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How to Protect Yourself from Renovation Mistakes That Can Cost You Time and Money

Posted by Walnut Street Finance Team on Nov 15, 2018

Setting out to do a home renovation project can be a costly and time-consuming process, even if you’re confident you know what you’re doing. Contractors tend to see the same mistakes over and over again. Here are five of the most common mistakes and how to avoid and/or fix them during your renovation project.

Mistake #1: Not considering your return on investment

house with for sale sign

If you fix and flip homes on a regular basis, you know how important it is to recoup as much of a return on investment (ROI) as you possibly can. It’s good to keep in mind that even though a renovation can cost thousands of dollars, the value of the home is unlikely to increase by the same amount.

According to a recent cost vs. value report in Remodel Magazine, “the cost to add a new bathroom is around $42,000, but homeowners typically only recoup about 56% of that cost in increased home value,” whereas a minor kitchen remodel will give homeowners almost 85% return on investment.

Mistake #2: Not having a budget

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Odds are good you don’t have unlimited funds, whether you’re fixing and flipping or renovating the home you’re going to live in. If you don’t create a budget, you could find yourself in financial trouble fairly quickly. You don’t have to nail everything down to the last penny, but having rough estimates of what things are probably going to cost can be very helpful.

You’ll want to build some room in your budget for things you weren’t anticipating, like having to repair plumbing or electrical.

As your project progresses, you may have to cut back in certain places, like downgrading shower tile or putting in less expensive flooring to leave more room in the budget for structural repairs, should any arise.

When renovating a house, there are no guarantees and it’s not possible to plan for every eventuality, but you can always find places to cut back while still creating a nice space for people to live in.

WATCH THE VIDEO [Ask Melissa: How do I determine my renovation budget?]

 

Mistake #3: Not doing your homework

Under construction

This has been mentioned many times in many places, but it always bears repeating. Do your homework when it comes to researching contractors and designers. Don’t just hire the first person listed in the phone book. Get estimates from several companies, but don’t just look at who’s offering the lowest price.

Consider how long they take to get back to you when you call or email. If they have a showroom you can visit (such as for tile or appliances) consider how helpful they were in person. Ask friends and family for recommendations. But most importantly, go with your gut. Whether you’re meeting with a contractor in person or chatting with them on the phone, you’ll get a vibe that tells you whether or not they’ll be a good fit for your project.

Mistake #4: Not choosing neutral finishes

Man holding a set of paint color swatches in all the colors of the spectrum splayed out in his hand as he tries to decide on a new color for his house

This is especially key if you’re doing a fix and flip. It’s important to remember that you won’t be the one living in the house, so choosing the turquoise tile for the shower because you love it probably isn’t the best move. You don’t have the pick the most boring finishes available; the house should still have some personality for potential buyers, but stick with neutral colors and timeless styles for finishes and furniture.

It’s easy to get sucked in by all the options, but do your best to remain neutral. Likewise, you don’t necessarily want to pick the cheapest finishes available, either. It will show in the workmanship and style of the house. You want to land somewhere in the middle on price and personality.

Mistake #5: Not considering workflow

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Before starting your renovation, walk through the house and consider how the people living there might use it. If you’re fixing and flipping, put yourself in the shoes of a few potential buyers and see how things feel; consider if the family has kids or pets, or if they’re taking care of an older relative.

Considering workflow is particularly important in the kitchen. This is where people tend to spend most of their time, and everyone knows it’s where guests immediately gather during a party, so it’s wise to allot as much of the budget as possible to this space. Upgrading finishes and appliances in here can be a smart move, giving you a good return on investment and increasing the value of the home, which, if you’re fixing and flipping, can often mean a higher asking price.

A Final Note

These are just a few of the mistakes that can end up costing you time and money, but do your best not to overthink it. It all comes back to trusting your gut. You’ll learn as you go and always do better next time.

Walnut Street Finance Team

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