Traditionally, people invest their money in the stock market or with financial institutions. Portfolios are typically filled with 401k, IRA, mutual funds, and money market accounts.Verify your mortgage eligibility (Jan 28th, 2022)
Recently, I was walking my neighborhood and came across a new listing for a house on the same street. Comparable lot size, square footage and add ons. This new listing had more recent upgrades, so I understand all things are not equal.
I immediately start crunching numbers in my head. Let’s say that comp is listed at 10% more than the value of my home. That equals a 42% increase in my home’s value in less than three years, or a 14% annual increase. Not to mention the reduction in principle on my mortgage which means more profitability on my home.
This is when I really started reconsidering a home improvement project I let fall by the wayside. There is a storage area attached to my house. It’s a significant size, about 250 sqft. With more and more people working from home, my idea was to convert that space into an office with a closet that could also be a bedroom.Verify your mortgage eligibility (Jan 28th, 2022)
Turning my idea into a reality means some minor framing and drywall, insulation, flooring, and adding HVAC. In the end, I will have a beautiful office, and more importantly, I will add 250 livable sqft to my home, and an additional bedroom.
A realtor recently sent me a piece of direct mail that demonstrated my neighborhood home sales averaging $300/sqft. I’m no rocket scientist, but that math comes to $75,000 of increased value.
Will my home really be worth $75k more? Probably not. However, if I add half that value for $15,000 the return on investment is 250%. It would be hard to find that much return in the financial market unless you hit a crazy day in cryptocurrency.Verify your mortgage eligibility (Jan 28th, 2022)
This is just my story and my investment choice. For those with financial and/or tax advisors, a licensed professional is a good person to consult when making investment decisions. If investing in your home is worthwhile and there isn’t cash available, consider using the existing equity in your home with a cashout refinance or a home equity line of credit (HELOC).
To find out more about available rates on refinancing or buying a new home if you decide to sell your current one, call us at E5 Home Loans. Or click below to get a rate quote.
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