Remodeling Your Home Might Really Pay Off
October 24, 2016 in Monday on the Money
Years ago when I was speaking with a contractor about remodeling my first house, he fed me a sales line that went something like this: “Spending money on your house is like putting money in the bank; you’ll get it back later.” I chalked that little line up to exactly what it was—a ploy to get in my wallet—but two years later when my wife’s job relocated, our house sold for a capital gain of $27,000, which was slightly more than I had spent on the remodel.
We hadn’t planned to sell the house so soon, particularly since we were still enjoying the fruits of our labors. Actually, not only were we still basking in that new carpet smell, but the housing market had crashed and home values were in a downward spiral. I have no doubt the only reason we were able to profit on our home was because of the equity we had gained from the updates we did to our kitchen, master bath, and exterior siding. And I also think the renovation helped our house sell months faster than others in the neighborhood.
So while I still wouldn’t claim spending money on your house is exactly like putting it in the bank, I know how it can pay off first hand. It makes your home feel more like it’s yours. It makes you excited to walk through your front door. It makes you proud to invite family and friends over. And in the end, it can increase the equity you have in your house and make it easier to sell. If you’d like to look into renovating your home, speak to a lender to see what type of financing options are available to make your dreams come true. Just remember that when the sawdust settles, try to enjoy that HGTV-dream-house feeling a little longer than I did with my last house.
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By Adam Lucas Adam Lucas holds a Finance degree and an MBA from the University of Kentucky. His work has appeared in many major outlets including Yahoo, AARP.org, and GoBankingRates.com.
Monday on the Money is a weekly commentary from Bank of the Ozarks providing financial advice and solutions important to you and your family.