afford the ongoing costs of your project (if any).

How much will it be worth?

In addition to calculating your project’s cost, you should also calculate its value. For us, the value was intangible. We expect to be in our home for many years so rather than calculate a dollar value, we gauged how much aesthetic value it would bring us.

If you don’t plan to be in your home for several years, you should calculate how much of your renovation investment you’re likely to recoup when you sell your home. As it turns out, a deck returns 80% to 90% of its cost. If resale value is important to you, know the average rate of return before you invest in a renovation.

Gather Comps

Look up comparable house values in your area before undertaking a major renovation. If the project will increase the value of your home substantially, you might find it difficult to sell your home later since many people avoid buying the most expensive house in the neighborhood.

Can do any of the work yourself?

You can often save a lot of money if you are willing to do some of the work yourself. Because our large deck is going to cost a lot, we’ve decided to offset the cost with manual labor (mostly my husband’s, but I plan to be an enthusiastic supporter).

In your research, figure out what steps are involved and identify those that you can perform. Depending on the project and your skill level you can save hundreds, or even thousands, of dollars.

Contact Local Zoning Authority

Most localities have building codes related to major home improvements. Even if you’re planning on hiring a professional contractor to do the job, don’t rely on him or her as your sole source of information about the local laws. Find out what permits and inspections are required, along with any related fees and regulations. This will also help you identify any “padding” in your contract if the contractor inflates the fees.

Contact Homeowner’s Insurance Provider

Don’t risk your investment by failing to line up homeowner’s insurance covering the renovation BEFORE you begin. If some disaster befalls your home mid-process, you’ll want to be covered for what you’ve already invested in the project.

Plus, some renovations might not be covered under your current policy (e.g. a swimming pool) so you’ll want of find that out before you sign any contracts or begin work. Also, most people don’t realize that some home improvements (like a new roof) can actually reduce your premiums.

Step 2: Determine a Budget

Whether you decide to pay cash or finance your renovation, you need to know your budget before you start any work. Establishing a budget will help you weed out overpriced offers and extras that aren’t necessary.

Set Aside Cash

We have a monthly allotment for home maintenance and repair. If we don’t use the full amount each month, we roll it into a money market account to grow so we can put it towards a “larger” project.

Secure a Home Equity Line of Credit

For home renovations, a home equity line of credit is a great low-cost financing option. With a line of credit, you only borrow what you need when you need it so you don’t end up paying interest on funds you may not need.

Since home renovations often don’t have firm, pre-established costs, a home equity line of credit ensures you’ll have funds available without requiring you to borrow a set amount before you know the final cost.

You might also consider a home equity loan, which could be a good option if you know exactly how much you want to borrow and would like a fixed rate.

Check out Capital One‘s home equity site since they have developed simple, smart tools to help you choose the right option for your situation. They provide a customized rate offer and estimated loan amount or credit limit with no impact to your credit score. Plus, you can begin the application process online without paying an application fee. We hope to have enough cash to cover the deck, but I went ahead and got pre-approved for a line of credit in case we fall a little short.

Step 3: Get Estimates

After you’ve done your research and know your budget, it’s time to gather estimates. Ideally, you should get four or five. At a minimum, you’ll want at least three estimates for comparison.

When gathering estimates, make sure that the contractor spells out exactly what costs are involved in the project. Are the permit fees included? Are all materials included? Have the contractor itemize the estimate as much as possible.

Shy away from estimates that are too close to your budget. A good contractor should caution you to include an estimate for unexpected events and overages. Even if they don’t, for your own calculations add 10-20% to the estimated cost and make sure THAT figure is within your budget.

a construction worker shaking hands with another person after discussing How to Plan a Home Renovation

ALWAYS verify references, even if a friend or family member recommended the contractor to you. Check the Better Business Bureau for complaints and read online reviews. An occasional bad review is to be expected since there will always be one person who just likes to complain, but beware of contractors with a pattern of bad service, slow service, sub-par work or low estimates and high final costs.

Step 4: Prepare Family

Many major home renovations impact daily family life. For example, even though our deck is being built outside, the work is right outside our dining area. Depending on when the work is being done, this could disrupt our meal times. Additionally, because of the work being done outside, part of our yard is off limits during the construction phase.

Although the finished project will likely bring much joy to your family, the process leading up to the final result can be stressful and disruptive. Make sure your family is prepared for those changes and plan ahead to alleviate as many potential disruptions as possible.

Step 5: Notify Neighbors

Be a good neighbor and don’t let the parade of construction equipment and workers be the way your neighbors find out you’re beginning a renovation project. Give them a heads up once you’ve settled on a contractor so they will be prepared for the extra traffic, noise, and activity.

I’m still mid-plan so there’s a chance I’ll be updating this post with additional tips as we move through the process. If you have tips from your own home renovation experience, I’d love for you to share them in the comments!


I was selected for this opportunity as a member of CLEVER and the content and opinions expressed here are all my own.

1 thought on “How to Plan a Home Renovation”

  1. Very helpful post, Corinne. Definitely, money is a big factor to consider when planning for a renovation. It’s a lot of work as well.


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