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Home Renovation - Cash Flow or Finance

Posted: Wed Sep 16, 2020 6:50 am
by socialforums2019
Will be doing a full renovation estimated around $250-$300K. I have the cash to cover this, but wondering what other options there are to consider and the pros/cons of doing cash over finance or vice versa.

Re: Home Renovation - Cash Flow or Finance

Posted: Sun Oct 11, 2020 6:22 am
by chipperd
Home improvements/renovations rarely pay back financially so it's more of a lifestyle choice. So would you rather pay for cash or finance an improvement in your lifestyle? It's an individual choice it seems to me. Depends on interest rate as well I suppose, but just know you won't be getting anywhere near close to your money back.

Re: Home Renovation - Cash Flow or Finance

Posted: Sun Oct 11, 2020 7:17 am
by Old Sage(brush)
More information would be needed to analyze. You might be able to take a loan against the house at historically low interest rates. You could consider how much cash you’d have after if you cash flowed it and also if you didn’t use the cash how you’d invest it, what return would be. If it were me I’d pay most in cash in current market conditions as long as I still had enough cash reserve when done. Also nothing wrong with partially cash and a loan for balance. Good luck with the renovation.

Re: Home Renovation - Cash Flow or Finance

Posted: Sun Oct 11, 2020 7:51 am
by fishmonger
You didn't provide any details on your situation, and may have already weighed the pros and cons, but have you considered buying a house that fits all of your needs/wants? Wife and I were in the same situation 4 years ago. Had a great old farmhouse that we wanted to do a major renovation - adding baths, moving stairs, etc. Basis was just under $200k and the reno was going to be in the $175-200 range, so close to $400k all in. There would still be parts of the house that would be untouched and would still have old plumbing, unfinished basement, etc.

Instead we started looking and found the perfect home with essentially everything we wanted for $310. We just put $40k into a kitchen renovation and now wouldn't change a thing, and are still way ahead of the game.

Again, a lot depends on your area and market, but in most cases don't expect to get any kind of return on shelling out that kind of dough.