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One of the most popular call-ins for this line of business is for Kitchen & Bathroom Remodels. Bathroom Remodels being right up there because they tend to be cheaper than Kitchen Remodels. Now, don’t get me wrong – these types of projects whether in a Kitchen or Bathroom can get very expensive. More often than not the budget in these types of projects will get blown up because of the materials that homeowners choose to use. Below I’ll talk about a few things you, as the Homeowner, should know and prepare for when getting ready for your Kitchen Remodel. I hope this also helps some young investors trying to learn the Property Investment Business and going into their first or next flip.

Keep in mind that kitchens can cost from on average $10,000.00 to over $80,000.00 or even $120,000.00 on a high end Kitchen Remodel. Home Advisor says that here in Boston, Ma the average is about $25,000.00 and it typically ranges from $15,000.00 to $40,000.00. On the low end it can be around $7,200.00 and on the high end around here it can be around $60,000.00.

1. What Can YOU Afford

The reality of it is this guys, what can you afford to spend or invest on your project? It’s like going into a car dealership – you walk in, they start pitching you sales on the car they can clearly see that you’re drooling over, they take you for a test drive (and if there’s sport mode then they tell you to press that magic button and take the ride of your life!). Then they sit you down after you’re high on excitement and hit you with the price tag – but you already sorta knew that. The worst part is when they check your credit score and have to tell you that you can’t get the car. So, they’re forced to wipe your drool from that bad boy and wait until the next drooling customer floats in through their doors.

If any of you have ever gone through this then you know that it’s a terrible feeling. Imagine fantasizing over an HGTV Kitchen or Bathroom so much that you start pursing contractors to give you a Quote – only for you to find out that it’s way out of your reach. You’re setting yourself up for the disappointment that you don’t need. 

Sit down and be real with yourself; “What can I spend right now?” (This will be the key factor in getting your new space successfully remodeled.)

2. Know How the Costs Will Break Down

Understanding how Labor & Materials will break down is an important piece of the puzzle. It comes down to three things; Labor, Materials, and Overage or Contingency. Usually labor in a Kitchen Remodel will cost about 20-35% of your budget. The next big is expense will be your cabinets. On average Kitchen Remodel Budget’s are broken down like this;

30 percent cabinets
25 percent labor ***Read Below
20 percent appliances
10 percent windows
5 percent fixtures
3 percent fittings
7 percent other

You obviously don’t want to use the highest percentage on labor but it’s more often than not the second highest. Your highest should be cabinets because they’ll be the main feature and focus point in your kitchen and with all the different varieties out there it can get pretty expensive. (We’ve done kitchens where cabinets alone cost our clients $40,000.00.) Also, by setting the labor percentage and the cabinet percentage close to one another you set yourself up to work on getting a lower labor quote in order to put more $$$ towards materials.

Keep in mind that the more you’re doing or having done in your kitchen, the more the contractor will charge you for. People usually place 20-25 Percent of the budget on labor but don’t take into account that the kitchen will need a Carpenter, a Plumber, and an Electrician. There could also be HVAC, Tile Installers, Painters, Cabinet Installers, Countertop Fabricator and Installer costs as well depending on your Kitchen and on your GC. But on average you’re looking to pay $10,000.00 – $15,000.00 for demo, cabinet, backsplash, flooring (tile or hardwood), and countertop installation. Here in the Boston region you can also go between $3,000.00 to $5,000.00 each on Plumbing & Electrical. (These are rough numbers on the average kitchen in the Boston area.) Also make sure your GC or separate contractors are including Raw Materials like 2 by’s, drywall, hardiebackers, cement, insulation, etc. or else you’ll end up paying for Raw and Finish Materials and budgeting for Raw Materials is hard to do without any experience at all.

3. Set Aside A Contingency Budget

This is a second budget used to cover the expected – unexpected. In any area of construction there will be difficulties, obstacles, and surprises. One thing you can bet on is that the older your home is the more you may find behind those walls. Contingency Budget’s are usually set between 15-20 Percent of the original budget. Surprises will always come, very rarely will a project come go smoothly, having this budget set and in mind can make things much easier when things get much harder.

Believe it or not – if you’re hiring a good GC he’ll already have factored in Contingency into his quote. It’s when he blows the Contingency Budget that he’ll start to charge you. If you’re not hiring a GC and you’re just contracting out the work yourself then know that it’s very rare that your separate contractors factored in a Contingency Budget – this is when those additional “Extra Work” charges start to come in.

4. Make A List of the “Must Haves”

When unexpected expenses come it’s good to have a list of your “Must Haves” in order to prioritize your budget. This list also comes in handy when shopping for materials. Granite or Quartz, Cabinets, Islands, Light Fixtures, Appliances, etc. can get very expensive and if you have a list of the absolutely “Must Have” features that you want then it can make it easier to keep yourself in the budget and also help you deciding whether you can do without certain materials entirely.

5. How Are You Paying

The most common way to pay for a project like this is to take out a Home Equity Loan because they’re tax deductible. But you may be using a different type of loan or choosing to go all-in from a personal account. (It may be smarter to take out a low interest loan rather than pull money out of an account that’s getting you a higher return.

If you’re going to use a loan for your project find out the loan terms because your contractors will need multiple installments and you’ll also need to pay for materials up front.

Factor in costs of your interest rate and loan originating fees as well.

6. Where Will You Live

Will you mind the dirty, dusty, demo going on while you’re around? How about the loud bangs, machines, tools, and contractors in your home? For your own sanity is it worth it to stay with family, a friend, or a temporary rental like a motel for the time being? A remodel like this can be very stressful to be around – if staying away from it is an option for you then it’s a good idea.

You’ll also need to move everything from the kitchen to a different room of the house or a storage unit.

7. Where Will You Eat

If you’re going to stay away from the house while the remodel is going on then it’s a good idea to factor in eating out expenses. Living off of burgers, sushi, and take out for a few weeks may sound fun, but it’s also expensive.

If you’re staying in the house explore the possibility of installing a small temporary kitchen in an adjacent room. This may be worth while if it saves you money long term on take out.

8. Work On Your Spreadsheet

Put your budget on a spreadsheet and review it daily. Keep track of your spending and manage yourself as you go. You may find that you’re spending less in some areas and higher on others during your remodel.

9. What Can You Do

If you need to bring down the cost put in some Sweat Equity. Decide what you can do to lower the cost of the renovation.

Something that most homeowners do is painting. This can save you a minimum of $800.00. Most homeowners also want to jump in on demo – a good GC would be hesitant to go with this for your own safety and for the sake of his company. You may end up getting hurt during the process and his or her’s insurance may not cover your injuries – now the project gets started off on the wrong foot. However if your GC allows you to do demo work – make sure you stick to small things like removing drywall, base cabinets, or counter tops. DON’T do anything without supervision from him or her. DO wear gloves, protective glasses, and a mask!

10. Discipline Yourself

During the project stage you’ll see your newly demoed open space and either say, “wow we can move the stove over there”, or you’ll see things coming together and say, “wow you know what, instead of that, this would look much better”. Avoid these temptations because this is the way to add on extra costs and blow your budget. This is also the surefire way to make your GC’s life more difficult. Changing the plan and design mid-project is not the time to do it unless it absolutely has to be done because the original plan no longer works.