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Building Home Equity - The Golden Rule of Investing Sweat
If there's a do-it-yourselfer inside of you, mixing some elbow grease with paint is the
best way to get a decent return on your home investment. However, if you
are not so inclined and try building home equity yourself, you could end up
with a poor return on investment. So what is the golden rule for
investing in your home? Know yourself!
Know what you are
capable of doing and what you can't handle, particularly if you are
going to do a major remodel. You may want to completely demolish the
wall separating your master bathroom and your master bedroom to make one
spacious master suite, but if you don't know anything about electrical
or plumbing work, be careful. You'll end paying more to professionals to
fix your mistakes and do the job right, so you may as well call them in
when you need them. Even if you have to hire a plumber, you can still
plump up the bottom line by doing the painting or the tiling or
installing hardware yourself.
Do-It-Yourself Home Improvement Project RulesBe aware of the value of your home before you do the home improvement
project, and be aware of the value of your home after the home
improvement project. You want to avoid making any renovations that add
so much value to your home that you price yourself out of your
neighborhood because the amount your home will eventually sell for is
mostly determined by the cost of other homes in your neighborhood. If
your home is too expensive for your neighborhood you won't be able to
sell it, or you'll have to drop the price of your home to bring it in
line with surrounding homes. It doesn't matter how much sweat equity you
have or how little money you paid for the improvements, you won't get
any return on your investment.
Know when to stop improving. A simple kitchen update can easily
expand into an outdoor kitchen, formal dining room and breakfast nook.
Home improvements projects snowball fast, and if you want to keep hold
of your money and any hope of making some on your investment, you will
keep a tight rein on your home improvement project. Instead of an asset,
you could end up with a money pit. Decide what you want to do, do it,
then stop.
Don't cut corners. Don't skimp on materials, don't skimp on labor (if
you need to hire someone), and don't skimp on the details. Do your
research, get your permits and mind the small stuff. If you don't mind
the little details, in the long-term, they will grow into big
money-eating problems.
Do proper maintenance. If you properly maintain your home, you may not
ever have to make large-scale home repairs. Large-scale repairs are like
homeowners' fools' gold, anyway, because buyers do not pay for new
plumbing or heating or roofs. Your home should already have good
plumbing and all the other basic features. Also, if you keep up with
maintenance, you won't have to redo your kitchen a few years down the
line.
If you follow these rules and invest in your home the right way, your
sweat equity will pay off.
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