Building Home Equity: How to Turn Your House into an Investment
The greatest asset you can have in life isn’t just money or your job or the things you own; it’s your home.
Not only does it give you shelter from the elements, but it also gives you the ability to build equity and invest in your future – an ability that keeps growing as long as you keep making payments on your mortgage each month.
If you want to know how to turn your house into an investment, read on!
Five quick tips
1. Increase home value by adding square footage, renovating or making energy-efficient upgrades
2. Add features that increase curb appeal
3. Keep a clear perspective on how long you plan to live in your home and how likely you are to sell
4. Pay off as much of your mortgage as possible because it increases your equity in a measurable way
5. And finally, consider taking out a 15-year mortgage (or longer) and paying down the principal while letting interest accrue—it might cost you more in monthly payments but will save you thousands over time.
Whatever course of action you choose, remember: Homeownership is key to building equity and wealth.
Save a percentage of your monthly income towards retirement and investments.
If you want your home to grow in value, it’s important that you take steps as a homeowner to preserve and protect your investment. That means putting money aside each month for expenses like maintenance and repairs.
It also means setting some money aside in an emergency fund that can help cover unexpected costs—like expensive surprises found behind old paint or damage done by an untimely winter storm. When all of these expenses are covered, any additional money can be funneled towards investments or retirement savings.
Both will ultimately benefit your home value over time as they’ll pay off in returns when sold down the road.
Keep up with general maintenance on your house.
As you work on other parts of your home, keep up with general maintenance like oil changes and tune-ups on your HVAC system. These simple procedures can help keep energy costs down and prevent issues before they start.
Additionally, routine inspections and occasional services can keep small issues from becoming larger ones that cost time, money and stress to fix. Homeowners who invest in ongoing maintenance can find more peace of mind when it comes to their house’s function—and value.
Look for ways to improve your property value.
It’s smart to spend a little extra on appliances if you plan on staying in your home for awhile. While high-end models may be more expensive upfront, they’ll save you money over time.
A luxury dishwasher might run $1,200 but a standard one costs half as much and could break down much sooner.
Homeowners who invested in Energy Star appliances cut their energy bills by $65 per year on average according to Consumer Reports.
And because of its long lifespan, that high-quality appliance can actually save you $400 or more over its lifetime—which means it will pay for itself in just 2 years!
Consider remodeling if you can afford it.
For many people, home remodeling can be a better investment than stocks. According to HomeAdvisor, every $1,000 you spend on home improvements could increase your home value by $5-15.
If you don’t have a large bank account, that’s great news! You don’t need thousands of dollars or years of patience to increase your home’s resale value. You just need good information and a strong plan for how much work you want done on your house and how it will affect your bottom line.
The following tips can help you make smart choices about improving your home and turning it into a profitable asset in less time than it takes some folks to pay off their mortgages.
If you can swing it, invest in new or luxury appliances in your kitchen
New appliances are a big-ticket item that can do wonders for your home’s value. If you’re considering making a big investment in a new car, think about how much your house is currently worth and whether it could use some updates.
An update or upgrade to your kitchen or bathroom will not only help increase its value but also improve your quality of life every day.
For example, you might want hardwood floors installed throughout instead of carpeting—or consider updating your heating system with more efficient features that save money on utility bills.
