Businessweek Archives

Is Your House A Money Pit?


ServiceMagic.com, a company that links home owners with local contractors, has come up with a formula to figure out if your house is a money pit. According to a survey the company did, 23% of Americans believe they are spending way too much to keep their house maintained.

According to ServiceMagic., if you are spending more than 2% of the home’s value annually on repairs——then you’ve got a money pit.

“Everyone’s going to have a bad year when the furnace goes out and the roof needs to be repaired,” says David Lupberger, a former remodeling contractor and now ServiceMagic’s Home Improvement Expert. “But when things keep happening, at some point, you have to stop what you’re doing, take a step back and objectively ask yourself – is this worth it?

ServiceMagic came up with other categories besides Money Pit. A house is a Sinkhole if your repair costs are between 1.6% to 2% annually. It’s just a Drain if it’s from 1% to 1.5%.

Here’s a list from the same source of typical home expenditures in the first year after a purchase. These numbers seem low to me. I’m not sure how much roof you can get for $1,376, for example. That won’t even cover a garage. It’s all a good reminder though that those monthly mortgage payments are just the beginning of your costs when you buy a home.

Flooring $1,457.40

Roofing 1,376.35

Heating/Air $1,238.01

Appliances $846.40

Wall Repair $695.98

Plumbing $685.09

Paint $561.60

Electrical $516.51


Later, Baby
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus