The sun is shining, the spring is springing, and we feel like doing some home improvements! And bonus, we’ll boost our home’s equity! Our friends at NerdWallet have a few tips.
In the age of Pinterest, a mecca of do-it-yourself projects and inspiration, you probably already have several home improvements in mind. Here are four ways to stretch your funds and maximize the payback as you remodel this year with an eye toward selling later on:
- Spring clean – Want to get paid to clean your house? Deep cleaning and decluttering is repeatedly a top pick by HomeGain for boosting a home’s value to a prospective buyer. It’s extremely financially efficient — just $400 of organizational additions such as cabinets, shelving, or storage can add $2,000 in value.
- Lighten up – Investing in measures that brighten your home can improve its value and may boost your mood as well. Adding a coat of paint, curtains and lighting costs an average of $424 but adds an average of $1,690 to resale price, according to HomeGain. Simply painting cabinets or trim can make a big difference, too.
- Increase curbside appeal – If potential buyers don’t like what they see on a drive-by, it’s unlikely that they’ll want to come inside. Simply installing a steel front door can produce a 96% return on investment in the form of an increase in resale value. Even power washing the exterior or planting a few trees can make a huge difference.
- Add a room – If you have unfinished space such as an attic or basement, adding a room can boost value and make your home more livable. On average, homeowners recoup about 84% of the cost of adding an attic bedroom when the house is sold, and almost 78% from remodeling the basement.Save on utilities with energy-efficient additions. Improvements such as solar-powered water heaters or better windows also can provide tax credits.
Save on financing
If you don’t have ready cash for a renovation, lenders such as Great Basin Federal Credit Union provide home equity loans and lines of credit, or HELOCs, that let you borrow against your stake in the property. In general, your home has to have a market worth that’s greater than what you owe on a mortgage – which equates to your equity.
Keep in mind that there may be substantial costs tied to equity financing, and it can add to the risk of foreclosure if you don’t make the payments. But the interest is often tax-deductible, which helps reduce the cost.
When remodeling to improve your home’s value, be careful not to price the property out of the neighborhood. Creating a palace on a street dotted with average houses can make it a tough sell. So don’t let chasing a dream undercut your return on investment.
Cait Klein, NerdWallet