This week’s episode is a classic from the Mid Mod Remodel archive. You can find the original episode and resources at www.midmod-midwest.com/604.
The common wisdom is that you should save up money for a remodel and then plan one that fits your budget.
I want to pitch an alternate plan. It can be better to let the design drive the budget, rather than the other way around. Let’s talk about diving into your master plan before you decide what your home update should cost.
Your Home Remodel can be:
You may pick two. Seriously. And while I totally appreciate the desire to keep costs down, I never want to encourage anyone to pick Fast and Cheap as their priorities over GOOD.
Three bad outcomes when you let the Budget drive the remodel
I see these all the time and it just makes me sad. Letting the $$$ control your remodel from start to finish can lead to …
- The Eyes are Bigger than the Stomach “Fade Out”. This is also known as value engineering. If you willfully take on a remodel that will cost more than you have and don’t acknowledge that until mid project you can end up cutting corners at the end to result in a pricey-anyway project that has nothing to love about it in the end. This is a tragedy.
- The Over Spend. Sometimes you get to the end of your planned budget and realize you just have to have to keep going. This can have a better final outcome than the Fade Out but costs you not just extra dollars but so much time and stress too.
- The First Things Win. When you start in on a big project that doesn’t match what you can really spend, what every you do first will get your best effort and result. If your priorities for the project don’t align with the order of your to do list, this can mean a really nice remodel of some less-than-important parts of your house. And no time or money for the rest. Not a great feeling.
What to do instead …
I’m not saying you should make a Sky’s the Limit design and then wonder what it will cost you. I like a hybrid approach. Keep your ballpark budget in mind. But rather than asking “How much kitchen can I get for $XXX, spend the time to think about what you really want from your home.
Then you can set out accomplish that WITHIN YOUR SCALE and discover out what that will realistically cost. It’s a cycle of design, budget, design, with multiple opportunities to assess.
From there you have a bunch of options to control cost:
- Trim the list
- Wait a year or two and save more over time
- Take in phases
- Find elements that you can DIY
- Prioritize the dollars for your most important design improvements
But in any one of those scenarios you have more control and more of a big picture view of the problem than if you did it the conventional way.
Listen Now On
Resources to Master Plan your Remodel … Budget
- Those statistics on budget success for other home remodelers [outside article]
- Get the Five D Master Plan Method Framework right here [Free Download]
- We’re also still looking for an mcm obsessed designer to join the Mid Mod Remodel Team. Apply at midmod-midwest.com/careers.
And you can always…
- Join us in the Facebook Community for Mid Mod Remodel
- Find me on Instagram:@midmodmidwest
- Find the podcast on Instagram: @midmodremodelpodcast
Read the Full Episode Transcript
This blast from the past episode really needs no new introduction. I want to guarantee that every listener to the Mid Mod Remodel podcast hears this message, so I’m playing it again for you this week.
If you’ve been waiting to start the planning process on your remodel until you have a reasonable budget saved up in your bank account, stop that right now or rather start. Start planning so that you can determine what a reasonable budget will be for the unique project that is your personal mid-century dream home. Only you can know then what will be worth splurging on and where you can save, and you can only really know that when you’ve considered all your options and focused in on a master plan. So sit back and soak in this message, my friends.
Welcome back to Mid Mod Remodel. This is the show about updating MCM Homes, helping you match a mid-century home to your modern life. I’m your host, Della Hansmann architect and mid-century ranch enthusiast. You’re listening to season six, episode four.
Here’s a little teaser. I’ve been adding to the materials for the ready to remodel course, and one of the bonus modules is a step-by-step guide to planning a budget for your remodel and how to save up for it using my personal favorite personal finance tool. I’ll be going into a lot of detail about the why and the where for of thinking about budget questions in a remodel. But today I wanted to actually talk to you about the bigger picture, how to think about planning the finances of a remodel. Should you look at the bank account balance you’ve got designated for remodeling and limit yourself to doing no more than that? Perhaps not. I think that there can be some value in looking at it the other way around.
Oh, that budget. It’s such a complex and fraught concept, but really it’s simple. A budget is just a plan for what you want to do with your money. It is also one of the most stressful parts of remodel, and here are some facts to go with that feeling. According to the house and Home 2020 survey, only 36% of homeowners hit the remodeling budgets. Last year, 31% went over budget, only three came in under and remaining 29%. Oh, they didn’t have one. Um, that’s one way to plan. Here’s the thing. When you fixate too much on the budget and not enough on the planning, there are three common bad outcomes. The first is what I think of as the eyes bigger than your stomach fade. So basically, if you live in a state of denial about what you can afford, you can set out to start on a remodel.
You don’t actually have the money you need for, and when you run out of budget, you just start downgrading everything. You end up with a shell of an addition, but it’s not done very nicely. You cut corners on windows, you choose materials you don’t love, and in the end, it has less value than it would have if it had been smaller and planned right from the start. This is often called value engineering and commercial remodeling, and it basically means taking all the good parts out of the design. It’s really sad, and in the end you have to wonder, was all that trouble even worth it? Were any of your dollars well spent? Then the second outcome is the overspend. Sometimes you design what you want and you love it so much that you choose to exceed your budget without wanting to or planning for it, and the result there is an outcome you like in the physical house, but stress, debt challenges and a lack of love for the process all the way through.
The third way it can go wrong is the first things win. This is when you start with more in your plan. Then you can afford and you do the first parts, but then stop in the middle or never get to later phases. I hate to see any of these things happen for my clients. What works really well is if you can actually think about design somewhat independently from budget. I love to encourage people to dream big dream and then decide what their priorities are and finally figure out what it’s going to cost. Then you can make informed choices about what you want to do, where you want to stretch, and where you want to cut corners without having the last things on the list guaranteed to be done badly. One of the biggest things people regret in a remodel is not spending enough right at the end. Those last few dollars when you’re already over what you meant are really hard to pay out, but if you cut the wrong corners, you can end up undervaluing the whole remodel.
That’s why I like to turn the whole process on its head rather than asking, What kind of a remodel can I get for X dollars? Think about what kind of a remodel you want. Figure out what’s necessary to make that happen. Price out the pieces. Then you can make informed choices about doing everything you want one year at a time, or make that choice to prioritize items one and two and leave three off the list so you can really focus on the most important elements. This is a great time to return to the concepts I’ve talked about in the past of scale and phasing. There is an almost one to one relationship between budget and scale When you’re remodeling, this might mean that with a tight budget, you take all the different parts of the house you want to affect and make extremely cost effective choices for each of them working from existing materials, collecting, salvaged and reused items from freecycle sites or the habitat for humanity, restore saving on your dollars by doing some or all of the labor yourself.
It could also mean limiting the number of areas in the house you try to affect with your update with a small budget, you might want to take on all the parts of the house, but instead limit yourself to mostly maintenance. Work with a few desired areas of aesthetic or practical improvements. In general, though a budget that’s small doesn’t have to stop you from making improvements to your house, but it will limit the scale of what you take on. But let’s flip this on its head. You can control the budget of your project by controlling the scale. You make choices about how much to take on how many areas of the house to work on now or in the future, or how much change you want to make in each of those areas. Each choice directly affects the overall cost of your home update. Of course, there are some factors outside your control.
For example, planning a remodel now in the mid stage of a global pandemic with supply line shortages and work shortages is a different animal than remodels that were taken on four or five years ago, simply in the middle of a housing crunch or a recession when there was less demand for work and more availability of materials. Lots of parts of remodeling are more expensive now than they have been in several years. Hopefully that will change over time, and both material and labor costs will go down. You might be able to affect the cost of your remodel by simply doing it now versus another time. Timing is another important question. The pace of the remodel is also a factor. In fact, one of the questions I ask new clients is of the three interlocking factors, budget, timeline, and scope, which is the most important to you and why?
Some people are able to give me a clear answer and others say, Not sure yet. That’s fine, but it’s important to realize that these factors are inherently interlinked. I actually have a favorite Venn diagram, which was originally made by a graphic designer about their business, but is just applicable to residential architecture. The three bubbles which overlap in the Venn diagram are fast, cheap, and good. The annotation on the diagram is that you may pick two. I love this because it illustrates so cleanly and perfectly. The impossibility of a project that runs swiftly costs very little and ends up with perfect results. In fact, we always may have to make a trade off between fast, cheap, and good. And the good news is that if you know what you want, you can use that trade off to make an informed choice. If it’s very important to have a result you love, and time is of the essence, budget is going to go up.
On the other hand, if you want to live in a house you love forever, but dollars are in short supply, you can actually eek out the good quality of remodel simply by spreading it over time, slowing down the process, taking on some of the work yourself, being willing to work flexibly within contractor schedules who might have to rush off and do a more expensive job in the interim. But the point is it’s possible to manage a less expensive project by slowing it down. Of course, there’s also the option of fast and cheap, but not good. I’m not going to talk about that because I hope that no one who’s listening to this podcast is interested in that possibility. Today, I want to pitch an alternate idea. For some people, it’s better to design a remodel and then budget for it. Now, there’s actually a fairly simple way to do a remodel and pay for it later by taking out a loan.
People who buy a house and want to fix it up before moving in will include a bridge loan in their mortgage package to allow them to take on that construction. But that’s not what I’m talking about today. This is the concept of designing a remodel, a master plan before you set your budget in stone. When I say you should design first, then budget. What I mean is that rather than choosing to let yourself be limited by a specific dollar value that you’ve got in the bank right now, allow yourself to plan for work to be done in various phases or open yourself up to the possibility that a larger budget might grant you a design result you want. When you look at the master plan, you can evaluate how much each part of the master plan is worth to you and what it might be worth to save that extra dollar to spend in that spot or not.
To a certain extent, I build this concept into the work I do with my clients. In the master plan, custom work, there’s always a part of the house in which I can make a clear recommendation, This is what you should do to solve this problem. But in other areas, we explore several possibilities. I prefer, as I said in a recent, I gtv to come up with three alternatives for areas like kitchens, bathrooms, and additions, master suites where there are layout variations on the table. And when I’m doing that, my team and I try to arrange the various possibilities on a scale from least to most intervention, which not coincidentally also happens to be from smallest to largest budget cost. We make it clear to our clients that we’re not trying to design anything that’s beyond what they’ve asked for or what we believe they can’t afford given the budget they’ve told us, but we do want to show them possibilities they could achieve if they were willing to take a few steps farther than what they’d asked.
In some cases, this results in people choosing to splurge in one area and be more conservative in others, or to raise the cost of the remodel and break it out over several paces. And in other cases, it simply helps them choose what they wanted in the first place, or limit even to come up with the more budget friendly option. Design really can make projects cheaper. I’m not just asking people to open their wallets here. I’m a very budget conscious remodeler in my own life, and I’m 100% sympathetic to trying to do a project as efficiently as possible. But I also want to open up the doors of design with as many people as I can and let people think outside the box creatively about what changes are possible. What in their home would really transform their life in that space? What could this add to their quality of life if we thought big during the design process, rather than limiting ourselves to a simple dollar value.
There’s also an extent to which you can’t really know during the design process exactly what a choice will cost in this climate especially, but really at any time, only the contractor that you choose can really put the price tag on the materials and labor costs to get that work done. And when you talk to multiple contractors, which by the way, you should, they may sometimes give you radically different prices for the same described work based on their experience, the accessibility they have to different materials or team members with different skills, et cetera. So it’s really impossible for me as a designer or you as a homeowner to get a perfectly accurate design that meets dollar for dollar a budget that you have in the bank.
What we can do instead is try to hit some goal posts and work within them to prioritize all the design ideas we’ve discussed so that you can really hit reality and start talking about real budget numbers with the contractor.
When you get to that place, I hope I’ve managed to persuade you that there’s some value in thinking about the big picture, dreaming about possibilities, even opening yourself up to a bigger remodel than you might have wanted before, perhaps deciding that a smaller one is what you really need rather than fixating through the entire design process on a bottom line number. Your house is your home. It’s important. It affects you day to day and year to year. It’s worth more than a dollar value. It’s worth your time, your creativity, your problem solving, and that’s really what a master plan is all about.
Next week on the podcast, I’ll be directing your remodel splurges by shouting out some of my favorite sources for fantastic mid-century building supplies and details even better. Most of these are small businesses that you might want to support instead of, or in addition to all the big box stores and mega businesses that are going to be flooding the airwaves and filling up your inbox in the lead up to Black Friday. So stay tuned for my small business Saturday, the mid-century version, podcast episode. Coming to you on Thanksgiving Thursday. Feel free to listen to it while you peel potatoes or put it off until after your family togetherness time. Either way, I’ll catch you then.