My Home as an Investment
Many people think of their house as just a home. And while that is ok, it can (and arguably should) be viewed as an investment as well. A simple change in thinking can set yourself down a path of generating added equity and some additional income, should you sell.
What do I mean by a change in thinking? Well, a typical homeowner may decide they want a new deck, a remodeled kitchen or a garden in the back yard. Many times, decisions to upgrade are based more on owner wants or perceived needs. Don’t get me wrong - updates like these can be great for quality of life and appeal but an investor will ask themselves, “Will I get a return on my investment in this project if I sell the house?”
Kitchens are one of the most appealing parts of a home and investing in making it appeal to buyers is a good thing, but you should ask yourself: if I spend $15,000 on a kitchen remodel, will I be able to charge an additional $15,000 on the sale price of this home?
Maybe you need a new deck but a concrete patio for half the price would actually suffice. Do you put in the deck because it looks better to you, or do you put in the concrete patio because the ROI pans out? I would usually argue to put in the concrete patio because I will likely never get my money out of the deck and it will most likely require maintenance.
Sweat equity is always best if time allows. Paint your own house, fix up your own landscaping. Do the small things that create value and, by all means, upgrade your home to fit your lifestyle. But when you do decide to upgrade, ask yourself: will I get a return on this investment? Do you really need the upgraded flooring or quartz countertops? Will the value of the house increase enough to cover the upgrade cost plus more? Maybe, but also maybe not.
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