Deciding how much to spend on home remodeling

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randomizer
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Deciding how much to spend on home remodeling

Post by randomizer » Wed Jul 11, 2018 5:46 pm

Our home is about 517k and is in fine condition, but we'd like to make some structural changes to improve our quality of life. The major two are big overhauls of kitchen and bathroom (specifically, we want to create a combined kitchen/living area and carve out space for a small second bathroom), but giving the whole place an overall facelift and update is also a possibility. For at least the next couple of decades we'll be living here (us and our kids-which-will-hopefully-grow-to-be-adults-with-us).

So far we have quotes from three architects who can do the design work, get permits and coordinate the actual remodeling work.

The question I am trying to figure out is what budget we should be shooting for, and what kinds of decision frameworks people use to make up their minds about this kind of thing. Given the quotes we have, the range we're looking at is anywhere from around 60k to 120k, depending on how "comprehensive" we want to make the renovation. Basically, it's a choice between doing the minimal thing now to obtain our most desired features, with the option of pursuing other projects in the following years, or trying to get everything "done" (as "done" as these things ever are) all at once.

Any tips for framing and thinking about the trade-offs?

Probably relevant: we have a lot of income/work uncertainty at the moment, not clear where we'll be working 1, 5, 10 years from now, doing what, or how much we'll be earning, but we do have a fair chunk of change saved (close to the 120k upper bound mentioned above) specifically with the remodel in mind. Our retirement accounts are basically non-existent at this point, but we do have about 50% of the money we think we'd need for retirement in a taxable account, and no plans to touch it.
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ResearchMed
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Re: Deciding how much to spend on home remodeling

Post by ResearchMed » Wed Jul 11, 2018 6:21 pm

randomizer wrote:
Wed Jul 11, 2018 5:46 pm
Our home is about 517k and is in fine condition, but we'd like to make some structural changes to improve our quality of life. The major two are big overhauls of kitchen and bathroom (specifically, we want to create a combined kitchen/living area and carve out space for a small second bathroom), but giving the whole place an overall facelift and update is also a possibility. For at least the next couple of decades we'll be living here (us and our kids-which-will-hopefully-grow-to-be-adults-with-us).

So far we have quotes from three architects who can do the design work, get permits and coordinate the actual remodeling work.

The question I am trying to figure out is what budget we should be shooting for, and what kinds of decision frameworks people use to make up their minds about this kind of thing. Given the quotes we have, the range we're looking at is anywhere from around 60k to 120k, depending on how "comprehensive" we want to make the renovation. Basically, it's a choice between doing the minimal thing now to obtain our most desired features, with the option of pursuing other projects in the following years, or trying to get everything "done" (as "done" as these things ever are) all at once.

Any tips for framing and thinking about the trade-offs?

Probably relevant: we have a lot of income/work uncertainty at the moment, not clear where we'll be working 1, 5, 10 years from now, doing what, or how much we'll be earning, but we do have a fair chunk of change saved (close to the 120k upper bound mentioned above) specifically with the remodel in mind. Our retirement accounts are basically non-existent at this point, but we do have about 50% of the money we think we'd need for retirement in a taxable account, and no plans to touch it.
Two things jumped out at me.

First is where you stated "For at least the next couple of decades we'll be living here", but then you state "not clear where we'll be working 1, 5, 10 years from now" (not even next year?).
DO you really plan to be in this house for decades?

Second, you mentioned that your "retirement accounts are basically non-existent" but then mention you already have half of what you'd need in taxable accounts! :happy
"Retirement accounts" typically refer to a "type" of account that is tax deferred.
But "spendable retirement money " is what one will have after money is removed from tax-deferred accounts so it can be *spent*. Don't focus so much on what the account is "called".
So you actually have "more money" to spend in retirement than if you had that same number of dollars in tax-deferred (often referred to a "retirement accounts").
People can and do spend money from tax-deferred accounts in ways that have nothing to do with retirement (and sometimes that type of use does not help retirement at all!).
Money is fungible. A dollar doesn't know where it came from or where it is stored.

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randomizer
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Re: Deciding how much to spend on home remodeling

Post by randomizer » Wed Jul 11, 2018 6:27 pm

ResearchMed wrote:
Wed Jul 11, 2018 6:21 pm
Two things jumped out at me.

First is where you stated "For at least the next couple of decades we'll be living here", but then you state "not clear where we'll be working 1, 5, 10 years from now" (not even next year?).
DO you really plan to be in this house for decades?
Yeah, sorry. I could have made that clearer. We really do plan to be in the house for decades. The thing about work is we can't be sure of what company or even field we'll be working in in the future. Not going to move for work; will have to maintain jobs in the area.
Second, you mentioned that your "retirement accounts are basically non-existent" but then mention you already have half of what you'd need in taxable accounts! :happy
"Retirement accounts" typically refer to a "type" of account that is tax deferred.
But "spendable retirement money " is what one will have after money is removed from tax-deferred accounts so it can be *spent*. Don't focus so much on what the account is "called".
So you actually have "more money" to spend in retirement than if you had that same number of dollars in tax-deferred (often referred to a "retirement accounts").
People can and do spend money from tax-deferred accounts in ways that have nothing to do with retirement (and sometimes that type of use does not help retirement at all!).
Money is fungible. A dollar doesn't know where it came from or where it is stored.
Yeah, when I said "retirement" I was specifically referring to tax-advantaged accounts (basically empty, like I said). We have money in taxable accounts, probably about half as much as we'd want for when we retire, whenever that will be (that depends on our income, which is hard to predict at this point). And separately from that money which has been earmarked for retirement, we have the money I mentioned saved up for the remodel.
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Carefreeap
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Re: Deciding how much to spend on home remodeling

Post by Carefreeap » Wed Jul 11, 2018 7:13 pm

I generally shoot for mid-range. I like durable materials (Silestone, good cabinets) but will go for a mid-range appliances, inexpensive field tile with a little accent for flooring and so on. One problem with higher end materials is that they often require higher maintenance and aren't as durable.

60k-120k is a big spread. What is an example of a trade-off you could do later?

I've done quite a few remodels over the years and would be inclined to just do it once. Living in a house that's being remodeled is a PITA especially a kitchen.

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Re: Deciding how much to spend on home remodeling

Post by stan1 » Wed Jul 11, 2018 7:24 pm

Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.

It's very difficult to tell how much what you like will cost. We searched every store in our Metro area for porcelain tile to use on our first floor. We finally found something we liked and figured it would be $12-15/sq foot before install/shipping/tax (because it looked nice). Turned out it was half that. On the other had we also looked for a light fixture to put over our kitchen island for almost as long. When we found something everyone liked it was $2200. We happily paid for it and it is a signature focus of the kitchen which we enjoy.

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Re: Deciding how much to spend on home remodeling

Post by Grt2bOutdoors » Wed Jul 11, 2018 7:37 pm

stan1 wrote:
Wed Jul 11, 2018 7:24 pm
Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.
+1 And even if they talk to a builder, even the builder may not get it precisely. So be prepared to be shocked.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

TheNightsToCome
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Re: Deciding how much to spend on home remodeling

Post by TheNightsToCome » Wed Jul 11, 2018 7:42 pm

stan1 wrote:
Wed Jul 11, 2018 7:24 pm
Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.

It's very difficult to tell how much what you like will cost. We searched every store in our Metro area for porcelain tile to use on our first floor. We finally found something we liked and figured it would be $12-15/sq foot before install/shipping/tax (because it looked nice). Turned out it was half that. On the other had we also looked for a light fixture to put over our kitchen island for almost as long. When we found something everyone liked it was $2200. We happily paid for it and it is a signature focus of the kitchen which we enjoy.
"Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K"

+1

If you've only spoken with architects who are not integrated into design-build firms, then you should assume that the actual costs will be much higher. Even after you receive the (higher) price from your general contractor, you should expect the final cost to exceed that initial quote (due to problems uncovered during the remodel and/or changes you decide to make as the work progresses).

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Re: Deciding how much to spend on home remodeling

Post by TheNightsToCome » Wed Jul 11, 2018 7:43 pm

Grt2bOutdoors wrote:
Wed Jul 11, 2018 7:37 pm
stan1 wrote:
Wed Jul 11, 2018 7:24 pm
Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.
+1 And even if they talk to a builder, even the builder may not get it precisely. So be prepared to be shocked.
Great minds think alike. :beer

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Re: Deciding how much to spend on home remodeling

Post by Grt2bOutdoors » Wed Jul 11, 2018 7:47 pm

TheNightsToCome wrote:
Wed Jul 11, 2018 7:42 pm
stan1 wrote:
Wed Jul 11, 2018 7:24 pm
Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.

It's very difficult to tell how much what you like will cost. We searched every store in our Metro area for porcelain tile to use on our first floor. We finally found something we liked and figured it would be $12-15/sq foot before install/shipping/tax (because it looked nice). Turned out it was half that. On the other had we also looked for a light fixture to put over our kitchen island for almost as long. When we found something everyone liked it was $2200. We happily paid for it and it is a signature focus of the kitchen which we enjoy.
"Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K"

+1

If you've only spoken with architects who are not integrated into design-build firms, then you should assume that the actual costs will be much higher. Even after you receive the (higher) price from your general contractor, you should expect the final cost to exceed that initial quote (due to problems uncovered during the remodel and/or changes you decide to make as the work progresses).
+1 I learned that lesson, my architect called it the price of running into "unforeseen conditions". You can't see what is beyond walls until you open it up. :oops:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

wilked
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Re: Deciding how much to spend on home remodeling

Post by wilked » Wed Jul 11, 2018 7:49 pm

I'm still confused - how do you have no retirement money but half what is needed for retirement in savings? I ask as I think that will pertain to ability to afford a big expense like this

stan1
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Re: Deciding how much to spend on home remodeling

Post by stan1 » Wed Jul 11, 2018 8:21 pm

All at once or smaller pieces over time: There are pros and cons of either, but one thing to keep in mind is that everything is done in layers, so if you want to make any changes later to inner layers like framing, plumbing and electrical that impact the outer layers like floor or paint you need to plan ahead and maybe in some cases have to redo work that has already been done. For that reason we did our entire first floor at the same time. We set up a microwave oven in the master bath and were able to keep a fridge/freezer plugged in downstairs with the crew moving it when it got in the way. Big caveat: I was alone for the 10 weeks it took from start of demo to final install of appliances & we don't have kids. If you have kids (young or not) you may want to consider moving your family into temporary housing and getting the whole job done as quickly as possible. That's yet another cost. The upstairs was filthy and it took months of repeated cleaning to get it back. I would not want to do that multiple times either.

Also, the contractor may tell you the kitchen will be out of service for "just" 3 weeks but there are many things that can go wrong. The work in a kitchen has to be highly sequenced. In my case we were missing a cabinet that took 4 weeks to show up from the factory in Pennsylvania. Because of how it was situated the contractor and I agreed we needed the cabinet installed before we could measure the countertop. Then another week to get it cut and installed. After that the plumbing could be hooked up at the sink and the appliances could be installed.

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randomizer
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Re: Deciding how much to spend on home remodeling

Post by randomizer » Wed Jul 11, 2018 11:03 pm

wilked wrote:
Wed Jul 11, 2018 7:49 pm
I'm still confused - how do you have no retirement money but half what is needed for retirement in savings? I ask as I think that will pertain to ability to afford a big expense like this
I mean I have basically nothing in tax-advantaged accounts, and my retirement savings are all in taxable accounts, where I am about half-way to my goal amount (25x or 30x depending on what age I retire at).
Carefreeap wrote:
Wed Jul 11, 2018 7:13 pm
60k-120k is a big spread. What is an example of a trade-off you could do later?
An example of 60k would be to do the kitchen and bath and stop there. Moving towards 120k would mean continuing to tackle more of the house (for example, moving a wall to better redistribute the space across the bedrooms, or adding some storage etc). Of course the extent of the remodel is only one variable we can make choices about; the other main one is in terms of quality or priciness of the materials (and for that, we're probably going to settle on something that could be considered "reasonable").
TheNightsToCome wrote:
Wed Jul 11, 2018 7:42 pm
stan1 wrote:
Wed Jul 11, 2018 7:24 pm
Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K when you talk to a builder and select your finishes and fixtures. Especially if you are looking at structural changes like taking out walls or moving the kitchen in an area with high cost and short supply of skilled labor.

It's very difficult to tell how much what you like will cost. We searched every store in our Metro area for porcelain tile to use on our first floor. We finally found something we liked and figured it would be $12-15/sq foot before install/shipping/tax (because it looked nice). Turned out it was half that. On the other had we also looked for a light fixture to put over our kitchen island for almost as long. When we found something everyone liked it was $2200. We happily paid for it and it is a signature focus of the kitchen which we enjoy.
"Architects are not always good at estimating cost, so your $60-120K range could actually be $120-200K"

+1

If you've only spoken with architects who are not integrated into design-build firms, then you should assume that the actual costs will be much higher. Even after you receive the (higher) price from your general contractor, you should expect the final cost to exceed that initial quote (due to problems uncovered during the remodel and/or changes you decide to make as the work progresses).
Yep, these are all useful words of caution. The architects we've spoken to have contractors that they habitually work with, but I fully expect unforeseen changes to be required, issues to be exposed, and I know that I have to go in this with the expectation that things will come in behind schedule and over budget; that in itself is probably reason to aim for the lower end of the scale.
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Re: Deciding how much to spend on home remodeling

Post by RadAudit » Thu Jul 12, 2018 6:47 am

randomizer wrote:
Wed Jul 11, 2018 5:46 pm
I am trying to figure out is what budget we should be shooting for,

If this is any help, my wife is remodeling the house. What I've noticed so far is that first you get to buy your house and then you get to buy it again.

Now in all fairness, the house is 33 years old and needed new siding, windows, flooring, and upgrades in two and 1/2 bathrooms and the kitchen. No structural work so far.

Best wishes.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The Calvary isn't coming, kids. You are on your own.

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!

Post by pennywise » Thu Jul 12, 2018 7:06 am

Remodeling is hugely stressful, messy, complicated, disruptive and did I say stressful? For that reason if you have the means, I advise doing everything you want/can afford to do as one major project rather than tackling something now, something in a few years etc.

Agree with others' advice to try not to get mentally sucked into spending for top of the line on everything you are doing. When I remodeled my kitchen and bathrooms I was very prone to spending for the most expensive materials and products because after all, it was NEW! and it needed to be THE BEST!

While I can't say I regret spending for quality, there are many areas in which good enough is good enough. Next time I remodel I won't be so quick to seek out the ne plus ultra when a good old Home Depot alternative may be just fine :wink: .

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Re: Deciding how much to spend on home remodeling

Post by jharkin » Thu Jul 12, 2018 7:25 am

Yeah, there is not a lot of information to go on here. $120k to do both a full kitchen and add a bath on a 500k house... sounds cheap to me, frankly. But it depends on where you are located, how big the house is, what local construction costs are. Where I live 500k will barely buy a 1600sq ft colonial, and construction costs are so high I'm spending $15k just to replace an asphalt roof.

In a cheap area like Florida, that same 500k might buy a McMansion and the construction dollar goes much further....

But that's only half the answer... once you figure out the reasonable cost for the planned work, you have to decide if that cost is affordable. And we cant answer that either without a lot more detail. Doing $120k of work on a $500k house might be no big deal if its paid off, you make 200k+ and have a million saved for retirement. If you are just scraping buy only making 5 figures its definitely not affordable. And there are so many other variables like job security, kids to get through college, your ages, etc..........

pennylane
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Re: Deciding how much to spend on home remodeling

Post by pennylane » Thu Jul 12, 2018 7:28 am

Good rule of thumb; don’t spend more than 10% of the Homes value.

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Re: !

Post by Carefreeap » Thu Jul 12, 2018 10:20 am

pennywise wrote:
Thu Jul 12, 2018 7:06 am
Remodeling is hugely stressful, messy, complicated, disruptive and did I say stressful? For that reason if you have the means, I advise doing everything you want/can afford to do as one major project rather than tackling something now, something in a few years etc.

Agree with others' advice to try not to get mentally sucked into spending for top of the line on everything you are doing. When I remodeled my kitchen and bathrooms I was very prone to spending for the most expensive materials and products because after all, it was NEW! and it needed to be THE BEST!

While I can't say I regret spending for quality, there are many areas in which good enough is good enough. Next time I remodel I won't be so quick to seek out the ne plus ultra when a good old Home Depot alternative may be just fine :wink: .
Lol at the bolded and your user name. :D

We found that it was actually cheaper to go to our local kitchen and bath design place than to buy cabinets through Home Depot. Better quality and he stood by us when the order didn't come in as expected.

We just finished up a family room/laundry room/bath remodel. I love my laundry room cabinets but had we listened to our contractor we probably could have gotten away with "good enough" cabinets for less than half the cost.

My project score? Real slate title @1.50 sq.ft. at Lowes. Gorgeous and durable and about $.50 sq.ft. cheaper than most porcelain tile.

It pays to shop around!

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Re: Deciding how much to spend on home remodeling

Post by imyeti2 » Thu Jul 12, 2018 10:50 am

I'd visit other homes in the neighborhood during opens houses and get a feel for price and condition of homes in your area. Meet with a real estate agent to find out what your home will sell for after doing all the changes you plan on doing. I always look for what the market is willing to bear in my neighborhood and make plans accordingly. If you decide to sell in a few years and do an expensive reno, you'll not get all your money back.

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Re: Deciding how much to spend on home remodeling

Post by 220volt » Thu Jul 12, 2018 11:04 am

So where will that 60-120k remodeling money come from? Second mortgage, the line of equity or a taxable account? Neither of those is appealing really. Especially when you have job uncertainty in a hot economy. Imagine job uncertainty when things start cooling down.

We are in a similar situation where we are thinking of remodeling kitchen and bathrooms. We are also halfway to our goal between retirement and taxable accounts. But we decided it is not wise to spend a lot of money on remodeling all at once. We will probably spread it around over few years. Couple of thousand each year on a different project. Paint the cabinets instead of replacing. Get a nice backsplash instead of knocking down the wall making it into open kitchen. Paint the bathroom cabinets instead of replacing etc... Because right now having cash and piece of mind to us is more important than what our kitchen looks like.
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

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randomizer
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Re: Deciding how much to spend on home remodeling

Post by randomizer » Sat Jul 14, 2018 3:00 am

imyeti2 wrote:
Thu Jul 12, 2018 10:50 am
I'd visit other homes in the neighborhood during opens houses and get a feel for price and condition of homes in your area. Meet with a real estate agent to find out what your home will sell for after doing all the changes you plan on doing. I always look for what the market is willing to bear in my neighborhood and make plans accordingly. If you decide to sell in a few years and do an expensive reno, you'll not get all your money back.
Yeah, I'd say the odds of selling in the next few years are about 0.0001%. Buying the house was painful enough; don't think I'd want to go through all that again, so planning on holding on to this one pretty much forever. For us the renovation isn't about improving our investment (we don't view it as an investment so much as a roof over our heads) but rather improving our quality of life.
220volt wrote:
Thu Jul 12, 2018 11:04 am
So where will that 60-120k remodeling money come from? Second mortgage, the line of equity or a taxable account? Neither of those is appealing really. Especially when you have job uncertainty in a hot economy. Imagine job uncertainty when things start cooling down.

We are in a similar situation where we are thinking of remodeling kitchen and bathrooms. We are also halfway to our goal between retirement and taxable accounts. But we decided it is not wise to spend a lot of money on remodeling all at once. We will probably spread it around over few years. Couple of thousand each year on a different project. Paint the cabinets instead of replacing. Get a nice backsplash instead of knocking down the wall making it into open kitchen. Paint the bathroom cabinets instead of replacing etc... Because right now having cash and piece of mind to us is more important than what our kitchen looks like.
We have about 100k sitting in a savings account expressly set aside for remodeling. One of the reasons I'm asking for input here is because I want to because it's a lot of money and I don't like to leap into these things without being informed. It may be that we should be more modest in our intentions and shoot for a smaller scale remodel. I'd really like to get it all done comprehensively, but not if it's going to blow our budget, which it sounds like it could do due to unexpected charges.
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Re: Deciding how much to spend on home remodeling

Post by Grt2bOutdoors » Sat Jul 14, 2018 3:47 am

jharkin wrote:
Thu Jul 12, 2018 7:25 am
Yeah, there is not a lot of information to go on here. $120k to do both a full kitchen and add a bath on a 500k house... sounds cheap to me, frankly. But it depends on where you are located, how big the house is, what local construction costs are. Where I live 500k will barely buy a 1600sq ft colonial, and construction costs are so high I'm spending $15k just to replace an asphalt roof.
Materials for your roof are a fraction of the cost - about $3-3.5k, the rest is labor and profit margins on roofs are high. How high? Close to 50%. Asphalt shingle, underlayment, venting, ice shield, even new decking, not that costly. The roofing contractors charge a lot because this is peak season and it can be dangerous.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Re: Deciding how much to spend on home remodeling

Post by Grt2bOutdoors » Sat Jul 14, 2018 3:53 am

randomizer wrote:
Sat Jul 14, 2018 3:00 am
imyeti2 wrote:
Thu Jul 12, 2018 10:50 am
I'd visit other homes in the neighborhood during opens houses and get a feel for price and condition of homes in your area. Meet with a real estate agent to find out what your home will sell for after doing all the changes you plan on doing. I always look for what the market is willing to bear in my neighborhood and make plans accordingly. If you decide to sell in a few years and do an expensive reno, you'll not get all your money back.
Yeah, I'd say the odds of selling in the next few years are about 0.0001%. Buying the house was painful enough; don't think I'd want to go through all that again, so planning on holding on to this one pretty much forever. For us the renovation isn't about improving our investment (we don't view it as an investment so much as a roof over our heads) but rather improving our quality of life.


We have about 100k sitting in a savings account expressly set aside for remodeling. One of the reasons I'm asking for input here is because I want to because it's a lot of money and I don't like to leap into these things without being informed. It may be that we should be more modest in our intentions and shoot for a smaller scale remodel. I'd really like to get it all done comprehensively, but not if it's going to blow our budget, which it sounds like it could do due to unexpected charges.
If you plan on $90k, you’d better have 1.25-1.50x saved up and dedicated to it. The two most costliest things in home remodeling - unforeseen conditions and change orders. Be firm on what fit and finishes you choose and don’t deviate, each change begets another - been there, done it. It adds up and quickly. Go look at the price of plumbing fixtures, valves, toilets. Kitchen cabinets - can be off the wall pricey.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

gd
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Re: Deciding how much to spend on home remodeling

Post by gd » Sat Jul 14, 2018 6:06 am

My remodeling experience has been more renovation than fundamental changes of the space but I've always tilted towards finessing vs. gutting systems, and always regretted it later. I try to use my standard estimating technique from my days in software development-- do your best honest, good faith, dead-nuts accurate estimate of time/cost, then... add 50%.

The one decision I've always stood by is that my house is mine, for my life. Somebody else prefers my house a certain way, they can give me some cash for their purchase and then we'll talk.

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