Many people don’t realize the dual nature of the return they get from their remodeling investment. When you plan a home remodeling project, there are both long-term capital gains and daily dividends.
The return most people think of and the part you read about most in the press is the increase in the resale or market value of your home. This return is the long-term capital gains value portion of the return on your investment. It can be high or low depending on the housing market and economy when you sell. However, almost no one decides to remodel based on the capital gains return side of the investment. It is generally a bonus.
Most people remodel their home because of the value of the daily dividends they will get. The dividends you get from remodeling are very tangible and come from the way that remodeling improves the quality of your life. How it lets you do things you couldn’t before, provides you with the special places you have always wanted: a new kitchen, addition, master suite, or other specialty room. How it makes you feel when you wake up in the morning or when you have friends and family over.
The dividends you get from remodeling are NOT dependent on market conditions. However, they are very dependent on timing. The sooner you remodel, the longer you will get to enjoy the daily dividends, the real reason you want to remodel.
So, if you expect to live in your home for another 15 years, remodeling now will give you 15 years of living in a home designed for you. You will get double the daily dividends you would get if you waited seven to eight years to remodel. And remember, this is the reason you are really remodeling in the first place – to make your home a nicer place for you to live.
SPECIAL NOTE: At the time of this posting, the housing and financial markets are unstable. Almost any kind of investment is more risky than it has been in a long time. However, the daily dividends you get from remodeling your home are much more predictable and positive than other types of investments at this time.
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