From a previous post, you may already know that we selected RMH Bartels Construction and how we came to that conclusion.
After we made our selection, we notified the the bank, and began the financing process. One of the first things we had to do was provide them with a final budget that both we and RMH signed off on.
To do this, we had to sit down with RMH and finalize decisions on certain aspects of the construction project.
We also had to strategize a bit because of the need to balance what we wanted vs what we could afford vs a budget that would work for the bank. I mentioned this before, but we had to consider that the bank will only loan up to 80% of the future appraised value of the home. Because of that, we needed the number to be low enough to be affordable, but high enough that we could get an appraised value that would justify the loan… without going over what is possible.
On top of that, for reasons I’ll explain later, the budget had to be for 100% of the remodel project. To get the project costs down, we couldn’t simply leave items out. The budget has to reflect everything needed for a completed project.
During the contractor bidding process, Russ Bartels at RMH gave us a comprehensive initial bid, which made it easier to get to the final numbers. It’s one of the reasons we wanted to work with them. Some of the other bids we received were based on unrealistic assumptions. Russ did a careful review of our plans so the initial number he gave us was already close to correct and we just had to make some decisions to get to the final numbers.
That negotiation included things like how far down we were going to dig out the basement, what type of window product we would use, what sort of tile etc.
We first came up with a number around $750,000. That number wasn’t feasible because after you tagged on the 10% that Umpqua bank would add as a construction contingency, it would mean we’d need to get an appraised value of over $1.7M. That was an impossible number so we needed to work it down to something passable.
We kept working at it until we got to something we thought we could work with.
The number we got to is $604,213.
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|Masonry||New foundation , keep existing grade in basement||69,100|
|Masonry||Replace CMU Block Deck footing with new concrete footing||2,450|
|Window Wells||New Concrete window wells||8,500|
|Siding||Cedar lap siding 4400sf - Gable ends 1000sf||41,500|
|Gutters||New gutters, none on turrett||4,200|
|Porch Roofing||New Metal seamed roof- Metallion Industries 40yr Clip Loc 24 gage||11,500|
|Deck Flooring||1x4 T & G Primed FirDecking||7,500|
|Cedar Soffit||1 x3,1x6 T & G Fir Tight not||8,500|
|Concrete||Saw cutting, driveway, walls, slab||3,350|
|Painting||Paint Exterior Complete||11,500|
|Grading||Foundation excavation, window well drains- Keep existing slab grade elevation||31,600|
|Windows||Furnish and Install new windows- includes trim materials and sheeting required for window sheer walls||44,500|
|Windows||Frame in old windows, frame new openings for new windows||8,000|
|Doors||Exterior front and back door budgets||5,500|
|Deck||New Single light Exterior Fiberglass door||1,850|
|Doors||Set owner provided interior doors- 9 standard, 4 barn, 5 pocket, 1 folding||3,180|
|Doors||Material budget allowance||2,500|
|Framing||Lumber and Framing per Plans and specs- Decks and House||75,000|
|Plaster||Smooth wall drywall house||39,800|
|Painting||Paint interior walls||8,500|
|Trim||Paint Grade FJP Fir||17,500|
|Stairs||Stair Rail Budgets||6,500|
|Painting||Paint interior trim||8,500|
|Flooring||Refinish floors Main Level||9,500|
|Flooring||Refinish Floors Master level||6,500|
|Flooring||Carpet Attic floors and stairs||3,100|
|Flooring||Trowel Polish Concrete Basement Floors||900|
|Stairs||Back wood stairs to basement||2,400|
|Tile||Master bath tile labor||8,500|
|Tile||Master bath tile Material||3,000|
|Tile||Attic bath Tile Labor||3,160|
|Tile||Attic bath Tile Material||1,320|
|Tile||Basement Subway tub tile surround||1,598|
|Tile||Basement subway tile||300|
|Bath||Attic Shower door||850|
|Tile||Kitchen Backsplash labor||830|
|Tile||Kitch Backsplace Materials||850|
|Plumbing||Rough Plumbing budget||17,900|
|Plumbing||Finish Plumbing/ Set fixtures||2,850|
|Plumbing||Finish and install pump for basement bath and laundry||2,500|
|Electrical||Electrical( budget only)- Owner provide ceiling & wall mount fixtures||22,625|
|Insulation||Attic insulation R-38, New Exterior wall insulation R-19||15,250|
|Cabinets||Master bath Vanity||2,250|
|Cabinets||Laundry room Cabinets||3,000|
|Cabinets||Powder and second bath vanity's||3,000|
|Countertops||Quartz Kitchen Counters||8,500|
|Countertops||Bath, Laundry counters Quartz||3,500|
|Cleanup||Demo Deck, siding, interior walls misc elect, plumb, dump fees||19,500|
|Miscellaneous||Project Management and Supervision, Permits buy owner||15,000|
|Permits||Building, Plubming, Electrical, Mechanical Permit Budget||2,500|
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The way we got it down to $604 was by simplifying some things and reducing material costs.
Here’s what we simplified:
Dropping the ceiling height in the basement and putting in a sewage pump. This eliminated the need to run a new sewer line to the street and cut out some excavation & concrete
Eliminating the dry well for stormwater management for a less expensive option
We downgrade the windows from a Marvin product to a Milgard product.
We swapped some carpet and concrete for some wood flooring.
That cut about $50,000 from the budget and got us to around $700k. That was still too high. We then eliminated a laundry list of expensive materials and cut out some big ticket items. I know this sounds like the thing I said the bank won’t let us do.
While it’s true, the project budget we submit to the bank has to be for 100% of the project remodel, there is nothing preventing us from providing a realistic materials budget for a line item like tile or appliances, even if we actually plan on spending more than that.
So, we identified things that we could estimate based on lower cost materials or remove from the budget because there were not considered required by the bank. These are the cost categories that removed or adjusted downward:
Required changes to the garage
You would think things like HVAC would be required, but we only need to have a heater, and there’s an old one in the basement. So, we included that in the budget we sent to the bank, and removed $20,000 of cost. So on the upside, the budget went down, but on the downside, Jenny and I now have to bring that 20K back in later. Jenny and I had saved about that amount and intended to spend it on the project, so this looked like it could work out.
This budget number meant that our property appraisal had to come in at about $1.5M in order to do the project.
And, spoiler alert…we missed that appraised value by a fairly wide margin. For a moment, it looked like we were not going to be able to pull it off.