Revealed ... How Shrek, Onions and Philosophy Can Help You Get What You Want On Your Home Makeover

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Hey Homeowners, if you're planning a Home Makeover project, what is the one thing you can probably expect to happen ... I'm going to stick my neck out and predict that it happens on 99 % of Home Makeover projects. And the 1% it won't affect, have just won the Lottery big-time ... yes, that is a clue.

 

It even happened to me on my own Dream Home Makeover Project. You know, the one that quickly became a House-of-Horrors before I managed to turn it around. If you haven't heard that story, hop over to https://houseofhorrors.thediypm.com where you can hear me share the story and also get FREE access to our eBook of the project - so you can see all the before and after photos. I share my journey from high hopes and expectations through literally the depths of despair on the way to a hugely rewarding and satisfying end result ... but only just. Honestly, I nearly lost my shirt along the way.

 

So here's the 99% thing ... our Home Makeover budgets simply don't match our desires and aspirations. They seldom do.

 

I'm guessing it won't surprise you when I tell you that on every project I've ever worked on, my Clients always wanted more than they could afford. And that includes some extremely wealthy individuals on multi-million Dollar projects. I think it's closely related to our dreams that sow the seeds that eventually grow into the project adventures we embark upon. High hopes but financially unrealistic.

 

And it's not just about what we can afford. Although budgets are often limited by how much cash we can get our hands on, there's another very important factor that must always be considered when we set our budgets. And that's to do with the danger of overcapitalising.

Most properties have a market value above which they simply won't sell. In lots of markets, the upper limit is a combination of location and amenities - overall floor areas, number of bedrooms, reception rooms and so on ... and, of course, on the condition of the property.

 

Imagine if we embark on a passion project that doubles the cost of the property - that's adding the original purchase price to the cost of the makeover. Now if the revised sale value of the property doesn't at least match that total cost, then we've overcapitalised - we've spent more than we can recover. Which is usually unwise. But, not always. Anyway, before I get sidetracked, this is really a whole topic in its own right and I'll be focusing on that in another episode in the next few weeks. The point is, that it's often wise to limit the budget deliberately and NOT rush to spend everything we can afford even if it means we don't get everything we desire.

 

So, does this mean we're doomed to disappointment on our Home Makeover projects ? Well, no actually, it doesn't !!

 

For many years, I've been using a strategy with my ambitious Clients to help them achieve super-satisfying end results without exceeding their budgets. That may sound like Harry Potter magic, but it isn't. It's just a three-step strategy that any Homeowner can follow. And it certainly saves money or at least limits how much money is spent - which is kind of a definition of staying within the budget.

 

I do have to warn you, I'm not promising you can get everything your heart desires but, if you'll embrace a well-known philosophical tradition, then ... to quote the Jedi Masters from Star Wars ... you can find "Balance in the Force".

 

If you're ready to find out how philosophy underpins this secret strategy, then stay with me because I'm going to share three simple steps that anyone can easily take ...

 

Hello and Welcome to Home Makeover Project Secrets, the show that equips Home Owners with the skills and understanding to execute successful home projects, that goes behind the scenes of Home Build Projects to unlock the secrets and share insider tips and strategies to save money and time on any and every home project. What you learn will give you the confidence to embark boldly on your next project and you’ll know what to do so your story has the happy, dream home ending you deserve.

 

I’m your host, Andrew Philips …

 

When I talk about "Home Makeovers", I include renovation, remodelling, alterations, additions, going up into attics and down into basements, redevelopments and even ground-up new builds. Any and every project where you're going to be appointing professionals, designing something, buying materials, carrying out construction work, employing contractors and sub-contractors, suppliers and manufacturers and even if you're doing some or all of the work yourself. All things home build.

 

I'm delighted you've joined me today.

 

Because we're dealing with what might be quite complicated information, especially if you are unfamiliar with some of the terminology and processes, the show notes and transcript will be uploaded to our website www.thediypm.com so you can easily revisit any episode and refer to the key information shared each week. And of course, if you prefer to watch or read an episode, rather than listening, you'll find links on the website as well. We also include any links to resources, free gifts and other useful information mentioned during episodes.

 

Let's be clear what this problem is that affects 99% of Home Makeover projects. Basically, it's about something my mom used to tell me regularly ... "Your eyes are bigger than your stomach" !! Which, after I had ordered the triple burger with cheese, bacon and extra fries, was her way of telling seven-year-old me that there was no way I could eat everything on my plate. Usually, she was right. In the case of Home Makeovers, we might rephrase this to "Your dreams are bigger than your wallet".

 

I wonder if that's you ? If you're anything like me and you want more than you can possibly eat, then the end result is massively frustrating because you end up leaving a ton of great food on your plate. And in the Home Makeover version, like most Homeowners, you end up not being able to afford half of what you really want. Which at best is disappointing.

Did I hear you ask "Andrew, is there a solution ?" And, as I've already hinted, there is. But you need to be willing to be a bit philosophical. The mindset you need is ... and you probably guessed it ... Pragmatism. Which simply means ... among other things ... being practical, especially when making decisions.

 

Okay, you're right, that isn't very earth-shattering and you're probably thinking "Tell me something I don't already know". But how you apply it, that essential pragmatism, is the secret sauce. This strategy is just like our favourite Ogre, Shrek. Remember him explaining to Donkey ... "there's a lot more to Ogres than people think ... Ogres are like onions ... onions have layers, Ogres have layers". Well, anyway, in this case, "strategies have layers".

 

Now, when planning any Home Makeover, I always recommend that you push to include everything you'd really like to have or do - a sort of "Blue Skies" mindset ... where you strip off the shackles and imagine just what might be accomplished "if money was no object". This is a very effective way to make sure you have captured all of the potential scope elements that would make this a truly dream project. But, being pragmatic, you must keep in mind that this will include things you know you can't afford ... because money isn't "no object".

 

The purpose here is not to make yourself miserable about what you can't afford but to ask yourself what might be possible. And that's much more exciting.

 

Next, taking your "Blue Skies" wish list, you need to run the numbers to create an outline Cost Model or Cost Plan ... even though you know you probably won't be able to afford everything. The more detail you build into this preliminary costing, the easier and more effective the follow-on process will be. Ideally, you want enough detail so you see where the costs are stacking up - more than just a total area multiplied by a flat rate ... a cost per square foot or square metre.

 

So, this gives you a rough idea of "all" of the stuff you want and, with it, you also have a rough idea of the total cost which, probably as expected, exceeds your budget. So you're already being "pragmatic" ... you haven't lost your marbles ... you know you're going to have to be sensible.

 

The next logical part of the process is to work out how to get what you want for a lower total cost, right ? Yes, exactly, 10-out-of-ten. But ... and there's always a "but" ...

 

Typically, most Homeowners would go wrong when taking this next step. What do they do ? And why is it wrong ? Well, since most budgets are created by taking the total area and multiplying by a cost per square foot or square metre to arrive at a total cost, our minds work from that cost  for area perspective. So, logically, to get the cost down we need to spend less over the total area. We need to make everything cheaper. Sound about right ?

 

And how do we do that ? Easy, we plan to spend less item by item. In the original budget, maybe you planned to spend $ 10,000 on a bathroom so you decide you will reduce the budget down to $ 5,000. You're aiming for a similar bathroom, no loss of amenity, just cheaper. Hmmm ... maybe ...

 

But the effect of making everything cheaper is that you can easily just make the whole outcome, well ... uhhh, cheap. It's a very common mistake that we see over and over. If you've ever toured houses for sale when looking for your next home, then you will have seen plenty of examples where the Realtor or Real Estate Agent will chirpily tell you about the great new en-suite bathroom the seller has added and why this makes the property a must-buy opportunity.

 

You think "Wow, there's an en-suite bathroom" but when you walk into the closet they've converted, you instantly want to run out of the property, never to return. They've clearly spent no more than $ 100 in total and the outcome is just cheap and nasty ... Ok, maybe not $ 100 but you know what I mean. They haven't spent enough. You know at once, for you to buy and live in this property, that en-suite will have to go and, if you still want an en-suite - which may have been the whole reason you were interested in the property in the first place, you'll have to have one added. More cost on top of the already inflated - en-suite-included - purchase price.

 

And so this is where we implement this super effective, Three-Step or perhaps 3 Layered strategy.

 

It's best explained using an example. My Clients had high aspirations. Theirs was a sizeable project and the planned scope was extensive.

 

My clients have two children who had been sharing a bedroom. But the kids had reached the age where they really needed to have their own, separate bedrooms. Their house had an oversized, but out of date, family bathroom, so they planned to remodel the family bathroom into an en-suite for one of the children while adding a new en-suite with the new bedroom addition.

 

Also, my Client's parents had recently retired and they were hoping would spend more time with them and for longer periods so they also planned another separate studio space that would incorporate a bedroom, a small kitchenette and an en-suite bathroom.  Along with those accommodation alterations they wanted to change the layout of their kitchen, increase the size of the adjacent utility space and open a wall through to a separate dining room to create a single, open-plan kitchen-diner. I know, ambitious, right ? Exciting. Challenging. Except that they couldn't afford the total cost. The initial Cost Plan indicated a total cost around $ 132,500. But their available budget was just $ 100,000.

 

And this was the process we followed to solve the problem.

 

So Step 1 : To Rank, from most important to least important, each of the scope elements. A great way to do this is to use a simple spreadsheet - Excel or Google Sheets will work perfectly - even a notebook will be fine. On the left-hand side list, the scope of works by location or whatever measure you are using for your ranking. Most important / essential at the top and least beneficial / least valued at the bottom. With that, list the budget allocated for each space.

 

If you're listening to this episode, you may want to catch the YouTube video to watch what I'm showing on screen or visit the website at www.thediypm.com/podcast and follow the link for this episode to the show notes where I'll include a link to a PDF example you can view. For privacy reasons, the costs shown are for illustration only so don't let that put you off ... I'm not trying to explain what these scope items should or could cost.

 

Following the strategy I've outlined, we ranked each scope element from most important - highest impact, most needed down to least or lower. Remember, this is a very personal exercise. Another family might have ranked exactly the same scope very differently. Again, don't get hung up on the ranking - it's the process you need to grasp and apply for your own projects. And with the ranking, we included the budget cost for each scope element.

 

We ended up with the following list :

Additional Bedroom - $ 35,000 (this included the extension that was required)

Additional en-suite bathroom - $ 20,000 (also including some of the costs of the extension)

Remodelling the existing family bathroom to create an ensuite for the existing kids' bedroom - $ 15,000

Additional studio suite  to be created in an existing attached single garage - $ 30,000 (including an en-suite shower room)

Opening up the kitchen-diner - $ 7,500

Alter the kitchen layout - $ 10,000 (including some new kitchen units and white goods)

Alter the existing utility room - $ 15,000 (including removing some walls from an adjacent access corridor)

 

To get the work done within budget meant they needed to save $ 32,500 which was about 25% of the total budget cost. If they had simply reduced the budget available for all of the spaces by 25% then they would have been forced to accept massive quality and functionality compromises on everything. And may still not have been able to get everything done. The end result would have been disappointing for them and probably also for future buyers ... maybe making the property difficult to sell or having to sell at a discounted price. Both bad outcomes.

 

It's not that reducing costs is a bad tactic. If you only have to get down a couple of percent, then that may have minimal impact but when you get above 10%, you're likely looking at a bad outcome.

 

So now, with this simple spreadsheet and ranking of importance we moved to Step 2.

In this next step we embraced pragmatism as we considered the problem of reducing the project cost by $32,500.

 

Rather than applying a blanket percentage cost reduction, we considered if there was any single item or group of scope items we could simply omit to bring the scope back on budget.

This is where pragmatism is needed - yes, you are having to let go of some scope items but for the benefit of retaining the best possible and most desirable elements.

 

It was immediately apparent that if we simply omitted the extra bedroom and associated en-suite bathroom, we could save $ 55,000. "Bingo" ! But we would lose that extra child's bedroom. So actually, not so "Bingo" !! Because we had ranked the scope elements, we already knew what was most important or desirable.

 

Next, we considered omitting the studio suite for the occasional visits from the grandparents, omitting $ 30,000 in just that scope element, which would almost get us there.

 

Or, we could omit remodelling the family bathroom at $ 15,000 and omit re-configuring the utility room at another, $ 15,000. Which together would bring us close to the target reduction.

 

We quickly realised that there were various options for reducing the spend and that brought us to step 3.

 

So, in this step we peeled back another layer as we considered those options from a value perspective and re-evaluated from a need perspective. And this helped us get laser-focused.

Omitting the child's bedroom was taken off the table - that was essential. But, after discussions with a Realtor, we realised that the additional en-suite bathroom was adding minimal value to the property. It became clear that retaining the family bathroom with a quality upgrade, would give both kids could have adequate, modernised although shared bathroom facilities - just not en-suite. So the new en-suite was omitted. A saving of $ 20,000. More than halfway. Now just $ 12,500 to go.

 

The studio suite for the grandparents also seemed like an easy win to omit at $ 30,000. After all, it might only be used occasionally. But again, in discussion with the realtor, the point was well made that it had other significant benefits. Yes, it would make for wonderful grandparent family time, but it would also count as an extra, super-bedroom suite for larger families. This would increase the value of the property and make it a more attractive option for buyers. It even had potential to be a rentable apartment space if an external door could be added. As a source of income, that potential alone could increase the property value. So the studio apartment was retained.

 

And then the realtor advised that the utility room remodelling would not affect the property value. On balance, the new, modernised, open-plan kitchen-diner would be hugely attractive for families and far outweigh the minor loss of the utility room improvements. My Clients recognised - being pragmatic - that this could even become a future mini-project if finances became available.

 

So we had found a solution that would reduce the budget back to $ 97,500.

 

Once the utility room remodelling was dropped, my Clients considered if they could recover any of the loss of amenity in the kitchen alterations and so added the small saving into the kitchen budget and also to pay for that external doorway into the studio apartment.

The family were delighted with the outcome. Their home has been significantly improved and enhanced and none of the work carried out has compromised their quality expectations.

 

So pragmatism, applied in three steps to peel back the layers leading to an outcome that achieved both the primary goals of additional amenities AND the, probably equally significant, secondary goal of enhancing the property value.  A win on every level.

 

Three steps:

One - Rank in order of desirability or need with costs.

Two - Reflect - pragmatically consider if any scope elements can be omitted completely.

And finally, Three - Reconsider - review the options from step 2 for reducing the total cost in the light of need and value, but now taking into account resale value as well as buyer expectations.

 

As I've mentioned, this may be easier to follow if you have the spreadsheet example in front of you. Please just visit www.thediypm.com/podcast and follow the link for this episode to the show notes where I'll include a link to a PDF example you can view or just watch the video on our website or on our  YouTube channel Home Makeover Project Secrets.

 

And that's a wrap for today. But, it's not actually all there is to share about this topic. Today we've focused on getting to an affordable budget before you commence the project works. But what happens when costs start to creep upwards once your contractor is appointed and works have commenced on site ? Well, in the next episode, to answer that exact question, I'll share an effective strategy for managing increasing costs on live projects.

 

To make sure you never miss an episode, why not subscribe to Home Makeover Project Secrets on our website at www.thediypm.com where you'll also find our blog posts and details about our upcoming Project Masterclasses and Training Courses.

 

If you have a question about a project you're planning or already running, please reach out and email me on faq@thediypm.com.

 

If you have a challenge to overcome then I can just about guarantee others are also facing the same or similar challenges. It’s always reassuring to know you’re not the only one battling away …

 

It's been great to have you with me today and I look forward to having you back for the next Episode of Home Makeover Project Secrets.

 

All the best on your Home Makeover project adventures.

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Andrew Philips, Project Management Coach