How to Spot Expensive Renovations That Drain Your Wallet

It’s great to keep an open mind when it comes to fixer uppers. However, it’s also good to know where potential ends, and trouble begins. Not all fixer uppers are winners, some are just money pits.

When I say, ‘money pit’ I’m referring to house features and/or renovations that are expensive to fix, replace, remodel or update. Sinking money into a money pit is an easy way to get yourself into financial trouble, especially if these costs are unexpected or weren’t accounted for in the budget.

6 Common Fixer Upper Money Pits, and How to Avoid Falling into Them

#1 – Full Kitchen & Bathroom Remodels

This is a tricky one, because although kitchen and bathroom remodels are usually pretty expensive, they are also a great way to add value to your home. In real estate, there’s a common expression that great kitchens and bathrooms sell homes, and frankly this much is true. However, more often than not, people get into kitchen and bathroom remodels without realizing the price tag that comes with it. 

If you find a home where the kitchen and/or bathroom(s) are in serious need of a makeover, take some time to think about how much of a financial and time commitment you are willing to make. If you’re considering doing a kitchen or bath renovation for your home, it may also be worth getting an estimate from a licensed contractor first.

#2 – Electrical Work

This one really hits home, because it’s a problem my fiance and I ran into with our home. Our house was built in 1940, and the electrical panel is original to the house.

We were told by our inspector that the electrical panel was old, but since it was original to the house, it was grandfathered into the current electrical code. He mentioned that we may want to consider replacing the panel in the near future, but that it wasn’t a major safety hazard to be overly worried about (fair enough).

What we didn’t realize was that one of the previous owners illegally wired electricity (without a permit) from the old electrical panel, to provide power to the detached garage. To make matters worse, the only reason we learned about this problem was because we found the shallow electrical line hidden, and encased in concrete while we were doing landscape work in our backyard! Yikes!

Not only was this an extremely dangerous fire hazard and code violation, but it was also a very expensive and unexpected problem that needed to be fixed immediately. In the end, the electrician estimated it would cost approximately 10-15k just to update our home’s electrical box, and properly rewire electricity to the garage.

Moral of the story: Electricians and electrical work are extremely expensive! If you find a home and notice that there’s something fishy with the electricity or electrical problems come up in your home inspection, this should send up some red flags. 

#3 – Structural & Foundation Flaws

Structural, concrete, and foundation flaws have always been the boogeyman in real estate, and for good reason. However, it’s worth noting that not all structural and foundation issues are as scary as they may sound.

Some structural and foundation issues can be relatively minor, and inexpensive to fix. But on the other hand, some structural problems will drain your finances faster than the speed of light.

If you run into a structural problem or it comes up in your inspection report, talk to a structural engineer about the scope of work and what it will cost to fix the problem. 

#4 – Plumbing, Flooding and Water Damage

Any sort of plumbing, sewer, or septic tank work will come at a price. When buying a new home, always opt for the sewer line to be scoped and inspected. This kind of inspection will identify and locate any expensive plumbing problems that may be hidden underground.

For example, our friends recently purchased their first home only to learn during their inspection that there were some major faults with the home’s sewage line. Luckily, they identified the problem early on and were able to negotiate the cost of the repair into their closing.

Another common issue with homes that is frequently overlooked, is the cost to repair existing water damage. Once water floods a home, it’s something that needs to be repaired immediately, or serious consequences could come from it.

Water damage can destroy wood floors, carpets, tile, cabinets, drywall, ceilings and more. Not only that, it can also create hidden problems that you may not be able to see such as black mold, which causes serious health problems for occupants if left untreated. While touring homes, always take a good look at the walls, floors and ceilings for any signs of existing water damage.

Additionally, It’s always a good idea to search the county records before purchasing a home. Check to see if the house is located within a floodplain. If so, try to find out the last time there was a flood, and how severely the area was flooded. Sometimes, you may even be able to find flood insurance claims that were filed within the neighborhood.

#5 Roofing

Roofs are another common real estate boogeyman. Replacing a roof can be pricy, so if your house is in need of a roof replacement get a professional quote for these services.

If you’re in the process of buying a home, and roof damage or the need for a replacement comes up in your inspection report, talk to your realtor to see if you can negotiate the cost of the replacement into your closing. If that isn’t an option, look into financing options or ask your insurance company if a roof replacement is something they will cover.

#6 – Siding and Decks

When a house is in need of a siding or wood deck replacement, it isn’t always easy to spot. However, if you’re buying a home, and the inspection report mentions old siding or a rotting deck it’s worth taking note of.

Depending on how much siding and/or deck needs to be repaired or replaced, it can be a deceivingly expensive project. It is also worth noting that if your home comes with a large wooden deck (or you plan to add one), the maintenance and upkeep alone can cost a pretty penny.

If you’re planning on replacing or adding a deck to your home, a great alternative to wood decking is Trex composite decking. Trex is durable, long lasting, looks great, doesn’t splinter, and is very low maintenance.

Don’t Forget, Location, Location, Location!

The one thing that is nearly impossible to change when buying a home is the land and location. Remember, you’re not just buying the house, you’re also buying the land it sits on.

Make sure you like the neighborhood and location of your home, because if not, there is absolutely no way to change it. Your plot of land will be yours until the day you sell it because to put it simply, you can’t just load it on a truck and take it elsewhere. Location is by far the most important factor to consider when buying property! Don’t take it lightly, as it will affect just about everything about your home. 

Busy Roads, Intersections and Railways

Homes located on busy intersections, streets, freeways and railway lines are typically more difficult to sell due to their location. That 6-lane highway isn’t going anywhere anytime soon, so the noise and lack of privacy will likely be there for the foreseeable future. 

If you already live near a busy road, freeway or intersection, use landscaping and fencing to your advantage. Create as much distance as possible between your house and the road, then build fences or masonry walls. Plant trees or other landscaping shrubbery as close to the road as possible for additional noise control.

Increasing the distance sound waves travel, adding physical barriers combined with trees and greenery is proven to be the most effective means of reducing noise pollution and creating privacy.

Direction and Lighting 

Since the sun rises in the East and sets in the West, houses that are south-facing typically receive the most sun, and north-facing homes receive the least amount of sun exposure. When looking at homes, take a second to notice which direction the house is facing.

If a house is north-facing, it will likely be relatively dark inside, with limited natural light. Meanwhile, a home facing south, southeast or southwest will get the more natural light. Once a house is built, it is very difficult (if not impossible) to change its directional orientation, unless you demolish and start from scratch or build an addition.

If you’re someone who likes to have lots of house plants, gardens or just enjoys natural lighting, pay close attention to which direction the house faces (the compass app on your phone should do the trick). 

Small Lot Size

For some people, a small lot might be exactly what you are looking for, especially if you live in a large city because small lots are low maintenance and easy to manage. For others looking for ample outdoor space or room to build an addition, this can be more problematic.

When you purchase land, the size of the lot will remain the same unless you begin purchasing the surrounding land and add them to your property. If you purchase a home on a small lot but have dreams of an expansive outdoor space, or a desire to build a 3-car garage, you may want to rethink your plans.

Determine how much land you need (or want) before starting your house search. If you find a home you love that’s on a small lot, think through if the space available will be sufficient for your needs before making an offer.

Be Smart, But Keep an Open Mind

When looking for a fixer upper, it’s always good to know what you’re getting yourself into. Anticipating and identifying home features or renovations that drain your wallet early on, will save yourself a lot of trouble in the long run.

If you are buying a house with someone (such as a significant other), have a discussion with them before you begin your house search, and come to an agreement on how much renovation work you’re willing to take on. If you’re unsure what a renovation will cost, contact a licensed professional who can provide you with a quote.

It’s smart to be cautions when it comes to home renovations and their costs, but stay open minded to improvements that will bring value to your home. For more useful tips about how to identify potential in a home, read my post, 6 Easy Ways to Spot Potential in a Fixer Upper!

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If you have any questions, or would like to share some helpful tips of your own, leave a comment below or email me directly at melanie@pillartoposthomes.com