As investors and homeowners, we tend to rely on the real estate market to hopefully drive property prices up and eventually increase the equity we have in our own home. If you’ve been keeping watch over the market for some time, you know very well that it can go the other way. It’s not uncommon for home values to drastically drop overnight.
Fortunately, there are countermeasures in order for us to soften such a heavy blow. This may include paying down your mortgage, property maintenance, and of course home improvements or renovations. One key component that comes into mind is sweat equity. What is it and how does it play when it comes to home renovations? GetPro Construction is here to give an extensive guide on how to build sweat equity in your home!
WHAT IS SWEAT EQUITY?
Before we take a deep dive into what sweat equity is, it’s important to understand the term equity. In a real estate perspective, home equity is the difference of your home’s fair market value and the amount you owe on your mortgage. For example, if your home is valued at $250,000, and the balance you owe on your mortgage is $100,000, the equity you have is therefore $150,000.
The equity on your home can be changed due to a number of factors such as the current state of the market, home improvements, or paying off your mortgage balance. Based on this, it makes sense why a lot of homeowners deem equity as the largest portion of their personal wealth. This is where sweat equity comes in.
This is the unencumbered effort or amount of work a homeowner puts in their home in an effort to improve its value. This is focused more on labor-intensive rather than money-intensive activities that can help you achieve a great return on investment. To put this into a better perspective, it’s better to understand that there are some renovation projects that can add more value to the home than others.
Consider a kitchen renovation. Adding an impressive backsplash to your kitchen definitely gives more value to your home rather than cleaning up the area and removing clutter. However, the latter could really dig deep into your pockets, and you may find that you end up costing more than improving the value of your home.
With that in mind, what are some projects that can easily build sweat equity?
The term molding is generally used for any type of trim inside the home, but ceiling molding falls under the term crown molding. By including this in your renovation project, your home gets to look more sophisticated and refined – something that a lot of prospective buyers would definitely appreciate. The challenge with this is cutting the corner angles properly. A bit of patience and a good eye for detail can go a long way to achieve this inexpensive project.
Staining your wooden floors or furnishings can give that polished finish making it look more refined and beautiful. You barely even need the help of a pro with this project since you can start off your project by sanding your floors, applying a fresh coat of stain, and follow it up with polyurethane or similar protective coating. Instead of hauling off your hardwood flooring, simply staining them can be more than enough in driving up the value of your home.
Boosting your curb appeal
There’s a lot you can do when improving the exterior of your home. It’s easy to skip this kind of project, especially if you’re mostly focused on the interior of your property. Remember, a lot of prospective buyers take a good look at your lawn before they decide to step inside your home. Mowing your lawn, planting green shrubbery, trimming a couple of branches, and decorating your porch area are just some of the inexpensive ways to boost your curb appeal. If you happen to have a backyard, focus on that as well. Buyers who step inside the home would most likely want to check the backyard and expect it to look as good as the inside.
Upgrade your lighting
Nobody wants to live in a dark and dingy home. Lighting is a critical factor that can make a big difference in how quickly you’ll be able to profit from your property. The majority of light fixtures generally don’t cost a lot, and they’re pretty easy to install. For the most part, all you need are some basic electrical skills and a few inexpensive materials that can turn your dimly lit home into a more desirable property. Pro tip: invest in daylight bulbs. When compared to their counterpart which emits a darker yellow light, as the name implies, daylight bulbs flood the room with a white light that mimics natural lighting.
Remember, although sweat equity can greatly increase the value of your home, in order to realize any real equity you would need to get an appraisal first when selling your property. But one thing’s for sure, not only does any renovation project to boost your sweat equity improve your quality of living, it also does the same for any of your prospective buyers as well. When in doubt whether you can achieve such a project on your own, worry not, our team at GetPro Construction can guide you through your project to completion. To learn more about our services, contact us at (734) 822-9595 or reach out to us via email at email@example.com.