Ep 006 - Managing Home Improvement Projects

Welcome to Be a Smarter Homeowner Podcast, where you'll discover strategies to save money, save time, and be better organized in managing your largest financial asset and biggest expense, your home. Your hosts, John Bodrozic and Beth Dodson, who are co-founders of HomeZada, have been supporting homeowners for over 20 years. They are here to share with you their tips and suggestions, as well as interviews with industry experts, with the goal of helping you become a smarter homeowner. Now here's your hosts, John and Beth.

Welcome to another episode of Be a Smarter Homeowner Podcast. I am so excited about today's podcast because we're going to talk about something that virtually every homeowner in America loves to do and talk about, which is home improvement projects.

Boy, do they love them.

And all the remodeling that could go on in your house. We're gonna have a great show today. We're gonna talk about why people are so excited about home improvement projects. We're gonna talk about all the different kinds of projects that are in your house. But unfortunately, we're also gonna have to share some of the problems that people face with home improvement projects. And then we're gonna round it out with a whole bunch of action items, easy but important action items, to make sure that people have successful home improvement projects. So let's kick us off, Elizabeth, and talk about the fun stuff. Why do you think people love home improvement projects?

That's easy. They get to personalize their property for their preferences. That's important. People get to do new paint and put up wallpaper. They get to buy new furnishings. They get to change out structures inside the house to make it what they would like. Even a simple countertop can change the look and feel of a room, and people love that because the previous people that lived in those homes, they didn't probably have the same style that the new homeowners have. And who doesn't like to change things up all the time?

Yeah, and, um, I think America has fallen in love with the home improvement remodeling shows. There are like There's a lot of them. Dedicated channels to showing people about how to do home improvement projects. And I know that a lot of our customers and family and friends that get so sucked into those things that they're fantastic to watch because you get to see a house that needs a lot of work, you know, contractor, designer come in magically in a half-hour episode, it all turns into like this great reveal and everybody's like, yeah, that's so cool. I want some of that myself.

Yep.

So, it's what I call— one aspect of home improvement projects is with the lifestyle aspects, right? Which is people have bought a home and they've got a growing family or they've got to— they want to entertain more. And so, there's the passion around improving your house for what I call everyday lifestyle living. Can you talk about maybe some of your experiences in that? Either from your own personal experience, Beth, or from some of the customers that you may have talked to?

Yeah, so when people want to improve their home, one of the things that they think of is they think of kitchen remodels, they think of bathroom remodels. A lot of people nowadays are changing out rooms to be home offices or home gyms. So we're seeing a lot of changes to rooms to meet The lifestyle needs of the family that's actually living in it. Some people are having a growing family, so they turn a bedroom into a nursery. But a lot of our our our clients are doing all kinds of things. But homes can be so personalized based on your specific needs. They can also change over time. So we have clients that are actually changing rooms into full-on closets because their adult children are no longer living with them. They don't need as many spare bedrooms anymore. And so we're seeing a lot of unique situations occur based on what the current lifestyle or needs of that particular family are. And it could be anything, like I said before, a home office, gyms, changing out spaces because you want to update them. That's another situation, people wanna update things, but they're actually looking at things specifically to themselves and how they wanna live in their home.

Yeah, absolutely. So the other aspect of why I think home remodeling is such a big thing, there's what I call the lifestyle aspects, which you've done a great job sort of talking about, you know, why people want to remodel parts of their home. Then there's what I call the structural aspects of things that need to get remodeled in a home. And this probably pertains to the people who maybe have bought a home that's in the 20, 25, or 30 years older in terms of its age.

Yes.

And some people like those because they're historical homes or they're just maybe cheaper on the market to buy those typical homes. But those homes tend to require projects that end up what I call being more structural type of remodels.

Yes.

It's the roof that needs to be replaced because the current roof is 25, 30 years old and it may be leaking. It may be windows that need to be replaced because it's got single-pane windows and you want double, triple-pane windows that are much more energy efficient. Right. It's the HVAC systems, right? The whole energy efficiency thing. Right. A lot of the air conditioning units that were manufactured 15, 20, 30 years ago are clearly not as efficient as they are today. Right. So a lot of the context behind different home remodeling projects really depends on the combination of, A, the lifestyle of the people who own the home, and B, what home did you actually buy?

What the home needs.

Right, exactly. So, you know, as an example, You know, we've got friends that are in the home building industry.

Yes.

Right. So if you bought a brand new home from a brand new home builder, what kind of projects would you be interested in?

Oh, it's totally furnishings, design. It's anything to get the home acclimated to my new family.

And most builders don't do landscaping in the backyard.

Good point.

Right. So it turns into what I call remodeling projects or home improvement projects that are both Inside the house as well as outside the house. And outside the house becomes, I want to put backyard landscaping in. Some people want to put outdoor kitchens. I want to put a pool in. I want to put some place to entertain. I want my kids to be able to run around in some play structure. So many different things go on in the outside of the home.

But a lot of these projects that you're describing for a new homebuilder is more aesthetic appeal. Some of it's functional, but definitely more aesthetic appeal.

Yeah, and a lot of this also has to do with the third or fourth aspect of the home improvement sort of piece, which is, can these things improve the value of the home, right? So we're talking about, A, the lifestyle, you know, people want to live differently and so they're gonna do remodels. Other people may just need to structurally change some stuff. But then can you talk a little bit about how you think certain home improvement projects may be able to improve the value of a home?

Oh, absolutely. So there are specific projects that can improve the value of a home. Let's face it, kitchens and bathrooms are money rooms. And when I say money rooms, they add value to the home, but they're also really expensive to remodel because there's just expensive components to it. So it's really important to remember, even though these sections of a home, bathrooms and kitchens, are extremely valuable to the home, you also need to manage the specific cost so that you are not getting ahead of yourself because there's only so much improvement that you can make that's going to add a significant amount of value to the home, if you understand what I'm saying.

Absolutely. And I think, um, it kind of goes back to the home improvement and home remodeling. They're such broad terms.

Yes.

And what we're trying to do here is bring it down into a context situation over it depends on What— where your family is today, where your house is today, how old your house is, and what you're looking for. But it also stems into what I call, for lack of a better term, there are even small home improvement projects, right? I just want to change the flooring in a room, right? It's the carpeting's bad. I want to replace the carpet, or I want to put in hardwood floors.

Changing out front doors.

Changing out front doors, painting your front door. Yes, cleaning up really simple your porch, you know, in the front. So there's a lot of things that span the scale of what I call home improvement projects from the very small and simple things to some of the maybe more medium moderate things. I wanna put out a new deck or a new patio to the much larger home remodel projects that are significantly more complicated, need more planning around the kitchen and bathroom remodels. And so I think that's an important thing for people to really understand as it relates to, you know, different types of projects. large, medium, and small, and how you should kind of go about attacking some of those kinds of things. Maybe we segue into a little bit of a different sort of category, which is the problems that people face when they embark upon these remodel projects of various sizes. And I know that there's a bunch of them, so I'll segue over to you, Beth, and why don't you give us what, what are the problems that you've either personally experienced that you could share your own personal story, or some of the customer stories that we hear from Our customers?

There's quite a few. So one of the things that I always see happening with projects, and in fact, statistically, it's known in the United States that most projects are over budget. People are just not managing the budgetary process of their projects. And they're doing one of two things. They're not managing it at all, or they're allowing their contractor or designer To manage their budget, and they don't know how to say no to things that maybe they can't afford. And because if projects go over budget and you catch it in time, I've run into customers who have said, "I need to stop the project entirely because I can't afford to finish it." And that's really problematic because. If you can't afford to finish your project and you're in the middle of, let's say, getting a refinance or you want to sell it, you may be hard pressed to sell the house or it may be really tough for you to get a refinance. Even insurance may be tough for you to get because it's a home that's incomplete and it's different than having an unfinished basement than having an incomplete project because you could have wires sticking out, plumbing, etc.

So have you ever gone over budget on a home improvement project?

John's laughing. So I do not believe I have, but I over-budget my projects and always come under.

Oh, so you fatten the budget up high?

I totally do.

You're a sandbagger.

I am. Always have been. So, but that's how I manage my project budgets. But I also, to stay away from going over budget, I don't do all my projects at once. You know that. I do a project a year.

Yeah.

Which also gets me excited about managing my projects. And that's the other, probably one of the other problems people run into. They move into a house and they look at it, they get so excited because they're watching all these TV shows and, and they see all these new design elements and they can change things out.

And it gets done in half an hour.

Yes. Not really. But they also want all of these projects done within the first 6 months of living in their home.

Yep.

And that also can be a bigger problem than people anticipate. And I just find joy in adding a project each year. I don't get overwhelmed. I don't get excited, like super excited and stressed out because I need to do it all at once. I actually appreciate the fact that I do a step at a time.

Yeah, I call that what I, what I like to sort of call that the excitement factor over doing the project is so high. that you get excited about all the different products and brands that you can put in there. And people sort of completely ignore the budgetary aspects of that, right?

Yes.

So you're like so passionately and emotionally invested in basically like trying to get this project going. And a lot of that comes with, you walk into the home improvement retail store, right? And you see all the displays of all the different products and you're like, oh, we could get that, we could get that. You could even do it virtually right now. People are on Pinterest and all these other sort of sites that show you these really cool pictures and people get sort of that massive emotional, like, oh my God, I want all that stuff. And they've completely ignored the, how am I gonna pay for this and what's the budget gonna be? I always like to tell people, it's like you're trying to balance what you like versus what you can afford.

Correct.

Right? And if you're gonna go with all the high-end appliances on a kitchen remodel and all the high-end finishes, you're gonna spend $75,000, $100,000.

Easy.

All right? If you're gonna go with all the entry-level stuff, maybe it's, $15,000, $20,000, right? If you go with the moderate stuff, maybe it's in the $50,000 to $60,000. Huge aspects over sort of that dynamic over being over budget.

I think a lot of people also, one of the problems they think they do is they feel like if I do all these remodels, I'm going to get more for my house. When part of that is true, but not to the level that I think a lot of homeowners think. They forget about the market where they live and the neighborhood because you could actually be building out a house and doing all these remodels that are so beautiful, they price you out of the market.

Yeah.

And it may take either longer to sell your house. I mean, and when I say longer, I mean 12 to 24 months versus it could sell in 6. And then you may never get your money back from all those extensive investments that you've made into the home.

Yeah, it's looking at the comps over, you know, look at the houses around your neighborhood. And if you're, you know, way out too high, then you're overpriced. If your house isn't up to speed with sort of the neighborhood houses, then you probably need to do more of that remodeling to kind of maintain or grow that value. So it's really, yeah, it's the context. You bring up a great point of not only is it what do I desire and lifestyle and budget, but how does it fit within the neighborhood that my house is currently in? So that I can maximize the value and not detract from value and give people a reason to kind of lowball you if you decide to sell your house in the future. How about talking— I'll bring this up first— is another challenge that people have with home improvement projects. One is they struggle with the, should I do this DIY or should I hire a contractor? And my advice always tends to be, It boils down to what I call safety and skillset.

And time.

And time. Yeah, absolutely. It's the safety factor of if you're going to do something that requires painting the outside of your house and you've got a 2-story house, you're going to be on ladders or scaffolding, right? And that can be, you know, a safety issue kind of mentality. And then it goes down to skillset. And a lot of times skillset can be something learned because we have YouTube videos and everything else. So, Things like, I wanna put in a new hardwood floor. You know, we've got a friend of ours I know that he basically learned how to basically put in his own hardwood floors and he basically learned—

He sounds like a determined guy.

And he saved a lot of money, right? So that was a skillset that could be easily learned. But then there are what I call skillsets that are a little bit more complex and they usually revolve around electrical skills, HVAC skills, plumbing skills.

Oh yeah.

Those are skills, you know, high-end carpentry skills of not just building a wall, but actually the finished carpentry of the cabinets, right? Those require specialized tools and high-end skill sets. Those are the things that, let's just face it, most of general homeowners in America don't have those skill sets. Correct. If your project requires those kinds of things, we definitely would recommend hiring a contractor. Any other problems that you've seen from your personal experience or customers on what, what do they get into?

Yeah. So we talk about time. I think people also miss dates. They think that a project will get done really quickly. Oh, this isn't that big. This is gonna be fine. We're gonna get it done really quickly. And one of two things happen. They either misjudged how long the project was gonna take for a variety of reasons. You know, we may have supplies having trouble coming in, and that's something definitely going on right now. Yeah.

You pick a product and it's no longer in stock and you have to wait 3 months before it shows up.

Exactly. And then you also You just may not be able to get the product because maybe it's just sitting somewhere else for temporarily. So it's just delayed in its shipping and supply chain. So that's another thing. The other thing that actually ends up happening as it relates to time is I don't think you anticipated how long the contractor was going to take or your involvement in holding up the contractor sometimes, because that happens. And homeowners don't understand they have to respond to things quickly.

Mm-hmm.

In order to move the ball forward as it relates to the project. And then the other thing is, for those people who are DIYing it themselves, a lot of times they think a project, oh, it's going to take me a weekend, and then it's going to actually take them 4 weekends, and everyone's frustrated in the house. They don't know when they're going to get it done. Sometimes that's when projects go unfinished because They didn't anticipate how long it would take. And then it just snowballs into what now happens. And a good example of that might be someone trying to put a deck on their home. And what if it's a 2-story deck? You can't walk outside your, your sliders anymore. And that's risky.

Yeah.

I mean, that's really a safety issue affected by time.

What's worse is doing a kitchen remodel and you can't cook inside your own house for 3, 4 months, which is part of the budget. You gotta, you know, figure out—

That's added budget.

You're going to be grilling out on that gas stove a lot during the summer months.

Assuming you have one.

Yeah, or you've got family that you can go over there and eat at their house. Another huge problem that we hear from customers, and I've done this, had this experience myself, which is how do I go about hiring a contractor?

Yes.

And making sure that that contractor-homeowner relationship is a good one. And it's just, So many factors go into, you know, going, taking through the process of that. But I can't tell you how many stories where you get invited to a friend's house and they're showing you this brand new theater room that they put in or the kitchen, and they're super proud of that at a house party. And then after a few cocktails, they're like, oh, but my relationship with my contractor was just horrible. And candidly, sometimes it's not just the contractor. It goes back to what you said. It's the relationship. Between the homeowner and the contractor. Were expectations set up front?

Correct.

Did the homeowner change their mind over the products all the time? Right? If you're changing—

They delayed the schedule.

If you're changing your decisions during the course of the project, what you just decided may not fit with what was just installed, right? And the contractor is going to go, well, that's a change, right? I'm going to have to rip out what I just put in to put in what you just, you know, selected. And so there's a whole, we're going to get into the action items, but, you know, lots of stories about people unhappy with their relationships with their contractors.

It's such a shame.

And let's face it.

It doesn't have to be that way.

Just like any other profession, right? There are great contractors and there are some that are not so great, right? And obviously we want to try to help our customers avoid the ones that are not so great upfront, right? And then once you do hire a great contractor, it's still maintaining that good relationship.

Yeah, you still have to manage that relationship. During that process, your contractor does not own your budget. You do. So I'm going to put that out there. I say it all the time. Your contractor does not own your budget. You own your budget.

Can you drill into that a little bit more? Because that's a very important point.

Same thing with designers. So when you give a budget to a contractor or a designer and they come back to you and they give other aspects to the project, so you either have scope creep. So now we're gonna do more in the project, which is a problem because that adds up on the cost. Or you've chosen products that don't meet, meet the needs of the actual budget that was established early on. And so all of a sudden that makes some changes. The other thing that does occur, and you stated it, if you make a change to the project. So for instance, you wanted one tile, you put it in. You don't like it once you see it down because you couldn't— you had trouble envisioning it, and now you want them to rip it up and pull it back out again. You have to pay for all that labor to install the first one, pull it up, and install the next one. And a lot of people forget about that. They think, well, it just wasn't right. Well, who's gonna cover the cost of the materials, and who's gonna cover the cost of the time? The contractor still has to pay their people and has to pay their suppliers. So it's really important that homeowners understand that how to work the process with the contractor, but also how to have check-ins regularly with them so that you understand where the budget is. And if it goes over, it's your choice that the budget has gone over.

Yep, absolutely. So I think we've got about 10 minutes in the show and we've got, I think, a lot of great action items that people can take. And I'll kick us off on steps that pretty much any homeowner can take regardless of what type of home you are, what you're trying to do, whether it's small or medium or large projects. And the first step is really what I call planning, right? It all starts with the—

Oh, dear.

Don't rush out and start buying things and products and saying, oh, I'm going to go do this, right? It's literally assess your house and literally write down Spreadsheet, documents, maybe use an app like HomeZada. Like literally say, these are—

Start with what you like.

These are all the things, these are all the projects that I would like to do in my house, right? I want to change out the floors. I want to put in an outdoor barbecue grill. I wanna replace the windows, whatever it may be. As soon as you list out everything that you want, that starts to define what is your, you know, sphere of all the things that you potentially wanna do with your home as it relates to projects. And then potentially even start to prioritize them. We're not getting quite into the budget, but like, it's like, okay, if my roof is 25 years old and I'm constantly patching it with leaks, maybe getting a new roof is more important than the bathroom remodel that you really want to do, right?

Right.

So it's trying to figure out that priority over, okay, you've listed, you know, who knows, 5, 10, 15 projects, try to prioritize them. In your situation. I'm going to defer now to you in terms of what I call the second step is to try to develop a budget for each one of these projects that you've listed. So I know that you've done a lot of budgeting in your past, given maybe you share the stories over how you go about creating your budget.

Yeah, so in the past, prior to Humsada, I actually had to use Excel to schedule a budget, and I would take into account my project and all the details I had to account for. And when I say details, I mean, uh, looking at all the items I got to go select and purchase or have a contractor purchase, all the, um, construction-type activities if there's construction. And so my recent project, I, um, redid a family room and a lounge area in my house. It used to be a game room. And I had to get new floor. I didn't have to. I chose to get new flooring in both rooms. I chose to remove cabinetry from a wall and then refinish the wall to have a flat surface. So that required drywall and paint. And then I also chose to add new furnishings. So I literally itemized. every solitary thing related to each one of these projects, the game room now turned lounge, and then the family room. And I started identifying what I actually liked online and just got a feel for what the prices were.

Yep.

And lo and behold, I even was surprised by some of these prices for some of these items. And I looked at the type of items that I could have purchased, and I said, you know what, I don't know if I want to spend that on this particular item because of where it was located or what have you. So I literally went through in my head constantly with items I wanted and then where I was willing to give on budget. But I found it just by going online and taking a look at things and then adding a placeholder For budget. And then as it relates to labor, I just did an estimate on how many days that I think it was going to take to do this at a dollar figure per hour. And I think I chose like $100, $200 per hour. I mean, I, I'd like to go high.

Sure.

Because I need to know if it does go over budget, I'm kind of balancing that a little bit.

Yeah, I kind of just to add to that, itemizing all the things that are in your project. is essentially what you were doing. And then, going out and researching what I call different brands and different products at different price points, right? Hardwood floors can be super expensive, native Brazilian cherry hardwood that requires a lot of installation, or pre-engineered floors are going to cost different per square foot.

That's right.

Same thing with appliances in a kitchen, right? You're going to go high-end Sub-Zero, Wolf. You're going to go low-end I don't know, Whirlpool, you know, you're going to go mid-tier, GE, maybe all these different products and brands have a huge impact on what your overall budget's going to be.

Yes.

And this is really where the rubber meets the road on, you know, basically what do you like versus what you can afford. Another task I think for people, action item, is if you are going to hire a contractor, here's my sort of suggestions over what you should do. One is Try to get at least three bids, and I know that's difficult because we get excited, especially if we find somebody we like. But try to get three different estimates for your project, right? And trying to find out who you're going to select starts with you know talking to friends and family. Do they have any references? There's a lot of online sites now that that list a different bunch of contractors, and a lot of their references are already online. So if you could sort of make those phone calls to 3 or 4 of them. Oftentimes you're gonna get a different price based on what the market demand is for their services in their, in your neighborhood.

That's correct.

Right? If all the kitchen contractors are super busy, they may not be able to get to your project for 3 to 4 months and they may end up with a very high price.

Yeah.

But maybe you do it in a time of year where they're not so busy, they may give you a better price. So time of year and understanding the market dynamics of those things. But definitely you wanna check references, right? Once you've down to like, okay, I wanna hire that contractor, Ask them for a reference. Call their previous customers and say, how did they do that kitchen remodel? Were they successful or not?

Even if your contractors are your friends or your family.

Absolutely. And then the last is check their license, right? Contractors in every state have to have recurring licensing and insurance. Yes, very important. Insurance is such a huge thing. Okay, one more action item I'll toss over to you is How important is it to track your costs and document your project?

Highly important. Highly important. Tracking your costs along the project process helps you stay in budget.

All those receipts and invoices and everything. You keep all that? You scan it? What do you do?

I keep— well, I put it all on Homesada now, but before I would keep all those receipts. I mean, it was important for me to understand the overall budget of my project, but to also manage it because things just change. I mean, you've got— when you're ordering, for instance, furniture, people never— they forget about shipping and receiving. You've got to collect that somehow. So that's part of the cost of your project.

Yeah.

And all of a sudden, your project could be 10% over simply because of shipping and receiving. So it's best to start tracking that, those details. along the way so that you can actually prepare. And you may actually cut scope of project temporarily just to finish the project. And especially if there's furnishings involved and you may wait for furnishings or some parts of the furnishings.

Yep.

So I track budgets all the time and cost all the time. And budgets and costs are 2 different things.

And before, during, and after photos, right? Because you never know what's going to happen from an installation perspective. So to close out, the last action item is once your project is done, there's really what I call the closeout phase, right? You want to make sure that everything is working before you final pay your contractor, right? You want to collect all the warranties. All those new products now have a 1 or 2-year warranty. You want to track all those warranties. And the other part about the benefit of tracking the cost during the project is at the end of the year or next year, you may have a discussion with your accountant as how does this impact your taxes.

That's correct.

Or long-term, if you ever decide to sell your house, can you use that history of what you've done to the house and prove what you've done to sort of maximize your house? And the last one is, most people don't realize this, update your insurance policy.

Heck yeah.

You just spent $50,000 or $100,000 on a kitchen remodel. If your house burns down the day after, the cost to rebuild your home and then your dwelling insurance is probably not high enough.

That's correct.

'Cause you just invested $100,000 into a kitchen remodel.

So we highly encourage people to make sure that when, The project's not done till all the closeout's done.

Yeah. So it's closeout of all the documents and receipts and warranties because you're going to want to track that. Because let's face it, some of those products may have problems with them and you want to get them replaced before the warranty expires and you need to be able to track that. So we've got a lot of great actions. Beth, why don't you just close us out on this episode?

Yeah. So we hope you enjoyed this episode about managing your home improvements. We can tell that there's budgets, finances, action items. Absolutely. Projects are exciting, but they can be very challenging if you are not managing them properly. So we hope you enjoyed this. If you did, please share this with your friends and family and anyone who may be interested in projects and project management. And by all means, please rate us and share our podcast with as many people as possible on all the major podcast places. And we want to help you be a smarter humbler.

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