Using a home equity loan or line of credit to finance home renovations and improvements can be profitable and highly rewarding if done correctly.
When you plan to sell a property and don’t have funds available to improve, repair, renovate, or rehabilitate it, a home equity loan or line of credit can help you overcome this hurdle.
If you are not planning to sell the property and expect to live there for an extended period of time, then a refinancing package with a first or second mortgage lender would probably be preferable.
Unless you are the recipient of large amounts of monthly cash flow, I would advise against major improvements or purchases with a credit card if you are looking to sell the property. This tends to make spending more than you really should on things too easy, and the bills linger long after the property has been sold.
Using a home equity loan or homeowners line of credit can go a long way if you keep an eagle eye on the bottom line. Additionally, these types of loans are paid off at closing when you sell the property, leave no residual bills, and must be factored into price negotiations.
If you’ve been watching television and believing what you’re told about improving the resale value of your home, it’s important to remember that on television homeowners are receiving a great deal of labor, material, and design assistance that will likely require to pay. So if you’re just looking to sell your house, putting in $10 to get $10 is useless. The real goal is to put $10 in your home and receive $300 to $500 at the time of sale. If you plan to stay in your home, then your decisions should not be based on the return on the dollar, but only on your personal likes and dislikes and comfort levels.
Before starting this project, it is imperative that you decide precisely what your goal is. The decisions you will make can be quite different depending on what you plan to do. You may personally love the white shag rug in your bedroom, however very few buyers will share that with you. You may want to put tall shelves in every room with holes connecting a model train set throughout the house. Again, very few buyers are in the market for that.
If you plan to stay in your home, then redecorate for your pleasure and taste. However, if you sincerely want to sell your home and are looking to get the most money for the least amount of money, then I have some words of wisdom for you.
1.0. Remember that no matter how beautiful the interior of the property is, if your potential buyers won’t walk in because it has no curb appeal, you have no chance of making a sale. The first place to start in making your home attractive and sellable is curb appeal. In the summer, the grass should be green (fertilize, water, weed and feed), neatly cut, bordered, free of weeds and bare areas. Lay down some grass if necessary. If you have concrete driveways, pressure-clean them so they are bright and white. If you have blacktop driveways, seal them so they look shiny, black, new and clean. Paint at least the front and sides of the house (everything is better) a bright, light, attractive color (eggshell, white, etc. makes it look bigger and cleaner!). If the house is brick or some kind of siding, then pressure cleaning may also be suitable. Paint or restore the front door. If the door is in disrepair, replace it with something attractive. Clean all the windows so they shine like Crystal from the outside (more on that later). Make absolutely sure there is no trash, debris, or junk cars on the premises. There are tons of little things you can do to improve curb appeal, but the guidelines to work with are clean, tidy, and neutral.
1.1. No one wants to buy fleas, pet odors, piles of grease, or someone else’s expensive/outrageous/ridiculous colors, treatments, or idiosyncrasies. Shoppers are generally looking for a neutral palette on which to place their own brand. If the property has old, worn carpet or flooring, then replace it with a neutral carpet or laminate (search for large remnants and surplus stock with carpet and flooring dealers for an overall installed discount price). Paint the interior of the property, again with a neutral white or eggshell color, to make it look bright, welcoming and neutral. If there are small nail holes, anchor holes or damage to the interior walls, a bit of caulk and self-adhesive patches and joint tape will do wonders. Also, buy a thick, heavy, one-coat, all-cover paint for the interior. This will solve a multitude of minor problems without much work or time. Clean the windows! Let me repeat, clean the windows so someone looking at the house from the inside only sees sunlight shining through the windows in this nice clean environment with new carpet and smell of paint. If it’s not sunny, windows will let in as much light as possible and make the interior feel larger. If the windows are dirty and there are dead bugs and dirt on the globes of the ceiling fixtures, your potential buyers will cringe. Even highly interested prospects will undoubtedly offer less money. Five dollars worth of cleaning supplies can bring you hundreds in return.
Make sure all appliances are clean and in good working order. If you need to replace something, a good used appliance store is the ticket. When prospects open the refrigerator door, it should be clean on the inside and cold. When they open the oven door, it must be clean. Stove burner trays should always be replaced. Installing a used dishwasher can be problematic, however if the property already has a non-functioning dishwasher installed, it must be replaced. For this, the used appliance store is the right place. Installing a new dishwasher becomes expensive, especially if the property does not already have a dishwasher. Sometimes plumbing and electrical may be required to do so. A legacy dishwasher eliminates those problems. I personally always try to install a garbage disposal in the kitchen. They are reasonably inexpensive, easy to install, and generally very well received by buyers. Due to the low price of disposals, this should only be a new item.
If it’s summer and it’s very hot, make sure the air conditioning is running and it’s cool (72-74 degrees) when prospects come into the house. If it’s winter, make sure the heat is working and it’s warm (68-70 degrees) when they come inside. This gives the prospect the immediate feeling of comfort in the property. Subliminally, in the back of their mind, they have already begun to feel that home protects them from the elements. For you, the seller, this is a good thing.
Make sure the kitchen and bathrooms are clean and smell clean. Renovating these rooms can be very profitable, but you have to do it yourself. Do not panic! The skills involved aren’t all that complicated, and home improvement giants like Home Depot and Lowes will even teach you how. All faucets must work without leaks. Leaks can usually be fixed with just a few simple washers from a hardware store. The hot water faucet should have hot water coming out of it. The water in toilets and tanks should be clean (putting toilet bowl cleaner in the tank is a good idea) and flush easily. Do not put toilet paper in the bathrooms of a vacant property that you or anyone else is listing for sale. This deters people outside of your control from using the facility and leaving a nasty mess for you to clean up. What’s worse, if such a mess remains, imagine a buyer’s reaction when he might be viewing the property with a real estate agent.
Always remember that out of a hundred potential buyers, more want to buy a property that is clean and tidy rather than dirty and smelly. More of those same buyers will buy a property with neutral colors and carpets, walls, fixtures, etc. Very few prospects will be interested in purple walls or rugs. The same goes for other flashy and outrageous features, be it colors, textures, or graphics. Gothic symbols on the walls or any socially offensive political or religious icon will only work adversely towards your goal of selling the property profitably and easily. Regardless of what you personally believe or think, extremes will offend someone, somewhere, in some way. If you want to make a political statement, go to a rally or vote. If you want to sell the property to the widest available market, milk and plain toast should be your guidelines. That’s not to say you can’t add some nice touches, like tile in the bathroom, kitchen, or porch, but you went for earth tones and not drama or absolutes.
Lastly, if you are living in the house, while renovating it and trying to sell it, remove half of the furniture and put it away somewhere. This will go a long way in reducing clutter and will make the property feel much less small and congested. Buyers want to walk through a prospective home, not through a minefield or maze.
I hope these tips will serve you well with your project.
