Although buying a fixer-upper can be much cheaper than a move-in ready home and offer you an exciting project to work on, some might not be worth the trouble. That is why you should always watch for the most common warning signs of a money pit house. If you notice that the fixer-upper home you’re currently looking at displays any of these qualities, it may be better to turn around and walk away from the project simply.
What is a money pit house?
Before discussing the warning signs of a money pit house, we first have to understand what a money pit house is. In simple terms, a money pit house would be a property that would require you to spend more money than you can afford on fixes for it to be hospitable for you. Although the initial investment for the property might be substantially lower because of its condition, in a money pit house, you could spend more money on repairing it than buying a move-in ready home.
Issues with the foundation
The foundation of the house supports its entire weight. That is why your home’s foundation must be in good condition. Significant problems with it can not only set you back thousands of dollars in repairs, but they can also put the home at risk of collapse. Before you invest in a fixer-upper property, make sure to have the home inspected for serious, foundational issues. You can do a few things to check for foundational problems yourself. However, hiring a pro to check it out is best if you are unsure.
Red flags with the roof
The roof of a house can be a great tell of several kinds of significant issues. That makes it a great place to look for the warning signs of a money pit house. Whenever a fixer-upper is bought, a few shingles needing to be replaced are to be expected. However, roof repairs are expensive and can get out of hand quickly. If enough damage has been done to the roof over time, fixing the roof itself can turn the project into a money pit house. Some of the things you should look out for in this case would be the following:
- multiple layers of shingles,
- interior evidence of major leaks
Termite and other insect infestations
Repairing damage caused by termites and treating active infestations can be costly. But if that is the case, it is necessary. Damage caused by termites is usually structural. That means it’s usually found in hard-to-reach areas of the home, such as the walls, crawl spaces, and even the floor, damaging the home’s foundation.
Before buying a home like this in an area of the country with termites, it’s best to inspect it professionally so you can know what to expect. That is especially important since termite infestation can come back. For example, suppose you’re moving to Oregon from California after construction. In that case, you don’t want to reach your new place safely with the help of hired movers only to be unpleasantly surprised by a termite infestation a few months later.
Some signs it could look out for on your own would be:
- Cracks in the foundation;
- Sagging floors, walls, or ceilings;
- Small pellets throughout the house.
If a home you are looking at has antiquated electrical wiring, turn it around as soon as possible. Electronics that aren’t up to code can be a huge safety hazard. Faulty wiring can even cause a fire. Additionally, updating old and subpar electrical wiring is a considerable expense. Not only is this a sign of a money pit house, but it’s also a sign of a hazardous house. Here are some noticeable tells of old electronics in a home:
- Fabric-covered wires on white insulator knobs – You can usually find these easily in the attic;
- An old fuse panel – You should find a modern breaker panel instead of this;
- A small breaker panel with just a few breakers.
The price might be too good to be true
The real estate market is strong in most of the country. Competition between buyers is high, and listing prices are usually even higher. That’s why one of the most significant warning signs of a money pit house is a price that seems too good to be true. A great way to discern a good deal from a potential money pit is to check how long the home has been on the market. If all of the other homes in the area have a much higher price and are selling like hotcakes, there’s likely a reason why this one is different.
Remember that this is not to say that great deals are not out there. Experts from Rockstar Pro Movers always advise looking for the best possible price, even if you’re buying a relatively cheap fixer-upper. The more money you have left over, the more secure and positive your moving experience can be. But, if you buy a money pit, you won’t have money for the renovation, let alone the move.
If you can, go for it
Depending on your financial situation, a money pit might not mean the same to you as it would to another person. Only one of the warning signs on this list usually won’t be enough to create a financial problem big enough to constitute a money pit. However, if you find three or four of these problems in one property, it’s likely that the investment simply won’t be worth the return value. Of course, if you’ve saved enough money to cover all expenses and want the property purely for location, there’s no need to hesitate. But if you want to be frugal and save some money, you’ll have to be much more careful.It’s sadly widespread for people to have misconceptions regarding buying a fixer-upper. One of the more common ones is that people seem scared that every fixer-upper they find will be a money pit. However, this is simply not true. If you take your time to properly inspect every potential home you find and look out for the warning signs of a money pit house, you might just be able to find a fantastic deal on a home that you get to personalize and make your own before even moving in.