HM Logo
HM Logo Mark

MONEY

Ten Things to Consider Before Starting a Home Renovation

Illustration of paint brush, paint swatches, painter's tape, and a hammer

Are you itching to renovate your home? Maybe you've been inspired by the Fixer Upper crew, or you're just plain tired of the way your house looks. Renovations can help you change the look and feel of your home to something you like and make it more comfortable or enjoyable to live in. 

One common mistake that homeowners who are renovating make, however, is to take the plunge before they have all their ducks in a row. Failure to do adequate prep work can cause major headaches along the way and potentially lead to sub-par outcomes. 

So, before you start a home renovation, here are ten things you should consider. 

1. To Renovate or Not Renovate?

Before you commence your home renovation project, ask yourself whether a renovation is actually the best course of action or if there are other options. For example, would it be more economical or practical to sell your home and buy another one that is more suited to your needs?

Compare the cost of renovating with the cost of selling and upgrading before deciding which could be the better option. If you are planning a major addition or structural change, it might in fact be cheaper to buy a home that already has the features you want than to add them yourself.

Of course, cost is not the only thing that should come into the equation. There are also emotional considerations to take into account when making the decision on whether to sell or renovate. 

For example, you may have memories or routines in the house that you are not willing to sacrifice. Renovating rather than moving can also mean staying in an area of town that you love. Moving can be a stressful experience - it would be perfectly understandable if you are simply not willing to go through it.

By being honest with yourself about your needs, objectives, and finances, you should be able to make the best decision for your circumstances.

2. Is the Renovation Value-Adding?

When renovating a home, it’s usually a good idea to prioritize tasks or projects that will increase the resale value of your home.

Research or set up a consultation with a local real estate agent or home appraiser can help you establish the kinds of renovations that will actually add value and the ones that will not.

Many homebuyers, for example, are often willing to pay more for modern and updated kitchens and bathrooms, so these renovations in those rooms are usually a good bet.

At the same time, your decision should not just be guided by the potential increase in resale value. Value can come in other ways. For example, factor in the intangible benefits that you will be able to get from investing in a home renovation.

Even if a home renovation isn't likely to add much resale value, it could still be a worthwhile investment if it improves your quality of life or brings you happiness and satisfaction. Some improvements, like a pool or home gym, for instance, might not increase the value of your home by much, but they can still be enjoyed by you and your family.

3. Building Permits and Restrictions

Depending on the type and scope of the renovation, you might need to get a permit from your local government.

Building permits are typically necessary for renovations that require major demolitions and major structural changes or additions, such as:

  • Adding and removing walls
  • Installing a new plumbing or electrical system
  • New fencing installation
  • Installing a new water heater
  • Changing the use of a room, e.g., converting your garage into an office or bedroom

Projects that might not need a permit include:

  • Repainting your home
  • Installing new kitchen and bathroom countertops
  • Replacing some kitchen appliances
  • Replacing faucets
  • Installing hardwood floors

If you're unsure about whether or not your project requires a permit, you can always check with your local city hall or building department.

They’ll tell you the permits you need and how to go about getting them. Typically, this will involve submitting an application with detailed plans of your project and paying a permit fee whose amount will likely depend on the estimated cost or size of the project.

4. DIY or Contractor?

Another big decision you have to make before you officially commence your project is whether to do the work yourself or hire a professional. Each approach has its pros and cons.

If you do the work yourself, you will have more control over the process and might be able to save some money. At the same time, if you are not experienced with construction or home repairs, you may end up making mistakes and having to pay a professional to redo the job, which will cost you more money.

If you are not sure or confident of your abilities, or if the project is complex, it might be best to leave it to a contractor. They usually have the experience and expertise to do the job correctly, plus they are likely to do it faster.  They are also likely to have the right insurance coverage to protect both parties in case something unexpected happens.

Of course, hiring a pro will cost you more, but the peace of mind that comes with knowing that the job will be done right will be worth it.

Ultimately, the final decision is up to you. Carefully weigh your circumstances, including your budget, skills, and timeline when deciding which option is best for you.

5. How Much Will it Cost and Can You Afford It?

Before you begin your project, you will want to make sure that you can actually afford it.

There are several ways to find out how much the project is likely to cost you.

  • Ask local builders or tradespeople for a ballpark figure.
  • Talk to friends, relatives, or neighbors who have recently had renovations done.
  • Check home decorating magazines (many will often feature stories on actual renovations and how much they cost).
  • You can also use a resource like Home Advisor.

The next step is to determine whether you can afford these costs, i.e., whether your renovation dreams match up with your financial reality. If you find that you cannot afford your dream, there are a few things you can do.

  • Consider doing renovations in stages. If your plan was to renovate two rooms, start with one and wait until you can afford the other.
  • Opt for a more modest design than the one you might have originally planned for.
  • Trim your list of project tasks to those that are absolutely necessary.
  • Communicate your budget to your contractor and ask what they can do for that price.

6. How Will You Finance the Renovation?

Before you start the project, make sure you know exactly how you are going to fund it.

The simplest and cheapest option, perhaps, is to use your savings. Using savings means that you don’t have to get into debt and incur interest to complete your project.

However, using all of your savings for a project may put you in financial jeopardy if you have an emergency later on, such as a job loss or a medical issue. 

Another option is a home equity line of credit (HELOC). This is a revolving line of credit that’s borrowed against your home equity. It functions similarly to a credit card in that you can withdraw the amount you want when you want, up to a certain limit. HELOCs are a favorite of homeowners because the interest rates on them are usually lower than on other loans or lines of credit.

You can also use a home equity loan (also called a second mortgage) to finance the project. Like a HELOC, it lets you borrow against your home’s equity. However, with a home equity loan, you will get your money as a lump sum and not a revolving line of credit. The loans come with fixed interest rates and fixed monthly payments over a specified term, usually 5 to 20 years.

If you don’t borrow money against the equity in your home, you can also apply for an unsecured personal loan from your local bank, credit union, or even an online lender like Happy Money. With a personal loan, you are likely to get your money faster and thus start your project right away. 

For smaller jobs, some people might also opt for a credit card.

In a nutshell, there are numerous options for financing your home renovation. Do your research on each to see which one works best for your budget and circumstances.

7. Timeline

Before you begin your project, sit down and plan out a timeline with specific milestones and deadlines. This can help you stay on track and not get overwhelmed.

Make sure to include some wiggle room in your timeline in case of delays. Renovation projects often take longer than imagined.

Things like weather and climate can all affect the time it takes to complete a project, as can market conditions. 

The general housing market at the moment, for example, is currently experiencing several bottlenecks, which could cause your projects to be delayed. Contractors are busier than ever after many projects were postponed due to COVID-19.

The pandemic has also exacerbated supply chain issues. Some of the materials and items you need for your project might take a couple of weeks or even months to be delivered.

Make sure to take into consideration all these factors and make accommodations for them in your timetable to avoid frustration.

8. Your Living Arrangements During Renovation

If you are undertaking a major renovation, you might have to move out of your house temporarily. Even minor renovations can be disruptive, and you might therefore also choose to relocate temporarily for the sake of your sanity. Or, you may simply decide to move out so as to allow the contractor to work with fewer interruptions.

Make sure to plan for alternative accommodation beforehand. To save on costs, for example, try reaching out to friends and family to see if anyone is willing to host you temporarily. If that’s not possible, try looking for cheap Airbnb and hotel options.

You can put a positive spin on this temporary inconvenience by treating it as a mini-adventure, or a chance to try out or discover something new.

 9. Unexpected Costs

Many renovations usually end up costing more than the original estimated figure. That could happen if you underestimated the costs, or if additional and unexpected expenses arise during the project's completion.

When estimating project costs and preparing your budget, consider adding an extra 10% to 20% to account for any unforeseen expenses or cost overages.

10. Impact on Neighbors

Unless you live in a secluded place, any home renovation project is likely to have some impact on your neighbors, whether it's through noise pollution or air pollution.

To avoid any potential conflict and to maintain cordial relations with your neighbors, see what you can do to minimize the negative impact of your project on your neighbors. For example, try to schedule noisy work for times when your neighbors are likely to be out of the house, such as during the day. You can also seal off any areas that could produce dust or other airborne particles. This will help to reduce air pollution.  

Before you start your project, you can even speak to each one and apologize beforehand for any potential inconvenience you might cause.

Planning is Key

Adequate prep work or planning is key to a successful renovation—it can help you avoid costly mistakes and make sure that the end result is exactly what you want. Consider the items we have discussed here before you start your project to ensure a smooth process and a beautiful final product.

In the meantime, if you are unsure of how to budget for your home renovation, check out our Step-by-Step Guide to Create a Home Renovation Budget That Fits Your Dreams (and Your Wallet’s Realities).