I Lost $12,000 Renovating a Fixer-Upper: These Are the Mistakes I Made
Written by
Laura Beck
Edited by
Molly Sullivan
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Embarking on a fixer-upper journey holds the promise of turning dilapidated spaces into dream homes or profitable investments. It’s a tale of transformation, innovation and the vision to see potential where others might see only decay.
Mathew Pezon, the CEO of Pezon Properties, embarked on such a venture with a mix of enthusiasm and ambition. Little did he know that his foray into the world of renovation would become a tale of hard lessons and costly mistakes. In his candid account, Pezon laid bare the pitfalls he encountered while attempting to breathe new life into a neglected property. This cautionary tale offers a glimpse into the challenges of the fixer-upper world and the valuable insights gained through a journey that didn’t go as planned.
The property, which Pezon described as a modest 1,200-square-foot home, seemed like a great deal. Even better, a contractor lived across the street so he thought they’d be able to work together to create profit for both of them. “It felt like this would be a perfect fit,” he told GOBankingRates. “But I would soon learn that I was very wrong.”
“The contractor was stealing materials from me, never filled the oil tank and the pipes burst in the winter, and he was even drinking on the job! It was a real nightmare situation, but I learned from it,” Pezon said.
Here’s a look at some of the other mistakes he made so that you can learn from them.
Mistake No. 1: Hired the Wrong Contractor
Pezon emphasized the importance of selecting the right contractor, a choice that can significantly impact the project’s outcome. He highlighted several key strategies to ensure a suitable match:
Seek Multiple Bids
“You’d be surprised how different bids can be, even for the same scope of work,” Pezon said. He advised that you reach out to a wide array of contractors and get multiple bids before deciding.
Check References
Pezon suggested contacting references provided by potential contractors to gauge their reliability, quality of work and whether or not they’re able to stick to budget and schedule.
Check Their Earlier Work
Visiting a contractor’s previous projects or reaching out to prior clients provides tangible evidence of their capabilities, Pezon said.
Search Them Online
Pezon shared that a simple online search can unveil valuable reviews and news about contractors, helping to make informed decisions.
Do Some IRL Research
“Go to a supply house like Home Depot or Lowes at 6 a.m. and introduce yourself to contractors who are there buying materials for that day’s work,” Pezon said. “The early bird gets the worm and the contractors that show up early are usually the ones you want to work with. Not the ones shopping at 10 a.m. because they forgot materials, or worse, are just starting their days!”
Mistake No. 2: Not Having a Contract
One of Pezon’s key mistakes was not having a formal contract in place. He paid the contractor weekly without a clear timeline for project completion. This lack of structure led to extended delays and financial mismanagement. He suggested starting with a detailed contract outlining responsibilities, timelines and payment terms acts as a safety net, keeping both parties accountable. Include penalties for contractors exceeding agreed-upon completion dates, protecting your investment and ensuring promptness. Also, he’s a proponent of structuring payments in stages, tied to project milestones, ensuring transparency and minimizing the risk of overpayment.
Mistake No. 3: Not Getting Inspector Approval
While cost may deter some, Pezon advised getting an inspector involved, particularly for initial projects with a new contractor. Hiring an inspector for a final assessment of completed work provides an expert evaluation and safeguards against subpar craftsmanship. The inspector’s unbiased opinion can determine whether the contractor’s work meets professional standards, helping you make informed decisions moving forward.
Other Mistakes People Might Make During a Fixer-Upper Process
While Pezon might not have made these exact mistakes, these are common ones you will want to avoid if you’re taking on this type of project.
Mistake No. 4: Not Having a Renovation Emergency Fund
Even though Pezon didn’t talk about it directly, others who spoke with GOBankingRates mentioned a common mistake: not having extra money set aside for unexpected problems. To start, you should clearly figure out what needs to be done. Then, list those things by importance and how much they’ll cost. If you want to save money, think about doing some of the renovations yourself.
Mistake No. 5: Starting Too Big
Another big mistake when fixing up houses is starting with a huge property, especially if you’re new to it. It’s smarter to begin with something smaller and cheaper so you can learn without too much stress. This way, you build up your skills and figure out how to manage money. Later on, when you’re more experienced, you can tackle bigger projects with confidence.
Mistake No. 6: Not Knowing the Market
Another mistake people often make when fixing up a run-down house is about the market. If you’re fixing it to sell, keep an eye on how houses are selling in your area. If prices are dropping fast, you should either sell it quickly or rent it out instead. But if you’re fixing it to live in, a dropping market isn’t as important. Just remember, if you want to refinance after fixing it up, make sure its value is high enough for the bank to give you the money you need.
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