Financing a Project

Estimate Costs

Start budgeting by looking at the scope of the project. You should have an idea of what your addition will be: one room or multiple rooms; a kitchen, sunroom, or master suite; and where the addition will go. Bankers or real estate professionals can give you an average cost per square foot for building in your area. For a rough estimate of labor and materials costs, multiply that figure by the size of your addition in square feet. Allow extra money for special circumstances or for luxury materials.

Add building permits and costs of living away from home for any period of time, including meals out and hotel stays, to the labor and materials costs based on square footage. If you're doing any of the work yourself, you can deduct the estimated labor savings, but add the cost of renting equipment or buying tools.

This preliminary budget will become more specific as you complete the planning stages. A budget based on the square footage and average costs will give you a rough idea of the cost, but you won't have accurate figures until you've developed the final blueprints and received bids from the contractor and materials suppliers.