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How Do You Get The Best Home Improvement For Your Buck? 

Home improvement is an art form on its own and people should be required to get a license before they even approach your local do it yourself home improvement stores looking for inspiration to make over their precious home.

Although I like property I prefer to leave the decorating to those who have the knack for it; like my wife. She is the best and that’s not coming from me as a loving husband, she has an eye for detail. 

When people get into real estate and flipping houses they get tangled up in the superficial world of flipping through home improvement catalogs and resources; which doesn’t sell the property for the price you need it to make a worthwhile profit. It makes no difference if you stick mahogany wooden antiques inside a two bedroom house, it will still have the value of a two bedroom house to the mortgage lender. 

Yes folks, I learned that the hard and expensive way! You should read further so that you can spare yourself the same grief. 

I had a property that I bought from the developer with all the amenities and I took 110% loan (10% was my undeclared home improvement loan) on the selling price to add to the appeal of the property. I added electric garage doors, paved the whole yard, added security gates all over (South Africa is crime ridden) and was happy to have the bank come re-evaluate my little expensive project. 

I was shocked when the valuator came and walked around my entire investment (on the beautiful paving by the way) and blatantly told me to my face that the property still has the same value with the bank. I was dumbstruck, what about the stuff I added? 

He looked at me and answered in a pleasant voice, “You should have rather added an extra bedroom.” 

That’s when a huge light-bulb went ka-boom in my head. Darn it, I got sidetracked by emotions. I ended up working on making my project look appealing to the buyer or tenant but I forgot about the lender, the one who will finance the property. 

Home improvement is a very expensive mistake you can make on your real estate investments. You either improve your house for you to live in or you add capital value by increasing the size of the property. 

Let’s analyze my mistake and see what I did. First I did not do my full home-work. The residences in the area where 2 to 3 bedroom newly built houses that were near the outskirts. Security was a problem and I had to get security gates which improved the outlook of the property without adding a single cent to my resale value. 

I added paving because the soil was not ready for maintaining grass but the cost would not add a single red cent to the resale value of my house. 

Everything that happened was my fault and it was due to poor planning. I would not make the same mistakes again but I made some money of the project. I could have made more if I simply walked over to the site and assessed it, built a two bedroom house, rented it out and added a third bedroom later when I am ready to sell it. 

That would have shot up my initial cash outlay and maximized my profits because the geeky building would have grown from a two bedroom to a three bedroom adding a 30-50% increase to my property value. 

So when you come into real estate investment looking to improve homes and sell them; maybe you should rather focus on doing that as a job. Real estate investing is far bigger than just home improvement.  The additions may not be useful enough to increase the capital worth of my property but I can still depreciate the improvements over the next 5 years to reduce my tax credits. I got a nice fat check at the end of that tax year. 

And THAT is why I love real estate investing. 

Happy investing y’all.