Increasing your net worth by remodeling your home isn't as straightforward as it used to be. Home values don't rapidly appreciate like they did in the early 2000's, but updating your home can definitely add value to your net worth, and if you're familiar with the BRRRR method from Bigger Pockets, it seems to work quite well still. One of my friend's even bought a foreclosure in 2016, renovated it, and now lives in it with an extra $70,000 of equity. If you've read any of my other articles on this blog, then you know that my personal financial strategy is to pay my student loans back on an income-driven repayment plan, and seek student loan forgiveness after 20 years of repayment. I am also using the savings each month from lower student loan payments to invest, so that I can increase my net worth, and someday replace my expenses with passive income.
One of the first big steps I took towards financial independence was buying a home. Well technically, it was a condo, but regardless, it was a place that my wife and I owed that we could use to build equity and rent out in the future with a low down payment. We were interested in buying a place, because rental prices in our neighborhood in Chicago, were slightly higher than our total home payment, so we were able to save a little extra money each month to improve our condo, and to invest in other ventures. The only downside, was that we were desperate to purchase a place, because our lease was ending, and we were in an extremely hot market, so we probably overpaid for our condo at the time. The market was so hot that we were the only showing for our apartment, and we were told later that day that they had multiple offers and needed our best-and-final offer. Since we were in dire need to secure a place to live, we probably overpaid by about $3,5000. Regardless, the condo was move-in ready, so we were able to use a 5% down payment (~$15,000 with closing costs), and secure bank financing, but it was fairly outdated. Here are some of the photos from the condition when we moved in.
It was fine, but not a dream home. The kitchen was in good shape, had nice shaker cabinets, stainless steel appliances, granite countertops, and a nice open floorplan. There were also hardwood floors throughout, and the bedrooms were large for the neighborhood. The paint colors were nowhere near what we liked, but we were ok with that, since paint is cheap, and painting is extremely easy to do. It can be time-consuming to do it right, but it's one of the simplest things you can do to improve the value and aesthetics of your home. Our biggest point of contention was the bathroom. Many of the units in this building had very similar bathrooms and were in serious need of an update. It was also a huge challenge, because there is only 1 bathroom in this condo, so in order to remodel it, we would need to have our only bathroom out of commission for the time. With that, we decided to keep the bathroom tile, tub, and toilet in place, and were only without our kitchen sink and vanity for a few days.
Here are some of the photos after our rehab was completed.
As you can tell from the photos, it looks drastically different from when we moved in 18 months ago. The changes were almost all cosmetic as well, and required very little technical skill.
Through the time we've lived here we:
One of the first big steps I took towards financial independence was buying a home. Well technically, it was a condo, but regardless, it was a place that my wife and I owed that we could use to build equity and rent out in the future with a low down payment. We were interested in buying a place, because rental prices in our neighborhood in Chicago, were slightly higher than our total home payment, so we were able to save a little extra money each month to improve our condo, and to invest in other ventures. The only downside, was that we were desperate to purchase a place, because our lease was ending, and we were in an extremely hot market, so we probably overpaid for our condo at the time. The market was so hot that we were the only showing for our apartment, and we were told later that day that they had multiple offers and needed our best-and-final offer. Since we were in dire need to secure a place to live, we probably overpaid by about $3,5000. Regardless, the condo was move-in ready, so we were able to use a 5% down payment (~$15,000 with closing costs), and secure bank financing, but it was fairly outdated. Here are some of the photos from the condition when we moved in.
It was fine, but not a dream home. The kitchen was in good shape, had nice shaker cabinets, stainless steel appliances, granite countertops, and a nice open floorplan. There were also hardwood floors throughout, and the bedrooms were large for the neighborhood. The paint colors were nowhere near what we liked, but we were ok with that, since paint is cheap, and painting is extremely easy to do. It can be time-consuming to do it right, but it's one of the simplest things you can do to improve the value and aesthetics of your home. Our biggest point of contention was the bathroom. Many of the units in this building had very similar bathrooms and were in serious need of an update. It was also a huge challenge, because there is only 1 bathroom in this condo, so in order to remodel it, we would need to have our only bathroom out of commission for the time. With that, we decided to keep the bathroom tile, tub, and toilet in place, and were only without our kitchen sink and vanity for a few days.
Here are some of the photos after our rehab was completed.
As you can tell from the photos, it looks drastically different from when we moved in 18 months ago. The changes were almost all cosmetic as well, and required very little technical skill.
Through the time we've lived here we:
- Repainted every room (some several times due to design changes)
- Updated the light fixtures (no more boob lights) and light switches
- Installed a $600 stainless steel microwave for $10 (you'll be surprised how often people remodel their kitchens)
- Replaced the dishwasher
- Added a backsplash in the kitchen
- Painted the cabinets and updated the hardware
- Replaced the door knobs
- painted the exterior doors
- Rearranged the living room
- Changed the kitchen sink faucet
- Replaced the bathroom vanity lights, mirror, fixed the drywall, cleaned the grout, and polished the tile
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