Jan 072010

Stucco homes are associated with million dollar mansions. There is something simply luxurious about the look of exterior stucco itself, then combined with the decorating options of stucco moldings, homes can truly stand out as gems in a neighborhood. But surely rich people have other motivations, and differences in taste, than to all do their homes the same?

The truth is that rich people are wealthy because they understand money. Not only how to earn it, but how to make it work for them. When building or renovating a home, their intention is to construct something functional as well as something that suits their taste, not to show off their wealth (contrary to popular conception). After all, building an extravagant home simply to flaunt their wealth is like having a doormat that says “rob me”. In examining the function of a home, ongoing costs such as maintenance and heating are taken into consideration. It is here that stucco truly shines.

Renovating or replacing your home’s current siding withEIFS (synthetic / exterior stucco) has been shown to reduce heating and cooling bills anywhere from 25-40%. For the average home in the North American climate that comes to a savings of roughly $800 per year. So is it worth it to spend $15,000 up front to save $800 per year? The answer is a resounding – yes.

What the majority of home owners who choose to finance the project entirely by re-mortgaging find is that the increased payments on their mortgages are canceled out by the savings in their energy bill.It’s a profound concept that gets rich people very excited. But maybe you’re thinking… if it’s a wash, and I’m not see any increase in cashflow by doing this, why would I even bother going through the process of renovating? While any wealthy person reading this article will already understand the underlying implications here, I will fill you in on a little secret.

The increased payments on their mortgages are canceled out by the savings in their energy bill.

You see, what you have done is reduced an expense (money you will never see again), and instead redirected that money into your assets (your walls). You have taken $70 per month that you were previously throwing away, and put it into your nest egg. Over the course of mortgage, the renovation will pay itself off. THAT is having your money work for you.

As the great Billy Mays would have said – But wait!There’s more! Not only has this renovation cost you NOTHING and increased your net worth over $15,000 over the years, but it will countinue to generate income once it has paid itself off. That’s right, the reduced heating bills don’t simply return to normal once you reach break-even, they countinue to save you 25-40% on your heating bills. Now let me ask you a question – do you think that gas and energy bills will be the same, 20 years from now?

Remodeling Magazine’s “Cost vs. Value Report” puts upscale siding renovations at the highest R.O.I. of any home renovations – 86.7%. That means that on a $15,000 stucco renovation, the value of your home goes up immediately by just over $13,000! This is further equity being put into your home.

And finally, the icing on the cake. The Governments of Canada and the United States have both passed massive stimulus packages, with a portion of those packages geared towards home owners making their home more energy efficient. In Canada, home owners renovating with EIFS are eligible for a $3,750 rebate, as well as $1,350 in tax credits, for a total of over $5,000. The United States Government has similar programs in place. That’s over $5,000 the Government is putting into your home equity! These Government checks and tax credits are just one of the many reasons millionaires are in the position they are today.

So what’s the final score? Your exterior stucco renovation costs $15,000. Of that $15,000, $13,000 is immediately returned to you in increased home value, and while this is not immediately tangible, you will recoup that amount when you do finally sell your home. On top of that, you will receive $5,000 within a year in the form of tax credits and government incentive checks. In total, you took on $15,000 of debt, and got back $18,000 in equity. This debt costs you nothing out of your pocket because you take the funds that would be otherwise wasted on heating and cooling your home, and using them to pay your increased mortgage. Over the course of your mortgage, the renovation will pay itself off, returning to you the $15,000 you took on in debt, for a grand total of $33,000.

Author: Jim Schwarznoff
Article Source: EzineArticles.com
Provided by: Netbook, Tablets and Mobile Computing

Jim Schwarznoff

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