How to Use a Personal Loan for Landscaping

A landscaping loan can make a lot of sense. It’s great to have a good looking home with lots of curb appeal but — no less important- – great landscaping can increase home values, cut utility costs, and simply increase your enjoyment. A personal loan for landscaping may be the easiest way to improve your surroundings fast.

See options for financing landscaping here

A landscaping project can be as simple as mowing lawns on a regular basis or as complex as remodeling front and rear yards. A 2018 study by the National Association of Realtors (NAR) found that, according to its members, a number of outdoor projects were likely to enhance property sale values. In order, they include:

  1. Landscape maintenance
  2. Overall landscape upgrade
  3. Standard lawn care service
  4. New patio
  5. New wood deck
  6. Tree care
  7. Landscape lighting
  8. Statement landscape
  9. Irrigation system installation
  10. Outdoor kitchen
  11. Fire feature
  12. Water features
  13. New pool

Landscaping adds curb appeal

One key in a sale situation is to use landscaping to add curb appeal. NAR says virtually all of its members (99 percent) “believe curb appeal is important in attracting a buyer.” It adds that “94 percent have suggested sellers improve their curb appeal before listing a home for sale.”

A Virginia Tech study found that “landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape.” Design sophistication and plant size were the landscape factors that most affected value.

“The resulting increase in ‘curb appeal’ of the property may also help differentiate a home in a subdivision where house styles are similar and thereby attract potential buyers into a home. This advantage is especially important in a competitive housing market.”

The usual thinking with curb appeal is that it can speed a sale or help an owner get a better price. But landscaping also has other advantages:

  1. People like nice landscaping.
  2. It’s a point of pride for many owners.
  3. It’s a hobby, one supported by numerous garden clubs.

And — interestingly enough — landscaping can cut utility costs. A widely quoted government study from 1995 states that “carefully positioned trees can save up to 25% of a household’s energy consumption for heating and cooling. Computer models devised by the U.S. Department of Energy predict that the proper placement of only three trees will save an average household between $100 and $250 in energy costs annually.”

Financing landscaping costs

Landscaping costs can range from just a few dollars for do-it-yourself lawn mowing or big-time expenses for a new pool. For many property owners, the benefits are worth it.

The big question can be how to pay for desired landscaping improvements. How do you finance a backyard remodel?

In some cases, landscaping costs are so minimal that no financing is required. But what if you want to really invest in landscaping? What are your options?

Related: Personal Loans beat Credit Cards for Large Purchases

Personal loan for home improvements

If you need a few thousand dollars, you might consider a personal loan for home improvements. This financing is unsecured, so you can expect interest rates that are higher than a mortgage but lower (about 7% on average) than credit card debt.

A good credit score typically gets you a lower interest rate from a bank, or you can try borrowing from a family member or friend.

Using credit cards for landscaping projects

Landscaping financing is often created bit-by-bit through the use of credit cards. This financing can be advantageous and convenient when used to build out projects over time. To hold down interest costs, it makes sense to pay balances down to zero every month.

FHA Title 1 financing

We usually associate FHA financing with mortgages to finance or refinance real estate. However, the FHA Title 1 program is different. You can borrow up to $7,500 for residential properties with one-to-four units and have as long as 20 years to repay.

This financing, like personal loans, is unsecured. There’s no debt to record in local property records offices and no  mortgage. Larger amounts — up to $25,000 –are allowed but must be secured by the property and recorded like any other mortgage.

Small mortgages

A new report by the Urban Institute says that 600,000 homes are sold each year for $70,000 or below, but only 25% of them are financed with a mortgage. These numbers tell us that mortgages are available for major projects such as a $50,000 pool but that borrowers may have to speak with a number of lenders to find such financing.

The attraction of a mortgage is minimal monthly payments. A $50,000 mortgage at 5% over 30 years has a monthly cost of $268.41 — a lot less than the cost of a typical car loan. But the long term also means more interest expense. In this case, total payments of nearly $97,000.

Financial recovery

Landscaping improvements may add value to a home, but not all improvements result in a dollar-for-dollar return. NAR research shows that some landscaping and improvement projects pay off in terms of higher values and some do not.

Some examples from the NAR study include:

  • Spending $3,000 for landscape maintenance adds $3,000 in value to a property, a 100% recovery
  • Paying $375 for a season of lawn care can put you far ahead with a property value increase of $1,000 — a 267% recovery
  • Adding an outdoor kitchen might cost $14,000 and result in $10,000 in additional value, a 71% recovery
  • Adding a pool to a home at a cost of $57,500 might add $25,000 to a home’s value – a 43% recovery

For specifics in your area, speak with local real estate brokers. The recovery rates for various projects are likely to differ by location. For instance, a pool might get a better recovery percentage in south Florida than in Montana. For financing, shop around and speak with lenders for the landscaping loan that’s best for your project.

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