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How To Successfully Budget For A Home Renovation In The Greater Chicago Area

How To Successfully Budget For A Home Renovation In The Greater Chicago Area

Is now the right time for a home renovation? Understanding the various factors that go into the cost is key to answering that question. Home improvement projects require significant resources, including your time, money, and emotions. To budget wisely, you must understand more than just the bottom line.

Here’s what you need to know to budget for a home renovation in greater Chicago.

Determine What You Want From a Home Renovation

A home remodeling to-do list can quickly become long and overwhelming. That’s why it is important to break the list down into needs and wants so you can prioritize these items. 

An easy place to start is answering the following question: What are your daily frustrations? For example, are there walls in the main living area that make it hard to track what the children are up to? Are items falling out of cabinets because there’s not enough storage? Do you need more functionality and space in the kitchen?

Defining these sources of frustration will help determine what must be remedied immediately. A conscientious design-build general contractor will take your budget and list of priorities and find solutions that incorporate your design ideas within your budget or clearly explain why these priorities are larger than the budget constraints. If you need a whole house renovation and the wish list is beyond the budget, they will help develop a master plan to tackle these issues over time in several phases.

Modern kitchen remodel with stained cabinetry and stainless steel appliances

Factors That Impact Renovation Cost 

It is tempting to look at friends' and neighbors' home renovation projects and think, “OK, that is what it will cost us to renovate this kitchen or primary bath.” But this is never an apples-to-apples comparison. No two homes are the same, and there are many factors that go into the cost of a renovation.

Common factors that impact renovation costs include:

  • Home Additions: One big factor will be whether you add square footage to the home by adding or reconfiguring the existing floor plan. A home addition may require footings, floor joists, and roof trusses, which will add cost to any project.

  • Floor Plan & Layout: Your home's layout will impact costs. Load-bearing walls may need to be re-engineered, including new beams. Ductwork, plumbing, and wiring may need to be rerouted as old walls are removed, and new structures are built.

  • Finish Materials: Cabinetry, countertops, backsplashes, tile, new flooring, and all of your other finish materials are available at a wide range of prices and quality. The choices you make will affect your budget.

  • Age of the Home: The age of the home will impact costs. Everything from electrical wiring to insulation, HVAC systems, and plumbing must be brought up to your town’s code.

  • Accessibility: Remodeling your home for accessibility will typically increase the cost of the house renovation. Reasons for this include additional structural support needed for things like rails and grab bars. If you are considering a zero-threshold shower, the floor must be designed for wheelchair navigation and proper drainage.

  • Deferred Maintenance: While remodeling is being done, it is the perfect time to catch up on deferred maintenance. For example, the home may have older plumbing that needs to be upgraded to meet code standards. The reverse can be true as well. While you are updating plumbing, electric, or other systems, you can redesign the space to better meet your needs and personal aesthetic. Turn this maintenance job into an opportunity to makeover your bathroom space or upgrade your kitchen. Talk to your design-build contractor about this upfront to avoid doing work out of order.

Should We Pay Out of Pocket or Finance?

Does planning a budget mean having cash in hand to cover the budget? You may choose to go that way, but the good news is that you don’t need to pay 100% of a remodeling project out of pocket. If you do finance the project through a HELOC, a Construction to Permanent Loan, or another loan, you can likely tackle more of the to-do list. The remodeling team can work more efficiently to get more work done while they are there. 

View of kitchen remodel with walnut cabinetry and large windows

Variable Costs that Can Impact Your Budget

Beyond the building part of construction costs, many homeowners don’t take into account costs that may be variable, such as:

  • Design Fees and Architectural Plans: these are figured based on the scope of your project. The level of detail needed for the architectural plans may be dictated by local ordinances. For example, a design commission may need to provide permit approval, and if that is the case, you will need additional design time to cover these details.

  • Permits: Expect permit fees to total around 2-3% of the overall project cost. It’s wise to assume that your home renovation project will require a permit. For example, any project worth over $5,000 in Arlington Heights requires a permit. 

  • Increased Taxes: While home renovations will increase your home’s value, improvements to the home can also mean a tax increase. When you submit permit applications, the county will be alerted to re-evaluate your taxes. Plan for an increase within the coming years. If you add a home addition, you add livable square feet, meaning your taxes will increase. 

  • Appliance Costs: Similar to finish materials, new appliances offer a wide array of options with a significant variable cost.

  • Home Insurance: Depending on the work completed and the square footage added, you may need to increase the amount of coverage you pay for to protect the home in case of damage.

Again, with so many variables involved, it is important to work with a design-build company willing to help you devise a comprehensive master plan to map out your overall home renovation project into phases. A company with a long history of work in your town will be there for you over the long haul if you choose to renovate in stages. 

Image Above:
Before and after photos of Crane's Hollow kitchen remodel by Patrick A. Finn. 

The Time and Emotional Cost of Remodeling

image000000 3While finances are a major factor in a home renovation decision, it is easy to overlook the emotional toll of the decision to remodel or not remodel. Remodeling will mean some level of disruption to your daily routine, but not moving forward with a home remodeling project means ongoing frustration with the challenges that brought you to this decision in the first place. Whether the stress is moisture in the basement, cracks in foundations and walls, or just an overall lack of space, these daily concerns strain emotional well-being and often prevent you from enjoying your home—the one place that should always be your sanctuary.

Many people considering a home renovation project often consider whether they should move to a new home. The time it takes to explore each of these options can be significant. Time and emotions are part of the process. Recognizing this will help you manage these stressors and make the best decision for you and your family.  

Moving Forward With a Clear Financial Picture

Understanding the full financial implications of a renovation will help you choose the right design-build company to work with. Find a partner who will look at your home holistically to help prioritize your highest-level needs and create a new living space that meets those needs while improving your day-to-day life. 

Work with a design-build team that can show you examples of past projects similar to what you envision. They will help you either make changes to your home all in one project or create a master plan that will address your needs while fitting comfortably with your budget and lifestyle and help save money over time.

To begin planning a successful home renovation project, read the budgeting guide “Smart Strategies for Home Renovation Budgeting: A Practical Guide.”