Business & Investment

I want to buy a house, but it needs a major repair. Is it worth it?

Big movement‘Is a MarketWatch column that looks inside and outside real estate, from searching for a new home to applying for a mortgage.

Do you have questions about buying or selling a house? Want to know where the next move should be? Email Jacob Passy

Dear Market Watch,

I want to buy a house that needs repair or remodeling, but I’m almost 50 years old. Is it worth it? How long does it take to pay off the remodeling?

Thank you.

Fixed with Fixer-Upper

Dear fix,

If you watch a lot of shows on HGTV, the idea of ​​buying a house that TLC needs as a bargain and trimming it may sound appealing. Many of us dream of accepting interior designers, taking them home to devastated homes, and treating them with tips and Joanna Gaines. To be honest, I admit that I’m guilty of the dream of such a day.

I can say with great confidence that you already have the right instinct here. There are many reasons to be skeptical about working on such a huge project. The biggest: they are usually unrewarded.

Small home renovation project Return on investment may be high.. For example, one or two cans of paint cost little, and research shows that painting a room in a house with the correct color can cost as much as $ 3,000 to sell a house.

Larger ones are unlikely to pay off your investment.Annual remodeling magazine Put out a list Home upgrades for maximum profit. The 2020 edition of this report shows that on average no single home improvement project is 100% profitable. By adding the manufactured stone veneer to the house, the closest one was an average of 96% revenue. And in most cases, refurbishment revenues were declining between 2019 and 2020.

Americans generally consider owning a home an economic investment — and a four-bedroom home with a white picket fence is certainly a factor in the American dream. Many people take home ownership in the hope that their property will grow over time — the money is intended to be given to children or used as a retirement cushion. However, when comparing real estate to other assets, it is clear that owning real estate is more complex.

Sean Pierson, Pennsylvania-based Financial Advisor and Associate Vice President of Ameriprise Financial, said: service. “If you live in your house long enough and sell in certain types of markets depending on interest rates, the ROI from your house can be positive, but that can be a long way from now on, Many things need to happen in the process. “

Other works of Big Move: I found an old Lien in my house from a past refinancing. How can I get rid of it?

Rather than buying a home in the investor’s mind, it’s a good idea to consider a myriad of other reasons why owning a home is beneficial. By owning a house, you can manage your housing costs. Sure, property tax claims and utility bills can change over time, but you don’t have to worry about landlords unexpectedly rising rents. And the fairness of your home, when used properly, can be a useful financial tool for consolidating other debts and funding your child’s college education. (Again, be careful about cashing out home equity.)

You are almost 50 years old — and probably 10 years or so after retirement. Think about whether this house can be your eternal home. For major renovations, working on the repair with accessibility in mind can really guarantee that the house will be a place to live for the rest of the day. If you can afford to make large-scale home improvements and they enrich your quality of life, it’s hard to put a price tag on it.

Or you might decide that it’s not worth owning a house. After all, the advantage is that you can leave the maintenance to the landlord or real estate manager.And In many parts of the countryBorrowing a house and spending the rest of your money wisely may be a better deal than becoming a homeowner.

Whatever path you choose, I recommend that you continue to trust your gut. So far, it hasn’t bothered you.

I want to buy a house, but it needs a major repair. Is it worth it? I want to buy a house, but it needs a major repair. Is it worth it?

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