1) Determine your budget. Decide what you can reasonably afford to spend before you even call a contractor. It's a good idea to talk to your bank, even if you don't intend to take out a special loan for your project. Find out what how much money you would qualify for. Find out what the bank's expectations are with regard to paying back your line of credit, should you choose to go this route. Banks are usually more familiar with the costs that go along with a home renovation and will probably have some insightful advice for you.
When it comes to budget, remember to build in an extra cushion, a contingency fund, should something unexpected come up in the course of your home renovation project. (Something always does.) A good rule of thumb is to earmark ten percent of your budget for surprises that may be uncovered during the project. That means that if you're borrowing $30,000, then $27,000 is for the initial project and $3,000 will be reserved for an emergency.
2) Decide how your new space will be used. For instance, if you're planning a garage renovation, how do you ultimately want to utilize this space? Will it just be a place to park your car, or would you like your garage to double as a place for woodworking? Do you plan to use your garage for storage as well as for parking? Try to envision the space functioning the way you'd like it to. At this stage it's okay to dream big. You may have to scale your plans back when it comes time to actually doing the renovation, but at least this way you have a point at which to begin with your contractor.
3) Make a list of "wants" and "needs." Perhaps you know that you'd like a new shelving system in your garage so that you can store things in a more organized fashion. Put "shelving" on your "needs" list. Maybe you'd like to have stainless steel shelving. You can put this on your "wants" list. By breaking down each room in this manner, you'll be able to see the difference between what's really needed and what would merely be nice to have. This way, when it's time to meet with the contractor, you can still get garage shelving, but if your budget isn't going to go as far as you'd hoped, you can opt for a less expensive shelving than stainless steel.
4) Choose your contractor. This may involve contacting several and getting quotes. Some will give you a ballpark figure by phone or email, but it's best if you can get one to come out and actually look at the room that you're renovating. You'll get a more accurate quote this way, and you'll find out up front what will actually be possible with the space you're renovating and what you may have to change to still get what you need. A professional who is willing to come in to your home and give you a quote for free is one who will be willing to go the extra mile to earn your trust and your business.
5) Get it in writing. Always sign a contract that lays out exactly what work will be done and the costs associated with it, and make sure it includes contingencies for the unexpected. It's the best way to protect yourself and plan for all of the costs involved in the renovation project.
