Kitchen upgrades can increase the asking price of a house when selling. However, these upgrades can cause homeowners to spend a huge chunk of money, especially if they don’t have a plan. Creating and staying within a budget can be difficult, but it is possible with a few steps.
Homeowners should set a budget based on the increase in value they believe they can get when they sell. Spending a ridiculous amount on an upscale kitchen in a middle-class neighborhood probably won’t reap a positive return.
From there, the costs should be broken down into percentages. Labor usually makes up between 20 to 35 percent of the budget costs. Then break up the costs based on the priorities. For example, the appliances may be in decent shape, but new cupboards and countertops may be in desperate need of an upgrade. It is also recommended to set aside about 20 percent of the budget for unexpected costs such as water damage.
Homeowners should also have a plan for how they are going to go about paying for the upgrade. Many people need to borrow money to finance a kitchen upgrade and they have multiple options for doing so. They can take out a home equity loan, a personal loan, refinance, or borrow against a retirement plan. It depends on the state of their finances and what will work best for them.
One detail that can get overlooked when doing a kitchen upgrade is the cost of not having a kitchen for a period of time. Homeowners will have to eat out or rely on take-out while the kitchen is being worked on, depending on what projects they are doing. This should be worked into the main budget as well.
Don’t just set a budget and then forget about it. Keep checking purchases and quotes against it. The easiest way to do this is to put it in a spreadsheet. This will help homeowners stay on track.