Cash or HELOC for flooring upgrade?

Question

Hello BP fam,

I'm planning on upgrading my flooring from carpet to some sort of laminate/vinyl/hybrid flooring - both for personal (allergy) purposes in the short-term, and for re-sale in the long term (6mo+). Estimate is coming out around $7500 for materials and labor. This is my primary residence and I've been there for 2y+ so there won't be Capital Gains on the sale.

Would you:

1) Come out of pocket to cover the upgrade?2) Set up a HELOC to cover the cost?3) Another option?

I figured if I was going to owe Capital Gains, a HELOC would make sense since you don't have to pay Capital Gains on debt service. With a HELOC being around 9% I'd probably be paying more in interest than the money would make in the stock market. What do you think?

Tony Savage · Answer

Don't take out a HELOC Jason, it's not worth the time it takes for the amount of money you need. Either pay cash for it or get a low interest C.C.

When I have to buy material from Home Depot for my rentals. If I spend at least 300 bucks or more I get 6 to 18 months no interest.  HD always mails me these finance promos, so I use HD money for free and pay it off as I get closer to the time the promo expires.

Look into it, you may get more than 18 months with the amount of cash you need. This all is dependent upon you getting the carpet from HD of course.

Bruce Woodruff · Answer

No Heloc for sure. If you want to preserve some of your cash, check with Lowes. You can open a credit line there and get an additional 5% off of your purchase. They have installers as well.

Take a look at Engineered Wood floors since this is your personal residence. Just a little bit more but so much nicer in both looks and resale value....

Matthew Crivelli · Answer

If you have the ability to pay cash for the flooring it would be the cheapest option. No sense in paying 9% interest by using equity unless you have to do so.

Jason Dumbaugh · Answer

Thanks, Bruce.

Jason Dumbaugh · Answer

That's a good point, Tony. I was looking at procuring the flooring from Costco for around $2/sqft and having a local installer put it in, but I should check HD and Lowe's to see what the comparable rates would be.

Jason Dumbaugh · Answer

Makes sense - just wanted to make sure I wasn't missing something

Cash or HELOC for flooring upgrade?

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