Buying & selling Archives

October 13, 2022October 18, 2022

Beginners’ Guide to BRRRR Real Estate Investing

tools in foreground, man nailing wall in background

It may be easy to confuse with a sound you make when the temperatures drop outside, but this slightly strange acronym has nothing to do with winter weather. BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. This method has gained quite a bit of traction and popularity in the real estate community in recent years, and can be a smart way to earn passive income or build an extensive investment portfolio.

While the BRRRR approach has several steps and has been refined over the years, the principles behind it — to buy a property at a low price and boost its value to build equity and increase cash flow — is nothing new. However, you’ll want to consider each step and understand the drawbacks of this approach before you dive in and commit to it.

Pros and Cons of BRRRR

Like any income stream, there are advantages and disadvantages to be aware of with the BRRRR method.

Pros:

Potential to make a significant amount of money

Provided that you’re able to buy a property at a low enough price and that the value of the home increases after you rent it out, you can make back much more than you put into it.

Ongoing, passive income source

The primary appeal of the BRRRR approach is that it can be a relatively passive source of income; aside from your responsibilities as a landlord (or outsourcing these duties to a property manager), you have the opportunity to bring in consistent monthly rental income for low effort.

Cons:

The risk of miscalculating ARV

When determining the after-repair value (ARV), make sure you’re taking into account the quality of the upgrades you’re making — it’s not uncommon for individuals to cut corners on bathroom or kitchen finishes because it will be a rental property, only to have the appraisal come in less than expected due to this.

Investing in a rental property can be more expensive than a primary residence

Rental property financing (and refinancing) often involves a larger down payment requirement and higher interest rates than an owner-occupied home.

The time necessary to build up enough equity for a refinance

Growing equity takes time, and depending on current market conditions, it may take longer than you would like for the property to accrue enough to refinance it.

Responsibilities as a landlord

Unless you’re willing to hire and pay a property manager, you’ll need to handle any tenant issues that pop up yourself once you rent out the residence. If you plan to accrue many rental properties, outsourcing property management may make sense, but many landlords choose to manage the first few properties themselves to start.

The BRRRR Method, Step by Step

Buying

For your first property, you’ll want to familiarize yourself with the characteristics that generally make for a good investment. Ultimately, you’ll want to seek out a property you can purchase at or below market value — as this will increase your likelihood of making money. But you’ll also want to make sure that you’re making a wise investment that makes sense in terms of the amount of work the property requires.

There are a number of ways that you as a potential buyer can increase your odds of securing a home for as low of a price as possible.

These include:

Learning about any specific motivational factors the seller has in addition to price
Offering cash (if you need it, you can get a short-term, “hard-money” loan), then take out a loan after rehabbing the property
Renting the house back to the seller, which is common with the BRRRR method
Write a genuine letter to the buyer that explains your vision and goals for the property
Waiving contingencies and buying the home “as is” for a faster closing
Get creative with your offer (for example, requesting to buy the furniture with the property)

Rehabbing

Before purchasing a home and rehabbing it, you should do some rough estimations of how much you’ll need to spend on the improvements — including a breakdown of what you can DIY versus what you’ll need to outsource. Make sure to consider whether this rehab will justify a higher monthly rent and whether the value added will exceed the cost of the project.

Fortunately, there are some models that can help you calculate some of the expenses involved to make a more informed decision.

You can determine the ARV of the home by combining the purchase price with the estimated value added through rehab. One important thing to note is that the estimated value is not the same as the cost of repairs; it’s the value that you believe the repairs will add to the home overall. If you purchase a home for $150,000 and estimate that repairs will add approximately $50,000 in value, the ARV would be $200,000.

Once you land on the ARV, the next step is to determine the MAO (Maximum Allowable Offer).

This equation is slightly more complicated:

MAO = (ARV x 70%) – cost of repairs

So, using the above example, if the After Repair Value of the home is $200,000 and the cost of repairs is estimated at $35,000, the MAO would be $105,000.

It’s worth nothing that there are certain renovations and updates, like landscaping, kitchen and bathroom remodels, deck additions, and basement finishing, that quickly add more value to a home than other fixes.

Renting

There are two important components when it comes to turning your investment property into a rental: determining fair market rent and securing suitable tenants. Websites like Zillow Rental Manager and Rentometer can help you set an appropriate rental amount. It’s also important to do due diligence when it comes to finding tenants. In addition to Zillow Rental Manager, Zumper and Avail can provide screening tools to help you vet potential applicants and perform background checks.

Refinancing

Once the property gains enough equity, you’ll apply for a refinance. Keep in mind that while specific requirements depend on the lender, most will request a good credit score, a tenant who has lived in the unit for at least six months, and at least 25% equity left over after the refinance in order for you to get the most favorable rates and terms.

Repeating

This part is pretty simple — once you pull out the cash from one property for a refinance, you can use it to put a down payment on your next investment property, while the refinanced home continues to bring in rental income.

Explore Real Estate Investing Resources

There are a number of resources that can help you learn more about and get started with the BRRRR method. For example, BiggerPockets provides valuable content and forums where you can connect with others in the financial and real estate spaces who are successfully using this approach. There is also a wealth of information on YouTube.

Funding Your First Investment Property

If you’ve decided to pursue the BRRRR method for passive income, there are a handful of ways you can access the money you need for a down payment to purchase the property.

As a homeowner, you can take out a home equity loan to get a lump sum of cash. However, you’ll need to pay the loan back on top of your existing mortgage payment(s) and the application and approval process can be rigorous. A home equity line of credit (HELOC) provides a bit more flexibility, but monthly payments can fluctuate each month due to variable interest rates, and your lender can freeze your account at any time if your credit score drops too low. A cash-out refinance, which is part of the BRRRR process, is another possibility to access equity from your primary residence — and can allow you to lock in a lower interest rate. But since you’re taking out a new mortgage, you’ll have to pay closing costs and possibly an appraisal fee.

Finally, if you’ve built up equity in your home and need cash to cover the down payment or necessary renovations, a home equity investment may be a good solution. There’s no interest and no monthly payments, and you can use the money for anything you’d like without any restrictions. You can receive up to 30% of your home value in cash, and don’t have to make any payments for the life of the investment (10 years with a Hometap Investment).

It only takes five minutes to find out if a Hometap Investment might be a good fit for you and your BRRRR goals — take the quiz today.

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

August 29, 2022August 29, 2022

10 States with Highest Home Equity Growth in 2022

While rising home prices and interest rates have presented major challenges for prospective homebuyers, homeowners in many parts of the country are sitting on record-high amounts of equity. In Q1 of 2022 alone, equity jumped 32.2% and national homeowner equity grew $3.8 trillion — with the average homeowner gaining $64,000. While there are a few different factors at play, including those skyrocketing home prices, low inventory, and a surge of renovations and remodels spurred by the pandemic, the end result is a whole lot of equity for a whole lot of people.

Here are the 10 states where homeowners have gained the most equity this year.

California

The average California homeowner has gained $141,000 year over year from the first quarter of 2021. California also has some of the highest home values in the entire country, with a median home price of $799,311 — an 18.5% jump between June 2021 and June 2022.

Read about how California homeowner Elizabeth was able to use a Hometap Investment to pay off her HERO loan and increase her mortgage payments.

Hawaii

Homeowners in Hawaii gained $139,000 in equity on average between 2021 and 2022. Hawaii is also known for its high home values, with the typical price coming in at $901,942. Home prices shot up 22.1% year over year between June 2021 and June 2022.

Washington

In Washington, the average homeowner’s equity grew $114,000 in 2022. The typical home value here is $627,555, a 21.2% increase year over year from June 2021 to June 2022.

Arizona

Arizona homeowners earned an average of $96,000 in equity from Q1 2021 to Q1 2022. And while the typical home value in Arizona — $450,629 — is significantly lower than states like California and Hawaii, prices have surged 26.3% in one year. Arizona homeowner David was able to use his equity to fund an investment property with a Hometap Investment. Read how he did it.

Colorado

Homeowners in Colorado experienced a $92,000 average equity increase this year. Here, the typical home value is $591,189, and prices have surged 21% from June 2021 to June 2022.

Utah

Utah homeowners had the same $92,000 jump in equity as those in Utah did this year. A typical single-family home here costs $577,112 and values have seen a 24.1% annual increase.

Nevada

Homeowners in Nevada gained $91,000 in equity on average year over year. The average home here costs $467,453, a 23.6% increase since June 2021.

Florida

On average, Florida homeowners each earned $90,000 in equity year over year. A typical single-family home in Florida is $397,280 and prices have increased a whopping 34.3% since 2021. Read about how one Florida homeowner used her equity to make some much-needed home repairs and get rid of debt.

Montana

Montana homeowners experienced an average of $77,000 in equity growth in 2022.

The average single family home here costs $448,875 as of June 2022, an increase of 25.6% from the same time last year.

North Carolina

Finally, rounding out the top 10 is North Carolina, where the average homeowner’s equity surged $67,000 between the first quarters of 2021 and 2022. The typical home value here is $320,291 and prices have increased 27.4% in one year.

See how North Carolina homeowner Butch and his wife were able to pay off their credit card debt, make home improvements, and stay in their home with a Hometap Investment.

More than ever, homeowners have the opportunity today to tap into their equity to reach their financial goals — from paying down debt to making much-needed renovations or funding an education.

Are you a homeowner who wants to make the most of your equity? Take our five-minute quiz to see if a Hometap Investment might be a fit for you.

YOU SHOULD KNOW…

July 6, 2022July 20, 2022

The First-time Homebuyer’s Guide to Mortgages

As a first-time homebuyer who’s wondering how to apply for a mortgage, you probably have at least a few questions — but let’s begin with the basics. A mortgage is defined as a loan that’s specifically used to buy or maintain a home, land, or another type of real estate. The vast majority of the time, barring extenuating circumstances, you need a mortgage to purchase and own a home.

There are two types of mortgages: fixed rate, which provides a set payment amount for the life of the loan, and adjustable rate, which begins at a set interest rate for a period of time, then regularly fluctuates based on market conditions.

While it may seem quick and easy to secure a mortgage to buy a home, there’s actually quite a bit more involved than meets the eye. Read on for an overview of the process — from how to get approved for a home loan to what happens at the closing table — so you can be as prepared as possible.

Step 1: Preapproval

Who’s involved: Buyer, lender

How long it takes: One day – one week

The first step in any prospective home buyer’s journey is getting preapproved by a lender. Before picking one, make sure you shop around to compare rates and loan types, as well as different flavors of lender. You aren’t restricted to big banks, as there are local institutions and credit unions, online-only options, and more, so it can pay off to spend time doing your homework.

The lender will ask you questions about your credit score and income, before providing you with a specific maximum loan amount that you’re approved for. If you’re purchasing the home with another buyer, such as a spouse, you’ll both need to provide this information.

In order to place an offer on a home, you need to be preapproved for a mortgage first. Once you receive it, your home loan preapproval will last for 90 days — so it can be a good idea to get this taken care of before you begin seriously looking at properties. That way, you’re not rushing to obtain it once you find a house worth an offer.

Step 2: Property under contract

Who’s involved: Buyer, seller, real estate agent, lender

How long it takes: One – three days

Once you’re preapproved for a mortgage and put an offer on a home, you’ll need to have the offer accepted by the home’s seller. This process is typically initiated through an official offer letter that’s presented by your real estate agent to the seller’s agent, and outlines details like the offer price and closing costs. If your offer is accepted, you’ll likely need to move fairly quickly to get the property under contract.

This requires your lender to evaluate and approve the property. When you get the green light, the home is deemed under contract and taken off of the market. However, it’s important to note that this doesn’t by any means signify an official sale yet; simply that the sale is pending.

Step 3: Application

Who’s involved: Buyer, lender

How long it takes: One – three hours

While your potential new home is under contract, this is really only the beginning; next, you’ll need to fill out a mortgage loan application. Completing a standard application will take between one and three hours. You’ll need to answer questions about:

The property you want to buy
Personal details, including your marital status, current living situation, and employment
Your monthly income and expenses
Any assets and liabilities, including life insurance or retirement funds

Before you begin filling out the application, you should gather any relevant documents, including:

The signed purchase and sale agreement for the new home
W-2 statements for the past two years
Tax returns for the past two years
Pay stubs for the past two years
Bank and savings account statements for the past two months
Profit and loss statement, if self employed

Once the lender receives, reviews, and approves your completed application, they’ll provide you with a loan estimate that includes all potential closing fees and charges. Again, you aren’t obligated to move forward with a particular lender — in fact, if you have the time, it can be beneficial to compare estimates from a few different financial institutions to determine the best offer.

Step 4: Home inspection

Who’s involved: Buyer, inspector, (possibly) seller

How long it takes: Two – three hours for inspection

A home inspection allows a prospective homebuyer to hire a third-party individual to look at the interior and exterior of a home, which includes plumbing, electrical wiring, roofing, HVAC, and more. An inspection can be incredibly valuable, especially if the property is an older one, as it can uncover serious and/or costly issues that you as the homebuyer may be able to require the seller to address before going forward with the purchase.

While forgoing an inspection happens more frequently today in the interest of expediting the purchasing process, many lenders still will not finance the home without an inspection. If the inspection reveals a major problem, you typically have a week to walk away from the purchasing process.

Step 5: Underwriting

Who’s involved: Buyer, lender

How long it takes: Three days – three weeks

Underwriting is a critical piece of the mortgage process, but it’s also unfortunately the step where things can get a bit complicated. During this phase, your loan officer will hand your application and any required documentation over to an underwriter, who will review each piece thoroughly in order to confidently issue you the mortgage loan.

Sometimes, issues can pop up during the underwriting process that require you to provide more documentation than you originally anticipate — the inspection report, for example — and request that certain repairs be made prior to closing. How long does underwriting take? It varies widely depending on both the property and the lender; while it can be completed in as little as a few days, it can take up to a few weeks or longer in some cases.

Step 6: Loan commitment

Who’s involved: Buyer, lender

How long it takes: 20 – 45 days

If you’ve successfully made it through the underwriting process, the hardest part is done, but you still have a couple steps to go before you make it official. Once they’ve approved your application and completed the underwriting process, the lender will issue you a loan commitment letter that details the type of mortgage, how much money you’re borrowing, the terms and length of the loan, and the interest rate.

Step 7: Closing

Who’s involved: Buyer, seller’s representative, real estate agents (buyer’s and seller’s), attorneys (buyer’s and seller’s), closing agent (usually a title company employee), lender’s representative, notary public

How long it takes: One – two hours

The final — and most exciting — step in the homebuying process is the closing. While it depends on your particular situation, closing usually occurs about four to six weeks after the home goes under contract. It will typically take place at the office of the title company, your lender, or your attorney.

At the closing, you’ll be required to sign several different documents and pay your closing costs, which typically range between three and five percent of the loan total. Once this is done, you’ll receive the keys to your new home!

Buying your first home will require a lot of patience. It isn’t a quick process, but the steps to obtaining your home are in place to help ensure you’re purchasing a safe home that meets certain safety standards and that you can make the mortgage payments on the home. It pays to be organized and patient throughout the homebuying process.

YOU SHOULD KNOW…

The above information is for general awareness and education purposes only, and does not pertain specifically to the homeowners insurance needs of those seeking a Hometap Investment. We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

June 1, 2021June 23, 2022

Should You Sell Your Home or Tap Into Your Home Equity?

Today’s real estate market has a lot of homeowners debating whether they should cash in on their home’s appreciation by selling their home or accessing their home equity. There are several factors to consider that can help you make the decision that’s right for you. Below, explore the advantages and disadvantages of each option, as well as the most common ways to access your equity so you can answer the question Should I sell my home? with confidence.

Selling: Pros and Cons

While the idea of downsizing to a smaller home or conversely, finding a house with more space to spread out may seem appealing in theory, the current market can make it a whole lot tougher in reality.

At the moment, the real estate market is red-hot, with a median sale price of $370,528 — an increase of more than 22% year-over-year from April 2020. More than 600,000 homes sold in the U.S. in April, a jump of 38.2% from the previous year. Mortgage rates have also dropped 0.2 points, making it more tempting than ever for prospective (and stir-crazy) buyers to lock in an offer on a new house.

Given the competitive nature of real estate, not only are houses selling for hundreds of thousands of dollars over asking price. But more and more, sellers are adding contingencies that allow them to stay in their home until they find a new property.

Often, short-term financing solutions like bridge loans can allow buyers to forego the contingencies and move more quickly, which can be a huge plus in a hot market. But it comes with risks, too. Some contingencies include forgoing home inspections, which may end in buyers’ remorse for those urgent to move into a new home.

There’s also the costs of moving to consider. If you plan on hiring movers, the average price tag is more than $1,000, depending on how much you’re taking with you. And of course, that’s not taking into account the hassle and emotional toil of the whole process.

In short, those looking to downsize or move to a location with a less competitive market have a great opportunity to cash in on a hot market, but it’s important to have a strong handle on your numbers and your moving plan.

Tapping into Your Equity: Pros and Cons

Moving isn’t the only way to make the most of your home’s growing value. You might be able to transform your current home into your dream home by tapping into your hard-earned equity to make the renovations you’ve been putting off — or build a long-desired addition.

If you decide that you want a seasonal getaway, you can also use your equity to put a down payment on a vacation home. There are a handful of different ways to get equity out of your home. Let’s explore the most common ones.

Home equity loan

One of the most common ways homeowners tap into their equity is through a home equity loan, as its fixed rate and lump sum payment often makes sense for funding home improvement projects. However, the qualification and approval process can present hurdles, as most lenders require a firm minimum credit score and stringent criteria.

HELOC

You can also open a home equity line of credit (HELOC) to access your home equity. This option offers flexibility in terms of the amount of money and how often you can borrow, but also comes with a level of unpredictability due to rate variability. It can also be risky because your lender can freeze your HELOC if your credit score or home value decreases.

Cash-out refinance

A cash-out refinance is another popular option for tapping into your equity. If you go this route, you have the chance not only to cover the cost of your renovation, but also to secure a lower interest rate on your mortgage. However, since you’re essentially paying off your mortgage with your current one, your timeline will be extended and you’ll have to pay application, closing, origination, and possibly even appraisal fees.

Learn more about when a cash-out refinance makes financial sense >>

Home equity investment

With a home equity investment, you can get a portion of your equity in cash in exchange for a percentage of your home’s future value — usually within a few weeks. You don’t have to deal with any monthly payments or interest, and can use the funds for whatever you’d like. This solution allows you to stay in your home and bypass the challenges and extra costs associated with moving.

Ultimately, Should I sell my home or tap into my equity? is a question only you can answer based on your own financial and personal situation.

Take our five-minute quiz to see if a Hometap Investment might be a good fit for accessing your equity without having to sell your home.

YOU SHOULD KNOW…

August 17, 2020June 23, 2022

9 Most Common Reasons to Order a Property Appraisal

A home appraisal is an objective, independent, and impartial assessment of a property’s real and current value, also referred to as the fair market value of the home or property. While the most common reasons for home appraisals tend to be related to home financing, such as selling, buying, or applying for a loan, there are many reasons why a property owner may want or need to request an appraisal.

1. Preparing to buy
When you’re buying a home, you’re usually the party on the hook for the appraisal unless you negotiated with your seller or lender to cover the cost (often with other closing fees). That’s because the home appraisal is meant for your lender. Your bank wants to offer you a mortgage that covers the cost of the home—not more.

2. Preparing to sell
Some homeowners opt to get a home appraisal before selling, particularly if they can’t figure out a list price. Note that the home buyer’s lender will often order their own appraisal. This is why some sellers opt to perform a do-it-yourself home appraisal that, while not official, gives them an accurate range for a list price.

Did you know 76% of sales closing in January 2020 had contract contingencies? 43% pertained to getting an acceptable appraisal. (Source: National Association of Realtors)

3. Looking for financing
When you’re looking to access your home equity —whether through a home equity loan, home equity line of credit (HELOC), refinance, or a home equity investment—your lender or investor will need to know the market value of your home in order to determine the amount of equity you have available.

4. Divorce
For homeowners settling a divorce, a home appraisal ensures the value of the house is split evenly between homeowners. If one party plans to stay in the house, lawyers can accurately assess how much that party owes the other. If both parties agree to sell the home, the appraisal can make it easier to agree on a list price.

5. Bankruptcy
If a homeowner files for bankruptcy, they are required to prove their current financial situation to the court through documentation that includes income, debts, and value of assets, including any property.

6. Construction defects
If a home is significantly damaged due to construction defects and the homeowner decides to file an insurance claim or take other legal action, they will need to prove what damage is from the construction defects. The first step to recouping the losses is often an appraisal of the property.

7. Bail bonds
If a homeowner is looking to use their home as collateral for a bail bond, a home appraisal is needed to determine the value of the property and ensure that its value is greater than the amount of the bond.

8. Eliminating PMI
If a homeowner has a conventional loan and made a down payment of less than 20% on the house, then they likely had to purchase private mortgage insurance (PMI). If property values have increased in the property’s area, the homeowner can elect to order a home appraisal to determine if the PMI payments may be eliminated.

How do your homeownership costs compare to other American homeowners like you? Download your free copy of our 2021 Homeowner Report and find out.

9. Property tax assessment appeal
If a homeowner feels the tax assessor valued their home higher than its worth, the homeowner may appeal their property tax assessment. In this case, a professional home appraisal can serve to support the appeal.

The list keeps going, but the most important takeaway is that no matter your reason for having your property appraised, it’s imperative that the appraisal is current and accurate in order to obtain its true current market value. Ensure that the appraiser is credible and certified, and that they have access to every area in and outside of your home.

LEGAL DISCLAIMER

The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.

May 18, 2020June 23, 2022

3 Things You Should Do Before You List Your Home for Sale

Selling a home can often feel more stressful and time-consuming than buying one. Not only do you have to get your home in tip-top shape, but you also have to keep it that way while juggling showings, open houses, and everyday life. If you’ve already purchased your next home, the stress quickly multiplies as you potentially juggle multiple mortgages while you wait for your home to sell. Understanding the best time to put your house on the market and the most effective ways of preparing your house for sale will ease that stress (and hopefully speed up its time on the market).

To make the process easier, Zillow recommends giving yourself at least two months to get your home ready for its listing debut. Here are three steps to take during that time to ensure your home-selling experience is as low-stress—and lucrative—as possible.

1. Run the Numbers

Before calling a listing agent, you want to make sure you’re emotionally and financially ready to sell your home. Only you can answer whether you’re ready to move.

Finance personality Dave Ramsey recommends staying in your current home until you’ve built enough equity to pay off your remaining mortgage balance and put 20% down on the purchase of a new property.

You’ll also want to make sure you have enough cash in the bank to cover the costs of movers, storage, and making any necessary repairs or upgrades to both the new and existing homes.

When is the best time to sell a house?

If you have the flexibility, wait until May to sell your home. Homes sold in the first two weeks of May traditionally sell six days earlier than the average listing. They also net more than $1,500 more on average. Of course, the best time to sell your home can depend on other factors and can vary regionally, so it’s worth doing your research and asking real estate agents for their opinion. The best time to sell a home in Massachusetts, for example, may not be the same for the market in California.

2. Find Comparable Homes in Your Area

To calculate how much equity you have in your home, you can get a formal appraisal or you can look at what real estate agents call “comps.” Short for “comparable sales,” comps are homes that recently sold in your neighborhood and are similar in condition and size to your own.

These can help you gauge how much you can get for your property when it’s time to list. They can also help you judge how long it may take to sell your home. If all of the similar comps were on the market for months, you may be in for a long ride. Be sure to pay attention to how much they sold for and how much they were listed for.

Read How to Predict the Appraisal Value of Your Home for more details.

As you’re scrolling through nearby comps, consider the condition of each home. Do they all have updated bathrooms? A recently renovated kitchen? This will give you a sense of what renovations you can make on your home to attract the attention of potential buyers, sell your home faster and increase your profits.

3. Determine Which Renovations Are Your Best Investments

Now’s not the time to strip your home to the studs or build an addition. But with a few smart tweaks and weekend projects, you can increase your home’s appeal—and profit potential.

For more details on which home renovations are your best investment, read Selling Your Home? Get Top Dollar by Tackling These Renovations First

Focus on First Impressions

Sprucing up your home’s exterior is an easy way to make the best first impression with potential buyers.

“Curb appeal can be improved by some basic efforts such as power-washing the home’s exterior,” says Rhoda Wheeler, a Realtor at Hoffman Real Estate Group. She also recommended spending a weekend refreshing the mulch, trimming back overgrown plants, and placing a few eye-catching flowers near the entryway.

Adding a fresh coat of paint to the exterior walls that face the street, or at least touching them up, can also boost your home’s curb appeal.

Clean Up the Kitchen

Many real estate agents agree that the kitchen is one of the most important rooms in the home. But chances are yours doesn’t need a gut job to get the attention of potential buyers.

Small upgrades like freshly painted cabinets or new door hardware can make your kitchen, and your home, more appealing.

If you can swing it, some new appliances could also help your home sell faster. These may not offer you a full return on investment (you’ll typically only be able to recoup about 87% of the costs on a minor kitchen remodel). But if a new $600 range helps your home sell faster, then it may seem worth every penny.

Beautify the Bathroom

The bathroom is another space that can make or break a sale.

“In most cases, almost overwhelmingly, it is beneficial to get a bathroom remodel done before selling a home,” real estate agent Jacki Shafer told Homelight. “My attitude has always been to put your very best foot forward whenever possible. If your bathrooms are tired and need sprucing up, it’s always a good idea to do that.”

Even if you can’t pull off a major remodel, you can freshen up a dingy bathroom by re-grouting the tile, replacing the caulk, and buying new mirrors and fixtures. A fresh coat of light-colored paint can also make a bathroom more appealing.

How to Fund Your Renovations

Once you have your to-do list made, it’s time to estimate the expenses and compare them to your anticipated returns.

Read 5 Ways to Build Your Cash Flow for a Home Renovation

The best way to fund your home renovation really depends on you. You can dip into savings, take out a loan, put them on plastic, or you can avoid high-interest credit card fees by utilizing a home equity investment. You can receive a percentage of your home’s equity now in exchange for a share of the home value at the time you decide to sell. With no interest or monthly payments, Hometap may be a smart way to fund the upgrades that will hopefully lead to a bigger payout on signing day. And with no monthly payments, you can focus on making the repairs and moving into your next home.

Find Out if Hometap Can Help You Fund Your Home Upgrades Before You List

LEGAL DISCLAIMER

The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.

July 22, 2019March 22, 2023

Selling Your Home? Get Top Dollar by Tackling These Renovations First

Although it’s a buyer’s market, U.S. News & World Report says all signs point to 2019 being a good time for you to put your house on the market. Real estate experts cite a plethora of new buyers and low interest rates contributing to this year being the right time to get top dollar. And, if you have high equity, selling sooner rather than in a year or two will help you maximize your return on investment.

However, before you put your house on the market, there are a few home renovations you’ll want to make to ensure you maximize your home’s value. Even if you don’t plan on putting your home on the market this year (or even next), you’ll want to consider these five upgrades as you can enjoy them now and see a significant return on investment when you do decide to sell.

1. Add a New Garage Door

According to Remodeling magazine’s 2019 Cost vs. Value Report, you can expect to recuperate more than 97% of your investment in a garage door. A new garage door, adds Bankrate, instantly increases your home’s curb appeal.

2. Refinish an Existing Space

Additions and remodels are expensive. However, refinishing an existing space, such as a basement, is significantly less expensive and can add major value to your home. A refinished basement allows future homeowners to imagine a variety of uses, such as a second living room, game room, or apartment for an aging relative, explains Money Crashers.

3. Update Siding

When it comes to your home, first impressions matter. Old or damaged siding hurts your home’s curb appeal, which also decreases its resale value. By updating your siding, you’ll ensure you get potential buyers to look beyond the exterior.

Moving.com says you can expect to recuperate more than three-fourths of the cost based on 1,250 square feet of siding but reminds homeowners to remember the trim when replacing siding. It’s a critical part of ensuring a cohesive look.

4. Replace Your Roof

Your home’s roof is arguably one of the most important parts of the home. Family Handyman says the average cost is nearly $21,000, but it will offer a resale value of more than $14,000. In the meantime, you’ll benefit from improved energy efficiency and reduced risk of mold.

5. Improve Attic Insulation

Like replacing your roof, improving attic insulation allows you to benefit from better energy efficiency and, therefore, lower utility bills. It’s also attractive to prospective homebuyers and—the best part—it doesn’t cost a lot.

As SuperMoney explains, improving attic insulation means a contractor will air seal your attic floor and add fiberglass loose-fill insulation. Based on Remodeling magazine’s 2017 report, it was the one home improvement that actually had a positive ROI, meaning you stand to make more money than you spent on the upgrade.

Fund Your Home Maintenance Project

If you’re looking to improve your home’s resale value but don’t have the cash on hand for upgrades, you can tap into your home’s equity. A Hometap Investment gives you the cash you need now in exchange for a share of the future value of your home. Without interest or monthly payments, Hometap may be a smart way to benefit from home upgrades now and when you sell.

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