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Building Home Equity - The Golden Rule of Investing Sweat

If there's a do-it-yourselfer inside of you, mixing some elbow grease with paint is the best way to get a decent return on your home investment. However, if you are not so inclined and try building home equity yourself, you could end up with a poor return on investment. So what is the golden rule for investing in your home? Know yourself!

Know what you are capable of doing and what you can't handle, particularly if you are going to do a major remodel. You may want to completely demolish the wall separating your master bathroom and your master bedroom to make one spacious master suite, but if you don't know anything about electrical or plumbing work, be careful. You'll end paying more to professionals to fix your mistakes and do the job right, so you may as well call them in when you need them. Even if you have to hire a plumber, you can still plump up the bottom line by doing the painting or the tiling or installing hardware yourself.

Do-It-Yourself Home Improvement Project Rules

Be aware of the value of your home before you do the home improvement project, and be aware of the value of your home after the home improvement project. You want to avoid making any renovations that add so much value to your home that you price yourself out of your neighborhood because the amount your home will eventually sell for is mostly determined by the cost of other homes in your neighborhood. If your home is too expensive for your neighborhood you won't be able to sell it, or you'll have to drop the price of your home to bring it in line with surrounding homes. It doesn't matter how much sweat equity you have or how little money you paid for the improvements, you won't get any return on your investment.

Know when to stop improving. A simple kitchen update can easily expand into an outdoor kitchen, formal dining room and breakfast nook. Home improvements projects snowball fast, and if you want to keep hold of your money and any hope of making some on your investment, you will keep a tight rein on your home improvement project. Instead of an asset, you could end up with a money pit. Decide what you want to do, do it, then stop.

Don't cut corners. Don't skimp on materials, don't skimp on labor (if you need to hire someone), and don't skimp on the details. Do your research, get your permits and mind the small stuff. If you don't mind the little details, in the long-term, they will grow into big money-eating problems.

Do proper maintenance. If you properly maintain your home, you may not ever have to make large-scale home repairs. Large-scale repairs are like homeowners' fools' gold, anyway, because buyers do not pay for new plumbing or heating or roofs. Your home should already have good plumbing and all the other basic features. Also, if you keep up with maintenance, you won't have to redo your kitchen a few years down the line.

If you follow these rules and invest in your home the right way, your sweat equity will pay off.



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