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What Experts Have to Say

We talked with experienced real estate experts about the use of Home Equity Lines of Credit for home renovations. Their insights provide a professional perspective on how to strategically leverage HELOCs to enhance property value and financial stability. Below, they share their expert advice, shedding light on best practices and effective strategies.

Brady Bridges

Owner, Reside Real Estate

“Some of the most common uses of HELOC include home improvements and repairs. Partly because of tax advantages: Interest paid to renovate or repair the home frequently might be deducted from the tax return. Interior and exterior upgrades feel and look great and add value to a house.

HELOCs are ideal for long-term renovations and property value. Which increases as they can borrow huge sums of money over time. Kitchen and bathroom renovations, energy-efficient upgrades, exterior remodels, and basement conversions are the most valuable home improvements. Eliminating a bedroom and adding personal touches can lower the home’s value. Consider how substantial upgrades will affect a home’s value. For example, a garage door replacement returns approximately 200%, while basic kitchen remodeling returns 96%.

Also, HELOCs provide bigger lending limits and lower interest rates than credit cards and personal loans. If one uses the HELOC to improve a home, the payments may be tax deductible, saving even more. When selling by owner, homeowners can boost their property’s appeal and ROI.”

Gagandeep Saini

CEO/Founder, We Buy Houses in Central Valley

“Based on my decade of experience working with hundreds of homeowners, kitchen renovations consistently deliver the strongest returns when using HELOC funds. Modern, updated kitchens typically return 80-90% of the investment cost in added home value, making them a smart choice for HELOC usage.

I’ve worked with many clients throughout the Central Valley in California and have seen firsthand how strategic bathroom updates using HELOC funds can increase property values by $15,000 to $30,000. In fact, just last month, I had a client invest $25,000 from their HELOC into updating their master bathroom; that update increased the value of their home by $45,000—an incredible 180% return.

I caution homeowners to avoid using HELOCs for purely cosmetic updates, such as paint or minor fixtures. Having managed hundreds of renovation projects, I have learned that these small updates seldom generate meaningful returns compared to major improvements in kitchens, bathrooms or square footage.”

Bubba Peek

Owner, Bubba Land Company

“A HELOC can help a homeowner pay for projects that have a great return on investment for the property, such as kitchen remodels, bathroom upgrades, or even building more square footage if necessary. For instance, a kitchen renovation, even a minor one, has a ROI between 70 to 80 percent.

Don’t go for over-personalized upgrades though, like putting in high-end features that aren’t in line with what’s acceptable in the neighborhood as these tend to be cost ineffective. These days, prioritize projects that can improve the energy efficiency or curb appeal of the property as these types tend to stay in the minds of buyers.”

Conclusion

A HELOC is a flexible and potent financial tool that, when used wisely, can greatly enhance a homeowner’s financial stability and opportunities. Whether it’s improving your home, consolidating debt, covering educational expenses, or preparing for major life events, a HELOC can provide significant financial benefits. However, it’s essential to approach this with a strategic plan and a clear understanding of the risks involved, especially since defaulting on a HELOC can lead to losing your home. As with any financial decision, consult with financial advisors to tailor decisions to your personal financial situation and long-term goals.