Buying A Fixer-Upper Home? Beware The Money Pit & Do The Math First

Posted July 19, 2019

Binge-watching home improvement TV shows can leave you with the impression that buying a fixer-upper is always a great opportunity to buy a home below market value and turn it into a dream dwelling. While that might turn out to be true, it only tells half the story. Renovating a fixer-upper is not for the faint of heart. It takes patience, sweat equity and deep pockets.

Thanks to a limited inventory of affordable entry-level homes and the aging of America’s housing stock, a growing number of home buyers are considering fixer-uppers. A new survey by LendingTree, the nation’s largest online lending marketplace, finds that watching home renovation shows also seems to make people more likely to want to buy a fixer-upper. LendingTree surveyed 2,094 home buyers who watch home improvement TV shows. Of the HGTV or DIY Network channel-watchers who tune in at least once a week, 81% would consider a fixer-upper. About two-thirds (66%) of people who never watch those shows also say they are open to buying a fixer-upper.

While a fixer-upper might have an appealing price tag, the markdown might not make up for basic renovation costs. Do the math. “A lot of people have a misconception about what they have to do with a fixer-upper,” says Tom Silva, a general contractor who stars on PBS’ home improvement show “This Old House” and its companion series, “Ask This Old House.”

“They have to think about the age of the house,” explains Silva. “They have to think about what are they planning on doing, if anything, themselves. Are they just going to buy the house and hire out people individually, or are they going to get a contractor to take the job on? It can be an overwhelming process if you don’t really know what you’re doing. You have to be careful that you don’t get in over your head.”

In 2015, Lauren Mochizuki and her husband, Kyle, bought a Spanish-style, two-story home in San Juan Capistrano, California that was built in 1976. It was in a great neighborhood, but the four-bedroom, three-and-a half bath home needed work to bring it into the 21st century. Mochizuki, who is 33, recalls thinking, “It has great bones, it has great potential. I could see that if we took out certain walls and we opened up certain things that eventually it could become what we wanted.”

Source: https://bit.ly/2JJJ39O