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  • Writer's pictureoriane

Dollars & Sense: Part I

Updated: Nov 13, 2020

If I had a nickel for every time a professional has said our budget was "plenty", only to later find out that plenty meant we had under-budgeted by at least double; I'd be a very rich woman.


Shortly after we put in an offer for Melrose (which was immediately accepted....ooops) I realized there was a significant lack of accessible information on this V V important matter for every day folks like you and me. From the onset the hours I spent scouring the internet in hopes of finding realistic cost estimates, resource links, and tips for vintage home renovations have been incalculable.


It's no shock that my once perfect 20/20 vision is blurred after endless 2 AM iPhone searches:

"two flat conversion cost-Chicago"

"gut rehab renovation cost-Chicago"

"how much does it cost to convert a 2 flat to a Single-Family Home?"

"2019 sq/ft construction costs-renovation"


While I did eventually find a couple of other "crazies" who had documented their journeys, the process was laborious. What's more, the most valuable information, the information that I desperately needed to confirm whether or not this dream was doable, was undisclosed.


Yooo hooo, BUDGET!? Are you out there?


Is everyone that does a project like this toting around seemingly endless bags of cash found at the base of their own, personal rainbow or plucked from the money tree growing in their backyard???


We all know discussing finances is uncomfortable. Talking about money is quite taboo and often creates uninvited judgement. I respect all the reasons to keep project budget information private, but it certainly didn't help me, it won't help you, and let's face it, in relation to a renovation it is

the. most. important. factor.


In almost all cases knowing how much money you can or want to spend on a project determines whether or not it becomes a reality. Further, budgets often dictate logical vs. emotional design choices-a critical concept in decision making.


So, in the spirit of sharing information that was so difficult to acquire, I'm extinguishing the veil of secrecy in the hopes that fellow renovation nerds have a brighter flashlight as they head down the long, dark tunnel of vintage home renovation.


*Our goal with this renovation is to create a home that fits our community, personal needs and lifestyle. Our choices and budget might not be yours! Please be kind and refrain from passing judgement. Keep in mind that the information shared should be used as a guideline--- that pricing can change annually and is heavily determined by region, city, and material selection- especially in regards to fixtures and finishings. Budgets are subjective, moving targets. Everyone chooses to spend their money differently, and value can be placed on different aspects of every renovation.

 

Stay in your lane.

As my real estate agent loves to remind me, "staying in your lane" is of utmost importance when deciding on a renovation budget. The initial purchase price sets the foundation for your budget, with your ceiling being the potential resale value. I know this seems like common sense but it's very easy to get emotionally attached to a project and make decisions that might not yield long term benefit.


Simply put:

Probably don't spend more money on the house than you think you will be able to sell it for.


A sizable mortgage + renovation costs are a big financial burden to carry for any young couple so we have based our renovation budget and many design decisions on the principle that if we needed to leave lickity split due to a change in life circumstances we would be able to sell quickly for at least "break even".

 

Back to the budget.

Remember at beginning when I said double up?


When we first did a walk-through prior to purchase we asked the pro's if a $200K budget was doable. Though folks admitted it would be tight, not a "luxurious" budget, those same folks said, "Yes. It can be done."


Ahhh how cute!

We were such sweet, naive little babies back then; our dreams not yet squashed by the reality of a worldwide pandemic, rising labor prices and national lumber shortages.


We forged onward through the renovation wilderness, a false sense of confidence in tow as designed our dream house with an architect.


As we plodded along we realized the existing enclosed porch needed to come down. And that the back of the house needed a small addition to accommodate the dream kitchen. And that small addition needed a small, but new foundation.

and we added arched windows…

and a custom 19th century newel post for the staircase…

AND a 14 foot island wrapped in marble…

AND unlacquered brass faucets I can’t live without...

AND AND

ANDDDD!!!


Reality hits.

That original budget is no longer nearly enough.


Process

On Friday, July 10th, 12 months after this brainchild was conceived, our architect emailed me the DropBox link containing the 47 page construction document. I was so excited that I cried. Here was our house-our home-each stair baluster, light socket and baseboard, detailed on paper--so real to me that I can imagine what the entry feels like as I walk through the door.


But that budget? "$200K Plenty" somehow crept to $300K ---and if we are being honest, the expected final price tag will be way higher than that.

That house, while beautiful on paper, is totally hypothetical unless I can find someone to work with our budget.

 

Where does that leave us?

Later that same July afternoon I drafted a bunch of identical emails and we submitted our completed construction plans to 5 developers (general contractors) for bidding proposals. All were direct referrals from others or heavily researched and vetted prior to submission.

It's been about a month since sending those out and boy has it been an eye opening couple of weeks.


On initial review, the general feedback we’ve had is that, “the budget doesn’t fit the drawings”.

Oommf.


Almost right away, our front runner flat out told me our project was too much work for him right now and that he couldn’t take it on. This was a big bummer because he’d been a referral from one of those online resources I had found (thanks, Home Sweet Hoyne!) and had done a beautiful job on their two flat deconversion in Wicker Park.


GC 2 took about 2 ½ weeks to get me his bid, which seemed a bit rushed and wasn't very transparent. It also came in at $605K. Gulp.

While we mentioned we were up to discuss the budget and figure out if we could meet in the middle somewhere, after a little back and forth we pretty quickly realized that we just weren't on the same page at all. He quoted $32,500 to paint the interior of the house (waaaaah?!?!) so it's safe to say we won’t be working together.


GC 3, referred to us by our real estate agent, has been out to the house twice with subcontractors to review a couple of things and has had thoughtful communications with us several times to clarify and suggest some budget “friendlier” alternatives. We should have an initial bid from him in the coming days.


GC 4, who I found through those extensive late night internet searches, has taken us through several current projects (all multi unit to single family deconversions) and has been in touch with us to review our bid set. He also echos that the plans “as drawn” reflect $600K pricing but has been great about listening to what we can do from a budget standpoint and has even been willing to take us on as a smaller GC project to get us through demo, structural, HVAC, plumbing and electrical aka “white box” and then letting me take over from there.


GC5 was also a super sleuthing internet find. Their development group only works on North side Chicago on homes older than 100 years, so this is their niche. They had a much more hands off approach with ownership and tout their “turnkey” reputation quite a bit, asking the owner to stay of premises unless there is a scheduled walk through. At first blush this doesn't really seem like it'll work for a nosey gal like me but do excellent work so it's an avenue worth exploring. We’ve had some initial discussions about our budget and we have a call planned to review their proposal in a week or so. This comes with the knowledge that we will be making “compromises” due to the “budget constraints”....

 

So, dear readers, though we have planned and saved and worked our little tailfeathers off to establish what we once believed was a workable budget, we are certainly not through the woods. We know there will be sacrifices and that renovations are full of surprises which has already been evident in the budget fluctuation just in the planning phase.


More on money and budget chat as bids come in for review!

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