My wife and I are going to start Renovating our home in January. I thought it would be good to document the process that we are going to go through, and provide information about it from start o finish. I want people to get a good feel for home renovations, what are the steps in the process, and things to expect. I will have lots of information and pictures as we go through the process and talk about the good and challenges that we faced.
This first blog entry is going to be about how we started the process. As we go through this renovation, I am going to be very honest and upfront about all parts of the it. In order for people to understand how it works – I need to be completely upfront about everything.
We bought our house in Smyrna June 2006. If was a three bedroom and one bath House. The house was 1100 square feet. Renovating our home was always a goal when we bough it and we are renovating because we have two kids and there is no space. We had plans to renovate it shortly after we bought it but the Market tanked and we had to wait. During that time we owned it we enclosed an exterior laundry room and stoop, to make a half bath, laundry room, and mudroom.
Before you start thinking about renovating there are four things that my wife and I did.
- We researched different renovation loan programs – and talked to lenders about the different ones. This helped us to decide what loan best fits what we need.
- We talked about our budget – We needed to make sure that the new loan amount was going to fit into our budget. I have included a copy of my blank excel budget and it has all the calculations. All you have to do is change the categories to fit your budget and put in the numbers and it will calculate it calculations below. We looked at our incomes, expenses, and places to cut the budget. If you want something bad enough you are willing to make sacrifices. Here is what we came up with:
- My income has increased over the last few years – due to the market changing, so we factored that in.
- My wife got a raise so we could factor in that amount.
- My son started middle school, we saved $140 a month because the After School Program bill was gone.
- I changed my student loan program and got my loan at a fixed rate and it dropped it by $133.00
- We also decided that we would try and reduce our monthly budget for food, but without sacrificing quality. Our food bill was somewhere in the neighborhood of 700-800 a month. We used to shop at Kroger, Costco (we do from time to time), Publix. The costs were high. Now we shop at the Cobb International Market for fruits and vegetables, Aldi for a majority of other things, and then the last few items we go to Kroger. This has reduced our budget from $175-$190 a month to $125 – $135. We did not sacrifice quality and still get all the same fruits, vegetables, eggs, etc.
- We reduced our car insurance – $50
- We are looking into ways to cut cable – I cannot stand cable and we are looking for cheaper alternatives.
- So far, we have saved and added through raises – $618. We have made some sacrifices but our quality of life has not changed.
- We made sure the renovations can be supported by recent comparable properties. This is very important. Since I am a Realtor, I have the tools to evaluate the market. I studied the market to make sure that:
- The renovations are in line with other homes in the neighborhood
- The cost of the renovation project would be under what the appraisal should be
- The comparable homes sales – make sure they are in line with your final numbers for your renovations and mortgage. Read more about how to determine market value of your home.
Do your due diligence when looking at comparables. The last thing you want to do is spend money on an architect (depending on size of renovation) and appraisal to find out you can’t renovate. Make sure you renovate to the scale of the other homes. This means, do not put in a $40,000 custom kitchen if all the other homes have basic cabinets and laminate counter tops.
- Decide how long you are going to live in the house. My wife and I have plans to live in our house for a long time. If you have plans on being in your home for 3-5 years then you might do some basic renovations. The longer you stay the more appreciation and value you will get.
Keep this in mind. If you are renovating your home in downtown Atlanta, like Candler Park, it will cost more money than if you are renovating your home in Marietta. A lot of time it depends on the area. The higher the home prices usually the renovation prices are going to be higher. To get a good idea on renovation costs in Metro Atlanta look at Atlanta GA Remodel Cost Spec Sheet From HomeWyse.
So these were the first steps we took to evaluate and decide if we could and wanted to renovate and to what level of renovations we will be able to do.
Next up: Interviewing, hiring, and working with an architect.
Blank Excel Budget
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