Home Improvements That Add Equity to Your Home vs. Value to Your Life, and How to Know the Difference

There’s a difference between making an upgrade because it will add equity to your home, versus making an upgrade because it will add value FOR YOU while you live in your home.

For example, we remodeled our previously unfinished basement. 

We added another bedroom, bathroom, and living space (with a bar and coffee nook). Because of this, the value of our home has increased because the total finished square footage has increased. Tangible upgrades. 

We also spent a lot of time and resources staining the concrete floor and upwards of 80 hours of work went into that labor-intensive process. We love it, it’s funky and blue and rad.

Will our house sell for more because of it? Unlikely. 

It might add to the intangible value of the home to the right buyer, but there is no extra dollar amount that we’ll make back because we stained the concrete instead of just installing carpet or LVT.

In this blog post, let’s chat about remodeling, improvements, and making upgrades to your home.

The difference between adding value your home for a future sale vs. adding value to your home as your live in it and enjoy it

There’s a difference between making upgrades for you as the person living in the home versus making upgrades for some future buyer that might pay more because of those upgrades. 

You’ll probably do a little bit of both, but it’s important to know the difference before spending the money.

Tangible upgrades that will add equity to your home: 

• Increasing the square footage of your home, building out previously unfinished spaces, adding on to the house. (If you’re adding bedrooms, remember in order for an appraiser to count it as an official bedroom it will need a closet and egress window.) 

• Kitchen and bathroom remodels. I’m sure you’ve heard the saying, kitchens and bathrooms sell the home. Upgrading these rooms with new cabinets, new countertops, new appliances, new flooring, will likely lead to a hire sales price at the end of the day. 

• Landscaping. If we’re looking at two identical houses, one with landscaping and one without, the landscaped home will likely sell for more, this article suggested 15-20% more. There's a lot that goes into this but landscaping is an expensive upfront cost, so it makes sense that it will add value to your home during resale. 

Two questions to consider before getting started on that next home improvement project

The most important thing to ask yourself before getting started:

1. Is the purpose of this upgrade to add value for me while I’m living here or to add value to some future homeowner?

Being clear on this is key to staying on budget and picking appropriate finishes. 

If you’re planning on upgrading your home to increase your equity in a future sale, the next question to ask is:

2. What’s expected in my neighborhood?

Look at past sales, chat with your real estate agent, understand what would help your property sell for more specifically in your area. 

For example, are you going to get your money back on those granite countertops if no other homes in your neighborhood have them? Maybe not.

If every other home in your neighborhood sells with laminate countertops, perhaps that would be a more appropriate selection. OR maybe that house around the corner sold for higher in your neighborhood because it was the only one with granite countertops.

Can you see how this could take some time and research to really understand?

But I promise, if you take the time now to figure this all out you will likely stay on budget and hopefully make more when you choose to sell. 

If you need additional guidance in understanding how to make home improvements that will add value to your life AND add equity to your home, I’d love to help!

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I’m Emily and in 2018 I left my corporate engineering job to jump into entrepreneurship with both feet. It was a winding road with lots of pivots that allowed me to realize my ultimate goal: to build freedom in my life through empowered investing and aligned partnerships. 

I want to help you find that same freedom.

Whether it’s buying your first home and analyzing the investment component of your purchase, or it’s saving up to buy your first investment property, I want to cheer you on, share my experience, and encourage more people, like you, to build freedom in their lives through empowered investing. 

If you’d like support in any of these areas, send me a note and we’ll continue the conversation!