Thanks to the pandemic, many of us are stuck at home more often than we used to be. Spending more time around the house makes it that much more difficult to ignore the projects we put off for months — or perhaps even years.
If recent reports are any indication, now is the time to act. According to CNBC and recent findings by Houzz, there was a 58% annual increase in project leads for home professionals in June. This increase in home improvement spending continues going strong.
Join the thousands of Americans coming clean about those home improvement projects that need doing now. Here are some helpful financial tips to get you started.
Start With A Rough Idea Of What Things Cost
Do you know how much a plumbing installation costs on average? What about a new garage door? If you cannot come up with a ballpark figure for common repairs and upgrades around the house, it is time to do some research. Here is a breakdown of some of the costs:
- Kitchen makeover: Up to $30,000
- Complete bathroom renovations: $16,000 with labor
- A new roof: $18,488
- New vinyl siding: $11,192
- An addition to your deck: $9,327
Averages are from Remodeling Magazine’s Cost Vs. Value report.
Start your home improvement projects armed with knowledge. Remember that one of the most helpful financial tips is to have an idea of what you’re getting into.
Get An Estimate
Ballpark figures are nice, but they are not precise — and sometimes they can be far from it. Just about all contractors offer a free estimate. Take advantage of them!
For example, the price of a new roof varies greatly. If a roof replacement is in your near future, the materials used, the dimensions of your roof, your location, the disposal of old materials, and labor will all factor into the final cost. Traditional, asphalt shingles will be much more economical than metal or slate, and labor may account for as much as 40 to 50% of your total spending.
The only way to know how much the specific materials and labor for your roof will cost is to contact a roofing contractor for a free estimate.
Prioritize Projects Around The Home
Other helpful financial tips stress the importance of prioritizing repairs and projects around the home. All repairs and home improvement projects are not created equal. Know what you need to do versus what you would like to do.
Sometimes this process is obvious — i.e., it is obvious that septic system repairs cannot wait and a new pool or deck addition can. Start with a simple list of wants and needs. Try to parse out the repairs or upgrades that are essential and the ones that are cosmetic. If you need more guidance, consider what items will come up during an inspection when you sell your home. Fix the plumbing, roof, electrical problems, water damage, and notable exterior issues first. Make certain your house has the appropriate number of smoke alarms, required flashing, and working bathroom exhaust vents. Prioritize these repairs — repairs that may make the difference between passing an inspection or not — before moving onto wants.
If you have any funds left for wants, these may include repainting or hiring a paver to spruce up paths and walkways outside your home. Start in the rooms or areas where you like to relax and note any features that are getting in your way of fully enjoying your time there.
Cut Corners Without Sacrificing Quality
Is it possible to make repairs or complete upgrades in your home without paying full price? Some of the most helpful financial tips advise you to tread carefully, do your research, and make plans.
By approaching repairs and upgrades armed with knowledge, you can determine where you can reasonably cut costs and when it is just not a wise thing to do. For example, if you want to replace flooring, look into the costs of equipment rentals and removing the existing tile or carpet on your own. While it may be worth hiring a contractor to put down new carpet to prevent buckling, wrinkling, or stretching, pulling up an old one is relatively straightforward. It is possible to rip up an old carpet using just a sturdy pair of pliers, a utility knife, and safety goggles to protect your eyes from dust.
Painting is also something you can generally do yourself. Lay down sheets of plastic or use tarps to protect your floor and furniture, and watch a quick YouTube video to learn how to evenly paint walls. Use painter’s tape and paint trim white for a clean, fresh look.
Other ways to cut corners financially include asking contractors if they have repurposed materials you can purchase at a discounted price. For example, contractors may have slabs of stone cut to fit a corner or particular spot. With certain designs, these slabs will perfectly suit your needs. For example, many homeowners use fillers for stone paths and that gives you some freedom to work with when it comes to the precise cut of your stone.
Don’t Neglect Your Emergency Fund
This year, just about all homeowners will dip into their savings to complete home improvement projects. In recent months, Americans are padding their savings accounts more than ever. “We’re also hearing that money that folks are saving from not going out to restaurants, not eating out, not going on vacations, those things are being saved and they’re deciding to add that value back into their homes as an investment,” Contractor Justin Sullivan tells CNBC.
That is welcome news as is any silver lining during the global pandemic. Just because the average family has extra funds, however, it is important not to grow overly complacent. Perhaps one of the most helpful financial tips — and the most critical — is to set aside an emergency fund. Conservatively, economists Emily Gallagher and Jorge Sabat suggests having a minimum of $2,467 if you are hurting, CNBC writes. Middle- or high-income houses should aim for closer to $15,000.
What are these emergency funds for? You need an emergency fund for car accidents, hospital bills, and unanticipated healthcare costs. Emergency funds are there for you should you lose your job or should a relative pass away and you need to travel to attend their funeral.
Homeowners need to squirrel away extra funds or contribute even more to their emergency savings to ensure that they are prepared in the event of emergency home repairs. For example, stowaway emergency funds for burst pipes, broken HVAC systems, and failing well pumps. Without a working well pump, you may not be able to get water in your home, preventing you from doing dishes, drinking tap water, and taking showers.
A final note: one of the most helpful financial tips is not to wait until emergencies. While it is smart and responsible to have a sizeable emergency fund, it is also important to have savings in general. If you know that you will be tackling big home improvement projects or upgrades around the house in the coming months, start saving specifically for these purposes and start now. Put aside a set amount each month for household upgrades. Pack your lunch or make dinner instead of ordering take out. Work with a financial advisor for more helpful financial tips or to get your finances in order after a hardship.
Prevent Big Problems
Major repairs — and extremely costly ones — can typically be avoided with due precautions. There are some problems around the house you never want to ignore. Ignoring them will only lead to more problems and, in some cases, you may be looking at major damages.
For example, air conditioning units need to be inspected at least twice a year. Along with these inspections, make certain to invest in routine AC repairs and to change the filters every few months as necessary (change them even more often if you or a family member suffers from seasonal allergies). Doing all of these things will ensure that your system runs at maximum efficiency. In the short-term, that will keep your heating and cooling bill as low as possible. Over time, these routine inspections and repairs will prevent the system from being overstressed or overworked — and that means you will not have to replace your system prematurely.
Similarly, small drips and leaks in your roof may not seem like a big deal at the time. Repairing them right away will save you a lot of trouble down the line. Without these necessary repairs, you risk serious water damage, structural damage, and even the possibility of your roof collapsing.
Explore Your Financing Options
Before searching the web for forklifts for sale or calling a contractor for an estimate, start with a solid financial foundation. How do you plan to finance the upgrades to your property? Follow these helpful financial tips to bring in funds from outside sources if need be.
- Take out a personal loan. This is one of the most practical options, especially for small- to mid-sized home upgrades or renovations. “Before applying, compare the best personal loan lenders that offer the lowest interest rates, smallest (or no) fees, friendly repayment terms and a quick payout,” Bankrate.com advises. Personal loans are accessible, easy to find, do not require collateral, and typically pay for the entire project at hand.
- Apply for a home equity line of credit (HELOC). HELOCs are flexible. Take just “what you need, when you need it,” Bankrate continues. HELOCs have low-interest rates and are best suited for upgrades that may take months, like extensive landscaping and hardscaping or a lengthy full-room renovation.
- Why not charge it? If you have good credit and responsibly keep up on your credit card payments, it is entirely possible to charge some of the upgrades on your home. Ideally, try to charge small home improvement projects, like replacing bathroom cabinets or purchasing the paint and supplies to repaint multiple rooms. Keeping it to small projects will ensure that you can make payments, keeping your interest rates low and your debts in-line.
- Do you qualify for a government loan? If you purchase a home that needs upgrades — and particularly upgrades to make it livable — you may qualify for government loans. For example, homeowners may be eligible to receive up to $25,000 without equity thanks to HUD Title 1 Property Improvement Loans. Use these loans to make strictly necessary repairs, like roofing repairs, or upgrades that make your home “more livable,” like installing new appliances or making energy-efficient improvements.
Choose Projects With A High ROI
Helpful financial tips make it known: it is not just about the short-term. For the best possible financial health, you need to consider the bigger picture. That means making household upgrades that pack a large return on investment (ROI) or resale value.
What home improvement projects have the highest ROI? Generally speaking, upgrades to your property that improve your home’s exterior or curb appeal come along with high resale value. For insistence, replacing your garage door may have an ROI as high as 98%. Other exterior improvements, like replacing siding and rooftops, can be a wise investment as well. Siding projects average an ROI of 97%, while the cost of replacing residential roofing may be entirely recouped — plus some. According to Home Advisor, the ROI on a new roof has the potential to reach 109%. On top of that, roof replacements can eliminate the need for unnecessary repairs, like drywall or flooring repairs you may need if you have an old, leaky roof.
Inside, bathroom and kitchen remodels have the highest ROIs. Homeowners — new and existing ones — tend to spend the most time in these rooms, making them the most sensible to sink money into.
Join the thousands perfecting the interior and exteriors of their home in recent months. Make sure your finances are in-line first. Follow these helpful financial tips or reach out to a financial advisor about your options for funding upgrades to your property and making these upgrades as economically as possible.