Description

In this episode of Financial Clarity for Doctors, Corey and Rachelle walk through when it makes sense to tackle home renovations (and when it doesn’t).  As always, think about your goals and the resources needed to achieve those goals.

Good examples of renovations include:

• Necessary repairs and maintenance. If you don’t do it now, you’re likely going to NEED to do it later.
• Smaller cosmetic updates like paint. These are typically lower cost and can increase the value of your home.
• Larger remodels (kitchens and bathrooms) and expansions that help you make your current home more livable.
  • These will not add enough value to your home to make the cost worthwhile financially, but can potentially help you stay in a home with a much lower mortgage interest rate.
  • This doesn’t usually make sense if you are not planning to stay in the home for a long time.

Downsides of renovating include:

• For most larger renovations, you will likely not recoup the cost through appreciation in your home value. For example, the Return on Investment (ROI) for kitchen and bathroom remodels is less than 50%.
• It can be incredibly disruptive to your home life. Depending on the size of the renovation, your home may not be livable for a while.
• Most remodels go over budget and are not completed on time.

A remodel can be enticing, especially when interest rates are high and getting into that next home may be out of reach.  But go into it with a very clear understanding that the process will have a lot of bumps in the road – more money, more time, more stress than you expect.  To hear more, listen to the full episode.

For more financial planning tips from Corey and Rachelle, find them on social media!
LinkedIn: @CoreyJanoff and @RachelleVanderzanden; Instagram: @CoreyJanoff and @VanderzandenRachelle; and Twitter: @CoreyJanoffCFP and @RachelleFinance 

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Finity Group, LLC and Cambridge are not affiliated. Cambridge does not offer tax or legal advice.