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The 5 Best Ways to Invest in Your Own Home

By Matthew Frankel, CFP® - Feb 15, 2014 at 3:00PM

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Sometimes the home you already own is an excellent way to put your investment dollars to work.

When considering all of the various investment options available, most people don't think of the home they already live in as an option. However, there are several things you can do to your own home that can not only increase its value, but make it more appealing and easier to sell, should you decide to.

Here are some of the best ways to add value to your home that will give you the best bang for your buck in property value (as well as a nicer house to live in).

Source: Grey World

Windows and doors
A general rule is you will get more added value for your money with replacement projects as opposed to remodeling. So, things like new windows (especially the energy-efficient type), a shiny new front door, or replacing that tired siding should be pretty high on your priority list, if they haven't been done in a while.

According to RealEstate.com, you can expect a 72% return on investment for these types of replacement projects, and more if the existing windows or doors are in bad shape.

Finish that attic! (Or basement)
According to Remodeling magazine, the number one project you can do is to finish an unfinished attic or basement. Converting an attic into a bedroom will cost you around $50,000 and about 72.5% should be recouped when selling the home. A basement can be converted into a sports den (aka a "man cave"), a game room, play room, or extra bedrooms. An in-law apartment is one of the more popular conversions for an unfinished basement.  In the meantime, you will have extra useable space to enjoy!

Source: Posh Living, LLC

A bathroom can pay for itself and more
Now, if you decide to build an over-the-top bathroom suite, remember one thing: while it will certainly be appealing to prospective buyers, it will not raise your home's value by anywhere near the amount it cost to put in.

On the other hand, a modest bathroom can be a good idea. According to the National Association of Home Builders, adding a half bathroom could raise a home's value by 10.5% and a full bathroom by 20%.

The price of adding a new bathroom can be very high or very low, depending on where you live and how difficult it is to put in the necessary plumbing. For instance, if there is easy access to sewage lines right under where you want your new bathroom, it can make the job cost thousands less than it otherwise would.

The lawn: sweat equity
This is one area where a do-it-yourselfer can really make some money. According to Money magazine, a professional-looking landscape can be done for between $500 and $3,000 in materials, depending on the size of the yard, and can raise a home's prospective selling price by more than 10%.

A word about kitchens
A kitchen remodel can instantly make a home more attractive and easy to sell, but is only a good "investment" if the kitchen remodel is relatively minor (under $15,000). Sellers can expect to recoup more than 90% from a budget remodel like this, and in some cases, the new kitchen will more than pay for itself in equity.

However, don't go overboard, and don't put in a kitchen that is "too nice" for the house. For example, a $15,000 Viking commercial range in a $200,000 house probably won't add much equity. 

What won't add equity?
Unless there is something really wrong with the flooring in your home now, a new floor won't add too much equity. The same goes for luxury features such as an outdoor kitchen or a swimming pool (which can actually be seen as a negative in some areas). 

Do all that you can by yourself
This is where real equity is built when doing home improvement projects. If you are somewhat "handy," it really does pay to only hire professionals to do the things you aren't comfortable doing.

For example, finishing a basement becomes much cheaper if you do things like hang the drywall yourself and paint. Don't do things yourself that you aren't 100% sure you know how to do, but not paying for labor can knock up to 50% off the cost of the project.

Are you ready to make changes?
While it is certainly nice to improve your home's value, also consider that you get to enjoy the use of the improvements as well. A finished attic or basement can add 1,000 usable square feet to a home, which not only increases the value but increases your standard of living while occupying the home as well. 

The "Holy Grail" of home repairs is to figure out how to get more than 100% of your money back in equity while transforming your house into the home of your dreams. 

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