In WalletHub's evaluation of home improvement loans, the financial information resource turned to a panel of real estate development experts for additional insight. James Marian, lecturer in the University of Arizona's top-ranked Master of Real Estate Development program, is one of those experts.
In its analysis, WalletHub asked its panelists to respond to four questions: 1) When does it make sense to take out a loan for home improvement projects? 2) What advice would you give to someone before they apply for a home improvement loan? 3) What funding sources should people consider when they plan for home improvement projects? And, 4) What common pitfalls should people keep in mind when it comes to home improvement factors?
For Marian, who teaches real estate finance, manages real estate development capstone projects and student internships and helps direct CAPLA’s MRED program, a significant factor in answering these questions is how long the homeowner plans to live in their home.
"Financially, consider making home improvements when the cost of the improvement is less than the increased value of the home once the improvements are made," he says. "For major or complex improvements, it might make sense to engage an appraiser who can determine the home's value as if the improvements have been completed. If a gain above cost is realized, how long you plan to stay in the home is not an issue. However, there is nothing wrong with spending money on an improvement that increases the enjoyment and functionality of the home even if the cost exceeds and potential value gain. In this case, a homeowner should plan to live in the home for a while."
Marian, a 1979 graduate of the University of Arizona, is also the founding partner and designated broker of Tucson-based Chapman Lindsey Commercial Real Estate.