After you buy your first home, you need to look forward to the profit you can make when you sell your first home.   You will frequently hear the term “equity” and what it means is the value you have in the house.   How do you build equity?  Make the home more valuable, and avoid problems that make it less valuable. 

 

To make the home more valuable, do some home improvements.  The most cost-effective improvements are carpet and paint.  Upgrading the light fixtures and the plumbing fixtures will keep your home looking current. 

 

The kitchen and master suite are some of the most important parts of the home for adding value because they are the parts of the house that are the focus of the buyers’ attention. 

 

If you want to get seriously involved in changing the house, you can add on a bonus room, additional bedrooms or additional baths.  If you finish off a basement or an attic, you might think that the value goes up by the same cost per square foot as the rest of the house but it usually does not.

 

Overbuilding the neighborhood is a concern if you are increasing the size of your home.  If all the other homes in your area are around 1,800 square feet, and you are increasing the size of your home to 4,000 square feet, you will have a hard time getting the money back for your improvement. 

 

If you are going to live in the home for an extended period of time, and you are going to really enjoy the improvement, you may not care if it adds equity. 

 

For a more detailed discussion on this topic, please go to http://solonglandlord.com/first-time-home-buyer-dos-and-donts/first-time-homebuyers-should-plan-for-becoming-first-time-homesellers.