Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

May 16, 2002

"Home Remodeling"

Host: Been thinking about remodeling your house lately? In this edition of "The Road To Riches," personal finance expert Jordan Goodman says there are some things you need to consider.

Now that spring has sprung and people are fixing up their homes, I thought we should take a look at making the best decisions when it comes to home renovations.

Ask yourself how long you plan to stay in the house:
• If it is 3 years or less, a big renovation may not make sense because chances are you won't be able to recover the money you put into it in a higher sales price.
• If it's more than 3 years, renovation projects do make sense because you will enjoy the improvement, and have a better chance of recouping your investment over time. The average homeowner stays in their home for 12 years.

Evaluate where you live:
• In general, the higher-priced your home and neighborhood, the more renovations will pay off. That's because homes in fancier areas tend to appreciate more, and buyers tend to appreciate what you have done more and are willing to pay for it having already been done.

Which renovations pay off and which don't:

The ones which consistently pay off are:
• Adding a family room
• Modernizing a kitchen
• Updating bathrooms
• Finishing a basement
• Making master bedroom into a suite

Renovations that usually do not pay for themselves because not every buyer would want these amenities:
• Swimming pools
• Home offices
• High-end appliances

What is the best way to finance a renovation?
• If you don't have the cash, probably a home equity loan is best because you. Get a low, tax-deductible rate -- and you are using the money to build more equity in your home.

For More Financial Tips From Jordan Goodman