So you want to be a rehabber? Or maybe you just want to update your current home, maybe add a bedroom or a family room? Whether you are buying a foreclosure or a first time home or want to learn how to flip real estate in order to make a profit, the big questions are, where do I get the money to carry out the project and how do I find the property?

Depending on what you're trying to accomplish, the answer to these questions vary. Outlined below are several different scenarios and the financing options that go with them. ValueList realizes that everybody's situation is different, so please utilize this article as a jumping off point. If you would like to speak with one of our associates about your particular situation, please feel free to contact us.

One of the first things that a person realizes after owning a home for a while is that all houses are in the process of falling down. Think about it, your roof isn't getting any younger!

Also, what is considered to be desirable today will be dated tomorrow. So if you're thinking about what you need to do to bring your home up to speed, here are a few things that you need to keep in mind.

First, with most home improvement projects, the cost is going to outweigh the increase in value that the improvement will bring to the property. That said, don't finish that basement because you're getting ready to sell the home. If you do, you'll probably not get back all of the money that you spend on the improvement.

Because of this economic fact, you have to realize that the immediate benefit of improving your home is generally going to be that you will enjoy the improvement, not that you're going to make money on it. At least not immediately.

An example of this is a home that I went on a listing call to where the owner had recently had all of the windows replaced with a top of the line, double hung, insulated, tilt-in windows from a contractor that advertised heavily on local television. When I showed her the comparable sales to her home that justified an asking price of $139,000, she sat back with a disturbed look on her face. When I asked her what she was thinking, she said, "That can't be right! I just paid $20,000 for new windows!"

I explained to her that the new windows would help in marketability and that they might justify a slightly higher price than the comparables, but that she was not going to recapture the entire $20,000.00.

Unfortunately for both of us, she didn't believe me and went with an agent who put the home on the market at a much higher price and the home sat there. I later came across the property again when doing comparables for another house and it had sold in the mid 130's.

The point here is, be careful with any projects that you do in order to prep the home for resale. My general rule of thumb is that for every dollar that I spend on a property, I want to make at least a dollar and ten cents back on that improvement. That's not to say that you won't want to do an improvement to improve the marketability of the property, but recognized that you're generally going to be swimming against the tide when it comes to recapturing your investment.

Now, certain improvements can actually make you money. Generally, paint is cheap! As long as it's applied in a professional, workman like manner. Cleaning and grooming generally a home doesn't cost a tremendous amount of money and can pay for itself and then some. A suggestion that I make to people preparing to put their home on the market is to have a friend or other objective person walk through your home with a note pad. He or she can assume the role of a potential homebuyer and make notes as if they were looking at the home to purchase. What are their impressions? What flaws did they see in the property? What improvements could be made to the property without a large investment? Don't take any critisism wrong. At this point, selling your home is becoming a business proprosition. Get bids or price the improvement out. If you are in doubt, contact a real estate professional (a ValueList agent is always a good bet!)and get his or her opinion on what you are contiplating. The most important thing to remember is that you need to be realistic in your expectations!

Your financing options on a home improvement can vary widely. If it's a small project, maybe you can pay for it out of pocket. If it's a larger project that requires financing, then you need to examine all of your options. Generally speaking, unless you have very little equity in your home, financing the costs of an improvement through the contractor is not a very good idea. Most contractors who offer financing place that financing with a finance company and while they sometimes have attractive teaser programs (such as 90 days same as cash, etc), the interest charges with a finance company tend to be higher than other sources of capital.

Depending on your credit rating, even if you don't have equity in the property, a signiture loan or a high LTV (loan to value) 2nd might be a better way to go.

If you do have equity in your property, then a 2nd deed of trust or mortgage might serve you even better. Another option is to look at your current interest rate on your mortgage. How does it compare with what is currently available? Are current interest rates lower than you present loan? Even if they are a bit higher, it might make sense to refinance the current note on a cash out basis and finance the improvement that way.

How you finance the improvement is a major component in any home improvement project. Take your time and think about your alternatives. Feel free to call ValueList and one of our real estate and mortgage professionals will be happy to help you crunch the numbers and to help guide you through your options.