Budgeting
Establishing a budget is an important step in the remodeling process, and it involves more than determining how much money you have, or want, to spend. Additional factors, including the current value of your home and how long you plan to stay there, should have bearing on your budgeting decisions because they will help you set a sensible budget goal.
Setting a Budget Goal
How much should you spend on your kitchen project? Real estate professionals offer the following rough guidelines, based on the market value of your home before the remodel and the complexity of your project.
• For a full, down-to-the-wall-studs kitchen remodeling job with a general contractor and all new materials and fixtures, plan to spend 10 percent to 20 percent of your home’s value ($15,000 to $30,000 for a $150,000 home);
• For a full remodel that includes an addition to your house, plan to spend up to 35 percent of your home’s value ($52,500 for a $150,000 home);
• For a simple cosmetic makeover, plan to spend at least 2 percent of your home’s value ($3,000 for a
$150,000 home).
Do these sound like huge sums of money? There are good reasons to invest in a new kitchen. A remodeled
kitchen is one of the few home improvements that translates directly into a higher market value for your home. Even if you plan to sell in the near future, you’ll enjoy the improvements until that time, and the kitchen’s new look may help make the sale when the time comes. However, it’s probably wise to scale back on the project if you plan to sell immediately. If you’ll be keeping your home for many years, the investment risk of the project lies in your enjoyment of the new kitchen. But with thoughtful planning and careful selection of appliances and materials, you’re sure to get a great return on your investment over the years. While it may be best to pay for a remodel with disposable income—that is, accumulated savings—there are several legitimate ways to pay for an improvement project and even more ways to reduce and manage the cost of a new kitchen.
Major appliances are likely to account for a big percentage of your total kitchen remodeling budget. But unlike other aspects of the project, you have a great ability to control the costs of appliances by choosing inexpensive but dependable models. Consider, however, that expensive, highend ranges and refrigerators are likely to last longer, both functionally and stylistically.
Appliance Costs
Side-by-Side Refrigerator: $900 to $5,000
Self-cleaning Range: $800 to $2,000
Gas Cooktop: $400 to $6,000
Convection Oven: $1,000 to $4,000
Range Hood: $100 to $2,500
Dishwasher: $200 to $1,500
Double-basin sink: $300 to $2,000
Faucet with Sprayer: $100 to $400
Estimating Costs
Begin your budgeting process by estimating the cost of your ideal kitchen, as you’ve envisioned it so far, including appliances, countertops, cabinets, flooring, lighting, and miscellaneous materials. Note that the cost figures for products and services can involve guesswork; minimize it by checking the prices in appliance stores and building centers, and ask contractors about their rates. Also add any additional labor charges you expect, such as interior design, cleanup help, and trash hauling. Finally, total all your costs, then add a 10 percent to 20 percent contingency fund to the total. The contingency fund is essential: few remodeling projects come in exactly on budget, and it’s difficult to list every expense at this stage, so keep your estimates on the high side to avoid any unpleasant surprises.
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