home improvements

Thanks to Capital One for sponsoring this post.

When it comes to home improvement projects, my favorites are the ones that add true bottom line value to a home.

After all, your house is probably the biggest investment you’ll ever make. As a real estate blogger and journalist, I want to see homeowners increase the value of their property in big ways and in every way possible. That’s true whether they’re planning to sell and looking to increase their asking price, or simply wanting to enjoy their home more while they’re in it.

Some of the smartest home improvements I’ve seen over the years are big and sexy (think glorious new master suite with an extraordinary, spa-like bathroom retreat), but some are more “behind the scenes” and add value to the house in less obvious ways.

I’d love to tell you all about them…

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capital one

Thank you Capital One for sponsoring this post.

Your home is likely the biggest investment of your lifetime, and building up its value can help you make the most of your money, especially in a market that continues to see increasing values.

Over my many years as a real estate reporter, and recently armed with a real estate license, I’ve seen so many fabulous home improvement projects. These projects, from kitchen renovations to new master suites and spa-quality baths, add serious dollars to a home’s value. Let’s face it: today’s buyers are more turn-key than ever. They simply do not have the time or vision for a remodel.

But home renovations don’t come cheap. For many homeowners, a home equity loan or a home equity line of credit is the best way to pay for these improvements, whether it’s a small change or a total renovation of a pretty-but-stale space.

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dallas landscaping

Thanks to Capital One for sponsoring this post.

When it comes to increasing a property’s value, beautiful, lush landscaping is a top option for homeowners. Nothing woos buyers like fabulous curb appeal and an oasis of a backyard that turns your property into paradise.

Fresh, sophisticated landscaping has the added benefit of bringing years of happiness as you live in your house. After all, Texas gets an average of 232 days of sunshine a year, meaning we spend lots of time outdoors on our patios with friends, family, kids and pets. I know my family has created wonderful memories in our backyard, with the pool as a focal point and gathering hole. From teen parties to birthdays, to letting our one-month old grandchild float in the spa, our yard has been a symbolic constant for our family’s best memories.

But quality landscaping isn’t cheap. A minimum job — adding a bed of liriope, fall color and a gravel walkway — can start at $5,000, with more extensive, sophisticated plans ringing in at $20,000 or more. With so many other financial obligations, oftentimes, that much cash isn’t readily available.

Many homeowners don’t know that they can take out a loan on their home’s equity to pay for new landscaping. It’s a super smart choice if you’re looking to sell, or simply love your home and want to enjoy it more!

Plus, the interest you pay, which is historically low today, may be tax deductible!

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Friday I told you about Al and Erin Hill, that’s Al Three, who recently moved their family to Atlanta. They bought a $9 million dollar estate in swanky Buckhead (think Highland Park on Strait Lane), closed on it in July. Last spring, the couple had some legal problems involving a $200,000 HELOC — home equity — loan on their Highland Park home. A Dallas grand jury made some serious charges: three counts of making a false statement to obtain property or credit and one count of securing execution of a document by deception against the 40-year-old Hunt oil heir. Erin Hill, age 38, was charged with two counts of making a false statement and one of securing execution of a document by deception. The indictments centered on $200,000 (really, a drop in the bucket) from OmniAmerican Bank taken out in 2009 when they claimed to be sole owners of their $1.9 million Highland Park home: majority interest in the Highland Park home is owned by the Albert Hill Trust, the young couple only owns about 20%. There were some charges too about false statements and “securing execution of a document by deception.”  At the time, Al Three did not have legal representation.

Here’s what my sources tell me: Al Three recently fought to change the trustee of his trust, and he likely convinced the trustee to buy the $9 million Atlanta estate on his behalf. (Taxes on that spread are a mere $50,000 a year — what is Georgia doing right about real estate taxes that we are doing wrong?) Sources tell me his legal fees in Dallas have eclipsed $70mm, and certain very generous Dallas friends are chipping in to cover those.

4433 Bordeaux, Dallas

This is a very sad story for the family, and I hate to even have to report it. (If I don’t, someone else will.) My heart goes out to them and I truly hope they can find peace with each other someday — life is really too short. Careful readers will recall when I told you the Hills dismissed their Dallas household staff in July, paid them in full, and handed out letters of recommendation. Some of the staff has complained that when prospective employers contacted the Hills for references, as promised, they got nada. Seems like they are really trying to cut all ties with Dallas.

Furthering the discussion on whether the credit agencies are using a flawed algorithm to determine our mortgage future, this comment from Dallas bankruptcy attorney Reed Allmand, Allmand Law, deserves its own post. Most homeowners who are underwater on their mortgages got there through home equity loans that Allmand says were used to retire the same type of debt you find on credit cards. And that is what got so very many people into a financial mess. Me, I remember Texas when you could not borrow one dime against your home to protect the homestead:

I disagree with the premise that the Experian algorithm is flawed by classifying a Home Equity Loan as a Consumer Credit Loan. Before the state legislature changed the law to allow Home Equity Loans, the only type of debt that could impair a homestead was a purchase money loan (a traditional mortgage loan), a mechanic’s/materialman’s lien, child support lien, or a IRS tax lien. The argument for allowing home equity loans was to allow consumers to cash out the equity in their property and encumber their homestead with a new debt so they could use the proceeds as they please.

The consumer then uses home equity loan proceeds to make consumer purchases or retire other debt. Unlike a purchase money loan (traditional mortgage) the consumer is not borrowing money to pay off a piece of real estate and build equity in that property. Instead, they are cashing equity in a piece of property to make consumer purchases. This most often is a sign of economic instability in my line of work.

I am a Board Certified Consumer Bankruptcy attorney and I have seen too many clients enter into a home equity loan they should not have. Many times these loans are used to pay off credit card debt. If the consumer had not paid off the credit card they might go into default and possibly be sued but they could not have their home foreclosed on. That is not the case when a home equity loan is used to pay off credit cards, because if the consumer defaults on the home equity loan payments they are subject to foreclosure. I have counseled many clients in this situation and would definitely advise consumers to think twice before getting a home equity loan.

Reed Allmand is a board-certified Dallas bankruptcy attorney and principle at Allmand Law.