The Hidden Costs of Home Renovations
By Mary Lanaux
Anyone who’s completed a major home renovation will tell you: it’s the most fun in the beginning planning and designing phases. That’s when you get to imagine the finished product, fantasize what it will be like to live in this new and improved home, and all the while, the budget is still intact.
And during the planning and fantasizing phase, you are likely setting aside money, getting financing, and approving allowances in the construction estimate for finishes, fixtures, and appliances. But there are additional costs of a major home renovation that go beyond labor and materials. Don’t forget to consider how regular living expenses will fluctuate during the construction months. Having a plan for how to handle extra outflows will help you feel more prepared for the overall disruption and help you have extra funds for the inevitable overages.
If you have to move out…
If a home renovation requires you to move out, you are probably budgeting for temporary housing – be it a short-term rental, extended stay accommodations, or a relative’s guest house. Here are a few other line items you should add to your budget:
It’s hard to swallow at the beginning of a construction project when everything seems to be going well and promises are being kept, but delays should be expected. Completion dates can be moved back by weeks or months due to circumstances sometimes out of anyone’s control. So, having money ready to cover another month’s rent (and hopefully not anymore) will take the sting of the longer wait feel less painful.
Be sure to ask the general contractor what utilities will still need to be running during the renovation – at the very least, expect it to be water and temporary power. Then, call the power company for a monthly estimate of a temporary connection. Often it can be just as much as a regular power bill. Going through this exercise will help you plan and budget for the monthly utility bills that you’ll be paying at the house being renovated, AND the house you are renting.
Budgeting for fuel is a challenge in itself, but it’s easy to be caught off guard during a home renovation if you don’t consider any additional miles you are driving due to living in a different location. Best case scenario, your daily destinations are closer to your temporary housing. If, however, your rental is farther, you’ll want to account for the extra miles you’ll be driving each month and add funds for extra fuel accordingly.
Double moving costs
Hopefully, this is a no-brainer. If you hire movers to move out of a house to renovate, you will have to hire movers to move back in. At the end of the project, when overage costs have likely crept in, the cost of moving home might be a little trickier to manage. Think about setting aside that money upfront and double the moving company’s initial estimate. Better yet, negotiate the price of two moves at once.
Bonus item: storage unit
When looking for rental houses, think about the difference in square footage between your current home and this temporary one. Will all your furniture fit? Will you need to budget for a monthly storage unit expense? It’s often an additional cost that homeowners don’t plan for until the need arises on moving day.
If you stay during renovations…
If your renovation doesn’t require you to move out, there are still additional living expenses to consider and prepare for. While the disruption will only be temporary, it can sometimes feel expensive.
Extra eating out
It starts with the best intentions. You are renovating the kitchen, so you set up a crockpot, hot plate, and electric griddle in the dining room. You wash dishes in the bathtub. The novelty and ingenuity of it get you through the first few weeks, and then it gets old quickly. Go ahead and plan on extra spending on restaurants and takeout.
As mentioned previously if you are moving out, the same principle applies if you are living in a construction zone – power tools need plenty of power. Expect the monthly kilowatt usage to increase.
In the case of staying home and having to move furniture out of a room or two, the contents of those rooms need a place to go. If there is extra storage in another part of the house, great! If your sanity would be spared by having less stuff to look at, a storage unit is the way to go. But, as it’s a known strategy to expect delays, having budget allocated for an extra month of storage is the way to go.
When it comes to renovations, homeowners come to expect the unexpected and roll with the punches. There is no doubt that time and expense are the hardest parts to manage. Seeing the total cost beyond what’s being paid to the contractor can help tremendously in setting realistic expectations.