Rolling Up Your Sleeves for Increased Equity
Most entrepreneurs are intimately aware of the term “sweat equity.” It’s that above-and-beyond work spent to build their business and ensure success. If you think of your house like a small business, then homeowners can appreciate a similar understanding of the term…
Sweat equity is the value added to a property by means of labor and improvements created by the owner instead of hiring someone else to do it. It means rolling your sleeves up to increase the success – value – of your home.
Determining when to pull out the toolbox depends on your financial goals. If you’re thinking of taking advantage of the current equity in your home by refinancing the mortgage, then you may want to make some improvements before the appraisal to improve those numbers. Or if your intention is to up the long-term value then you might be looking to refinance now for cash in order to make those big improvements.
Whether your plans are of the chicken or the egg variety, there are many ways to increase your investment, with or without help. Unless your day job is roofing or construction, major home improvements often need to be hired out. Shopping wisely for local contractors can ultimately save you money even if it isn’t your own sweat involved.
Thanks to the popularity and influence of HGTV and TLC shows over the last decade or two, DIY is often the enthusiastic default for homeowners. According to NerdWallet, approximately 38% of all property renovation projects are tackled by homeowners. Millennials in particular are eager to save money – and increase equity – by learning from a YouTube video and doing the work themselves.
DIY projects that add to the aesthetic value of your home can vary from a simple coat of paint to planting flowers in your front yard. Here are a few projects that will improve the appearance of the home and possibly affect your appraised value.
• Adding molding or baseboards to a room
• Updating lighting throughout the house
• Simple landscaping investments to add curb appeal
• Adding an attractive tile backsplash to kitchen or bath areas
• Refinishing or replacing floors with tile, wood or modern laminates
Some home improvement projects will provide practical benefits to you and future homeowners, thus adding immediate value. They might include:
• Adding a deck or patio to the back yard
• Replacing toilets and fixtures to be more energy efficient
• Installing new windows – also energy-wise
• Minor kitchen or bath remodels for much needed updates
• Refinishing basements or garages
Determining the best projects to take on – whether to improve refinance and loan qualification or the best use of a cash-back refi for long-term equity – may be difficult when you’re “too close” for perspective. At EnTrust Funding (ETF), we can help with all areas of building equity, taking advantage of current markets, and how to wisely protect your investment. Let’s roll up our sleeves together and make the best decision for you, your family and your home in 2020.