5 things to know before you tackle an expensive backyard makeover


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Staycationers, grill masters, novice gardeners and home sellers are among the thousands of homeowners fixing up their outdoor spaces for the summer. Last year, more than 53 percent of homeowners surveyed said they renovated their outdoor living spaces, according to a recent data study by Houzz, which polled more than 130,000 people on their website. The median project cost in this survey was around $5,000.

From simple landscaping tweaks to major renovations, the backyard not only adds to the overall living area and enjoyment of your home, it can also improve its value.

Find out which updates can help you save money and get the biggest return on your investment with these five tips.

1. Simple lawn maintenance goes a long way

For people who want to get the best value for their dollar, nothing beats basic landscaping, says Tarek El Moussa, co-host of “Flip or Flop” on HGTV.

A long-time television host, real estate agent and investor, El Moussa says that cleaning up the landscaping is essential when you want to update your outdoor area and attract buyers. Homeowners needn’t spend scads of money; sometimes sweat equity is enough to get the job done.

Simple, cost-effective updates that add value include trimming overgrown hedges, clearing away brush and dead plants, repairing sprinkler heads and making sure that everything looks fresh and new.

“I put colored mulch in my planters to add depth. I might also add new plants to brighten up the area. Things like that, anybody can do. Put some seed down, throw some fertilizer down,” El Moussa says. “If you don’t want to put in grass, you can put in decomposed granite which is nice or gravel which looks nice, too. It’s OK to mix material. You can mix pebble with concrete, it looks great.”

2. Appraisers judge condition — not how expensive the materials are

If you plan to sell your home in the near future, fancy updates might end up costing you money you won’t recoup. Before you splurge on the most expensive materials, think about how much return you want on your investment, says Ran William, real estate inspector and owner of OR Valuation Services.

Home appraisers look at what shape your home is in when they evaluate it, not necessarily the materials. A new pool with expensive glass tile will add the same amount of value as a new pool with porcelain tile. What matters is whether there are chips, cracks and overall wear and tear. People who put in quartz countertops — a premium material that can cost up to 40 percent more than granite, for example — are probably not going to get their money back, William says.

“If you put in a brick patio rather than concrete, I’m not going to give you more credit for brick, even though it’s much more expensive — it’s the condition I’m judging,” William says.

Make sure you price compare materials so you get the most mileage out of every dollar you put into your outdoor projects, especially if you plan to sell your home.

3. Why you should keep up with the Joneses

Sometimes you have to do what everyone else is doing if you want to eventually sell your home. Homeowners might have to invest money into certain upgrades to meet neighborhood standards, like having a pool, otherwise the property will get devalued.

“Let’s say the cost of the pool is $68,000 with hardscape. Although this is a lot of money, in high-end neighborhoods where everyone has a pool the property will sell for much less because it doesn’t have one. Sometimes it’s not just the cost of the improvement, but it should be on par with what your neighbors have,” he says.

That said, less-expensive homes likely won’t see a return on a pool. For people in starter homes, the main thing to focus on is the condition of your outdoor space.

If you have a nice view, putting in a deck is a better investment than pouring money into a pool, El Moussa says.

4. Show off beautiful backyards before sunset

Outdoor entertainers can create a dazzling ambiance by focusing on three economical features: a patio, lighting and music. Extras like fire pits also add to the overall mood and are considerably less expensive than sinking money into a spa or rock wall pool.

Creating a festive outdoor area might not add significant value to the house, but it can help it sell faster, William says. If you’re selling your house, show it at the right time of day to maximize your backyard’s charm.

“In cases where there’s a really nicely done backyard, I would have a potential buyer see it right before the sun goes down so they can tour while there’s light. And let them spend a little time there, so they can see what it looks like at night with the lights on and the fire going,” El Moussa says. “When you’re selling a house, you’re selling a lifestyle. At the end of the day, you’re trying to show people what they could have.”

5. Weigh your financing options

Although most outdoor projects cost less than $5,000, according to the Houzz survey, bigger jobs might require financing. For homeowners with equity, a home equity loan or a home equity line of credit (HELOC) are two low-cost options that might fit their needs.

Equity-based loans are cheaper than credit cards, which can come with 18 percent interest rates. Current home equity loan rates are hovering around 6 percent, while HELOCs are around 7 percent. These loans are often less expensive than personal loans, as well.

“Many people are not familiar with home equity lending. Home equity today is the most affordable way to borrow money,” says Jon Giles, senior vice president at TD Bank. “Your average home remodel is about $45,000, so this is where a home equity loan or HELOC can help.”

The difference between a home equity loan and a HELOC is that with a home equity loan you get a lump sum of money with a fixed interest rate. A HELOC, on the other hand, extends a maximum line of credit to you, which you can draw from during a set period of time known as the “draw period.” During the draw period, you’re making payments only on the interest. Beware, however, as some HELOCs come with a balloon payment — or the total amount due once the draw period ends. This is important as you risk losing your home if you can’t make the payment or refinance the HELOC.

The benefit of a HELOC for home improvement projects is that you only owe what you use, which is beneficial if you aren’t sure how much the final amount of a project will be. Equity-based loans are also tax-deductible if you use them for home improvement projects.

For people who are struggling to make their mortgage payments, home equity loans are risky. Because they use your house as collateral, you can end up losing your home if you fail to make payments.

If you’re interested in getting a home equity loan, banks look at three main things:

  • The amount of equity you have in your home.
  • Your credit score. Most banks require a minimum 660 FICO score.
  • The loan-to-value ratio, or LTV.

A little planning and research can go a long way in helping you get an ROI on your home additions.

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