When most people think of a home that’s become a money pit, they think of an older home that needs renovation after renovation. And while that’s a classic example, you may not consider that new construction not done right can also create a money pit. Either way, you can easily end up wasting tens of thousands of dollars pulling yourself out, when all you wanted was your dream home. Find out the seven major causes of a money pit and how to avoid them to get the home you want without the hassle.
Renovating a home that’s too far gone
There are no guarantees when you start renovating an older home—whether it’s a home you’ve been in for years or a resale home you just purchased—that it will be a one-and-done solution. We’ve all heard horror stories of a homeowner wanting to update a bathroom, only to find out that the pipes are rusted, the electrical wiring is outdated, and the contractor knocked a hole in the wall carrying in the bathtub. A $10,000 renovation project suddenly turns into a $50,000 home upgrade seemingly overnight.
The best way to avoid this path to a money pit is to buy a new construction home rather than renovating or buying a resale home. A new home provides many benefits over renovating. Before deciding to renovate, it’s wise to look into options for a new construction home to determine if it’s a better choice for your family. Our free BUILD Analysis can help you answer that question.
However, simply building a new home doesn’t guarantee that it won’t become a money pit. Here are six ways that a new construction home can also cost far more than it should, and what you can do to prevent it.
Trying to manage a home build yourself
You might assume that serving as your own construction manager would save money–after all, it’s one less person to pay. However, doing it yourself can lead to mistakes that are far more costly than hiring a builder to do it right. Plus, your time is valuable. Managing the countless tasks of building a new home, from permitting to selecting finishes, would take hundreds of hours of your time.
With BUILD by TJH, you get two dedicated experts to handle the details, giving you back your valuable time. Your project manager will oversee your home build, and your build experience specialist will keep you informed at every step of the way.
Plus, unless you’re a professional homebuilder and interior designer, making all the decisions for your home can lead to design decision fatigue and poor choices that can decrease the value of your home when it’s time to sell.
This was our first home and I didn’t want to make the wrong decision, so having the Design Team guide us through the whole process was really helpful.
—Sumanta C., TJH homeowner, Los Angeles, CA
Over-designing your home
Hiring an architect to design your new home is wonderful, but if you’re not careful, it can result in a money pit in a couple of ways.
If you’re not experienced in briefing an architect, they may come back with an over-designed home that doesn’t properly consider your constraints. In other words, you may tell the architect what you want, but they push the design vision—and costs—to new heights that your budget can’t handle.
When you get quotes from contractors based on the plans, you may realize you can’t afford to build what the architect designed. As a result, you have to go back to the drawing board, either paying the architect for additional hours to redraft plans that fit your budget, or scratching the plans completely and losing all the money you spent in the process.
Another way you can burn through the budget by working directly with an architect is if the resulting plans don’t adhere to local jurisdiction requirements. If the city fails to approve the initial plans, you’ll be saddled with the same problem of having to pay the architect more to fix them, or having to scrap the plans and waste your initial investment.
Overpaying for materials
If you try to renovate or build a new home on your own or work with contractors that don’t build at scale, you may end up paying more than you should for your building materials. With TJH, our size and scale allow us to secure custom-quality materials for less, giving you the highest quality materials and finishes for less than you would pay otherwise.
Contractors charging more than expected
Talk to anyone who’s undertaken a home remodeling project or new build, and they’ll likely tell you that they ended up paying more than expected. Particularly since the pandemic, it’s common for the cost of materials to increase between the time a contractor gives you an estimate and when the project is complete, which may mean they pass on that expense to you. If your contractors bill by the hour, the number of hours a project actually takes is frequently higher than estimated, especially if they run into unforeseen complications.
We guarantee the price of your new home upon contract execution, and we never pass on surprise overages or spikes in material costs to you.* You can rest easy that your home build won’t turn into a money pit that costs you far more to complete than anticipated.
Buying or building without a warranty
A home that’s not protected by a warranty can easily turn into a money pit if you have to pay for unexpected repairs out of pocket. Resale homes are rarely protected by a warranty.
At TJH, we stand behind our people, product, and process with a warranty program to ensure your peace of mind. If the unexpected happens, our devoted customer experience team is here to quickly make it right. Before you sign your contract, we’ll cover the warranty details specific to your location to give you confidence in your new home.
Choosing a builder without a strong track record
Even if you select a builder to handle all the details of construction, you could still end up with a money pit if you don’t choose one with a proven track record of building quality homes that stand the test of time.
TJH is the nation’s largest, single-lot, new home replacement builder. We’ve helped more than 800 people find the right home in the right location.
Our many happy homeowners are a testament to the ease of our end-to-end process and the quality of our homes. Read what TJH homeowners have to say to learn more about the joys of building with us and how doing so can help prevent a money pit.
Building a home was never an option that we thought was in the realm of what we could do. But after looking into Thomas James Homes, it was way more affordable than we thought, for even better quality.
—Katie E., TJH homeowner, Los Angeles, CA
*See your contract for additional details and restrictions.