RESIDENCE: ASSET OR LIABILITY?
Last week, I began a discussion about whether a personal residence should be considered an asset or a liability. My experience is that investing wisely in Pasadena real estate and then making key improvements is an excellent way to make money with real estate. But, realize there are pitfalls and most don’t take advantage of the opportunity. Our homes are very personal to us, so it is easy to use them merely for our own comfort rather than as a mechanism for building wealth.
My husband and I have a rather unique viewpoint about our home. We view buying, fixing, and selling our personal residence as a business. The sale of each home was pursued to either turn over profit from a current residence for another good opportunity, meet a family need (i.e. more room or public schools), or free up cash for another important purpose (i.e. college). Every home improvement project we have embarked on is intended to add value (much more than dollar for dollar increases) at the point of sale. Every decision we make is put through that lens.
MAKE A HOME IMPROVEMENT PLAN
If this sounds interesting, I encourage you to start by making a plan about what projects you want to undertake to improve the condition, look, and feel of your property. Even if you have no plans to move, it is wise to stay on top of household projects and focus on home improvements that add value to your home. It is always a good idea to start with the less “sexy” projects like systems work and fixing anything that is in poor repair. Buyers in today’s market expect updated plumbing, electrical and HVAC. These projects will also be considered “capital improvements” with the IRS and can be used to offset any capital gains taxes you might owe at the time of sale (Please confirm any tax implications with a Certified Public Accountant).
I encourage you to be open to when it might be the right time to sell and move onto something new. This is the perfect time to put on the finishing touches, which will ensure the house shows amazingly. A fresh coat of paint and some stylish staging are just a few examples of last-minute work that makes an incredible difference in how buyers perceive your home and will help you make money with real estate. Work done to get a house ready for sale (even if it is not a capital improvement – like painting) can be used to offset capital gains tax (remember to talk to your CPA!). Experts at Cedar Crest Properties in Denver Colorado have a great list of wise things to do to prepare a home for sale. Check out their tips!
MAKE MONEY WITH REAL ESTATE
I love to bring my experience in home investment, improvement, and transition planning to my clients and friends. Through consultation and action planning, I help homeowners make money buying, fixing, and selling their personal residence. The optimal time to start is when you are young and a first time home buyer. This will reap the biggest rewards over the long-haul. However, it is never too late to start. Even if you are in the process of downsizing, I can help you make some key improvements that can benefit your retirement planning. Call me if you want to make money with real estate. I am here to help!
You might want to go back and read Is Your Personal Residence an Asset or a Liability?