Investment

Your house is an investment, and understanding what that means is important. It can be an investment in your families quality of living, the ability to call your house a home, and the financial value upon resell.

Most people only see the financial side of an investment, but enjoying your cozy home with your family for years to come is a worthwhile investment. The ability to throw parties and entertain is a great investment.

One item I would like to debunk though, is that you are making a good investment increasing the value in your home. I mean, yes it will increase the value, but the return on investment makes it a poor financial investment.

If you plan to move within a year and want to enjoy the remodel for a short time, then you are an exception to the rule.

Let me explain:

Let’s say your $100,000 full home renovation increases the value of your home by $150,000. That’s a total return of 50% on your investment. That’s great if you’re aflipper, but what if you live in that home for another 10 years? Your annualized rate of return is only 4.14 per cent.

So maybe calling this remodel an investment isn’t completely true, but holistically, when you look at the value it will bring toyour life as a whole, its worth it!

BREAKDOWN ON FINANCIAL VALUE GAINED