Using a home equity loan or line of credit to finance renovations and improvements on a property can be profitable and quite rewarding if done properly.
When you are planning to sell a property and you do not have funds on hand to improve, repair, renovate, or rehabilitate it, then a home equity loan or line of credit can get you over this hump.
If you are not planning to sell the property, and expect to live there for an extended period of time, then a refinance package with a mortgage lender for first or second mortgages, would likely be preferable.
Unless you are the recipient of large amounts of monthly cash inflow, I would advise that you do not contract for major improvements or purchases on 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 an equity loan or homeowner line of credit can be very helpful if you keep an eagle eye on the bottom line. Also, these types of loans are paid off at closing when you sell the property, leaving no residual bills and should be taken into account in price negotiations.
If you have been watching television and believing what they tell you regarding how to improve the resale value of your home, it is important to remember on TV the homeowners are receiving a great deal of labor, materials and design help that you will likely have to pay for. So, if you are only looking to sell your home, putting $10 in to get $10 out is futile. The real goal is to put $10 into your home and to receive $300 to $500 out at time of sale. If you are planning to stay in your home, then your decisions should not be based on dollar return, but only upon your personal likes and dislikes and comfort levels.
Before you start this project, it is imperative that you decide precisely what your goal is. Decisions you will be making may be quite different depending on what you're planning to do. You may personally love long white shag carpet in your bedroom, however, very few buyers will share that with you. You may want to put shelves high in all the rooms with holes connecting a model train set throughout the house. Again, very few buyers are in the market for that.
If you are planning to stay in your home, then by all means redecorate for your pleasure and taste. If however, you sincerely wish to sell your home, and are looking for the most money out for the least in, then I have some words of wisdom for you.
1.0. Remember that no matter how beautiful the inside of the property is, if your prospective buyers do not get inside, 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 with curb appeal. In the summer, the grass should be green (fertilize, water, weed n feed), neatly cut, edged, with no weeds or bare spots. Put down some sod if necessary. If you have concrete driveways, pressure clean them so they are bright and white. If you have asphalt driveways, seal them so that they are glossy and black and new and clean looking. Paint, at least the front and sides, of the house (all is better) with a bright, light, inviting color (eggshell, white, etc., it makes it look bigger and cleaner!). If the home is brick or siding of some sort, then pressure cleaning may well be appropriate for it also. Paint or refinish the front door. If the door is in bad shape, then replace it with something attractive. Clean all the windows so that they shine like Crystal from the outside (more on this later). Make absolutely sure that there is no trash, debris, or junk cars on the premises. There are a thousand little things that you can do to improve the curb appeal, but clean, neat, and neutral are the guidelines to work with.
1.1. No one wants to buy someone else's fleas, pet smells, grease piles, or expensive/outrageous/ridiculous colors, treatments, or idiosyncrasies. Buyers, by and large, are looking for a neutral palette to place their own mark on. If the property has old and worn carpet or floors, then replace it with a neutral carpet or laminate (look for large remnants and leftover stock with carpet and flooring dealers for an overall installed discount price). Paint the inside of the property, again with a neutral white or eggshell color, to make it look bright, inviting, and neutral. If there are small nail holes, anchors, or damage to the interior walls, a little spackle and self-adhesive patching and joint tape will do wonders. Further, buy a thick, heavy, one coat covers all, texture paint for the interior. This will solve a multitude of minor problems without a lot of work or time. Clean the windows! Let me repeat that, clean the windows so that someone viewing the home from the inside will only see brilliant sunshine streaming through the windows into this nice, clean, new carpet and paint smelling environment. If it is not sunny out, the windows will allow as much light as possible and make the interior look larger. If the windows are dirty, and there are dead bugs and dirt in the globes of the ceiling fixtures, your prospective buyers will cringe. Even the very interested prospects will undoubtedly offer less money. Five dollars worth of cleaning supplies can bring you hundreds in return.
Make sure all the appliances are clean and in working order. If you need to replace anything, a good used appliance store is the ticket. When prospects open the door to the refrigerator, it should be clean inside and cold. When they open the door to the oven, it should be clean. The burner pans on the stove should always be replaced. Installing a used dishwasher can be problematical, however, if the property already has a dishwasher installed that does not work, it should be replaced. For this, the used appliance store is the place to go. To install a new dishwasher becomes expensive, particularly if the property does not already have a dishwasher. Sometimes plumbing and electrical may be required to do so. A pre-existing 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. Because of the low price of disposals, this should only be a new item.
If it is summertime and very warm out, make sure the air-conditioning is working, and it is cool (72-74 degrees) when the prospects walk in the house. If it is winter, make sure the heat works and that it is warm (68-70 degrees) when they walk in. 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 the home is sheltering them from the elements. For you, the seller, this is a good thing.
Make sure that the kitchen and the bathrooms are clean and smell clean. Renovating these rooms can be very profitable, but, you need to do some of it yourself. Don't panic! The skills involved are not that complicated, and the home-improvement giants such as Home Depot and Lowes will even teach you how. All faucets should 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 from it. The water in the toilets, and the tanks should be clean (put a bowl cleaner in the tank, it's a good idea) and should flush easily. Do not place any toilet tissue in the bathrooms of a vacant property that you or anyone else is showing for sale. This discourages people out of your control from using the facilities and leaving a nasty mess for you to clean up. What is worse, if such a mess is left, imagine a buyer's reaction to it when they may be viewing the property with a Realtor.
Always remember that out of a hundred prospective buyers, more want to buy a property that is clean and neat rather than dirty and smelly. More of those same buyers will buy a property with neutral colors and carpet, walls, accessories, etc. Very few prospects will be interested in purple walls or carpet. The same goes for other loud and outrageous features, be it colors, textures, or graphics. Gothic symbols on the walls or any socially offensive political or religious icons will only work adversely toward your goal of selling the property profitably and easily. Regardless of what you may personally believe or think, extremes will offend someone, somewhere, somehow. If you wish to make a political statement, go to a demonstration or vote. If you want to sell the property to the widest available market, neutral and milk toast should be your guidelines. That is not to say that you cannot add some nice touches such as tile in a bath or kitchen or porch, but looked toward earth tones and not dramatics or absolutes.
Lastly, if you are living in the home, while renovating and trying to sell, take half of the furniture out and put it in storage somewhere. This will go a long way toward reducing clutter and making the property feel much less small and congested. Buyers want to stroll through a prospective home, not a minefield or a maze.
I hope these tips will serve you well with your project.
