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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.
Wall Repair $695.98