When most people think of construction projects, they imagine massive, expensive undertakings like building a new house or erecting a skyscraper. In reality, construction projects come in all shapes and sizes- from fixing a leaky roof to installing a new fence around your property.
While some construction jobs may require the services of a professional contractor, many can be handled by the average homeowner with some essential tools and knowledge. There are also many home improvement loans to cover the costs. If you’re thinking about taking on a construction project yourself, here are five tips to help you get started:
- Plan Everything Out in Advance
Begin with your end goal and determine what your finished product will look like. Afterward, you can start planning the steps necessary to get there. If you are looking to increase the value of your home, some high-ROI projects include:
- Kitchen remodels
- Bathroom remodels
- Basement finishing
- Attic conversions
After you’ve decided on your construction project, the next step is to develop a timeline. Construction projects can often take longer than expected, so it’s essential to set realistic expectations. Make a list of construction materials you’ll need and research the best place to purchase them. You should understand if you’ll need to hire a contractor by this point. However, completing this research will provide you with the information to negotiate with your contractor.
- Estimate Costs and Budget Accordingly
Construction projects can be expensive, so it’s essential to clearly understand the costs involved before you get started. Some standard costs include:
- Construction materials: lumber, drywall, nails, screws, etc.
- Tools: saws, hammers, levels, etc.
- Permits: depending on the nature of your construction project, you may need to obtain a permit from your city.
If hiring a professional contractor, get a written estimate including all labor and materials costs. Once you have a budget in place, stick to it as closely as possible to avoid going over budget and putting yourself in financial jeopardy. However, it’s always wise to have a 10% to 20% buffer in case the project runs over budget.
- Have a Financing Plan
If you’re like most people, you probably don’t have thousands of dollars sitting around to pay for construction costs outright. That’s why it’s essential to have a financing plan before starting your project. There are several ways to finance home improvements, including the following:
- Home equity loans: If you have equity in your home, you can take out a loan against that equity. This is often one of the most affordable ways to finance a construction project because home equity loans typically have lower interest rates than other types.
- Cash-out refinance: If you have a mortgage on your home, you can refinance it for more than you currently owe and pocket the difference. This extra cash can be used to finance your construction project. However, remember that this will result in a higher monthly mortgage payment.
- Construction loans: These are short-term loans used to finance the construction of a new home or home improvement project. Once the construction is complete, the loan must be repaid in full or refinanced into a mortgage.
- Personal loans: These loans can be used for just about anything- including construction projects. One advantage of personal loans is that they can often be approved quickly, which can be helpful if you’re dealing with a time-sensitive construction project. However, personal loans typically have higher interest rates than other types of loans, so compare offers from multiple lenders before choosing one.
After deciding on the type of loan you want, it’s time to approach lenders. Pay attention to interest rates, loan terms, and repayment options when comparing lending options. Comparing loans based on the APR is best because this accounts for all fees and the interest rate. For example, if a loan had a low-interest rate with high fees, this would be shown in the APR.
- Hire the Right Professionals for the Job
While the average homeowner can complete some construction projects, others are best left to the professionals. If you’re unsure whether you can handle a particular construction job, err on the side of caution and hire a contractor.
An excellent way to find contractors is to ask for referrals from friends or family members who have recently completed construction projects. Once you have a few names, be sure to look for the following criteria:
- A good reputation: Check online reviews and ask friends and family members for recommendations.
- Proper licensing and insurance: Make sure the contractor you’re considering is properly licensed and insured. This will protect you in case of any accidents or damage that may occur during the construction process.
- Competitive pricing: Get estimates from multiple contractors to ensure you’re getting a fair price
- Pay Contractors in Installments
Paying for their services in installments is standard practice if you work with a professional contractor. This is to keep the contractor motivated to complete the task. You may agree to pay a certain percentage of the total cost upfront, with more draws as milestones are accomplished.
For example, if you are finishing your basement, you could negotiate to pay 25% upfront, 50% after electrical and plumbing installation, and the remaining balance upon completion. This arrangement protects you and the contractor- if they don’t complete the job as agreed, you don’t have to pay the total amount. Doing research beforehand will give you an accurate understanding of costs at each step. This will allow you to negotiate the payment schedule confidently.
The Bottom Line
Construction projects can be complicated, but with some planning and preparation, you can manage them effectively. Be sure to plan everything out in advance, estimate costs, have a financing plan in place, hire the right professionals for the job, and pay contractors in installments. By following these tips, you can make construction much less stressful- and ensure that your project is successful.