‘Buying a house has ruined me financially’: North Carolina woman accrued $65,000 of debt to repair historic home she bought — here’s what you can learn from her situation

10/05/2024

Woman has $65K debt after repairing historic home

Building your wealth with real estate could be considered a sound financial move — that is, unless the property becomes a money sinkhole.

That’s exactly what happened to Samantha Barker (@samantha.barker8), the creator of the “Make Money Online” TikTok account, who bought a 1940s ranch-style home in central North Carolina last year — only to discover that it’s unlivable.

For the “sake of transparency and accountability,” Barker laid out all the mishaps she’d encountered during her home buying journey in a since-deleted viral video (her debt calculations and quotes have also appeared on other news outlets). “Buying a house has ruined me financially.”

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So, what exactly happened? It all started when the biotech scientist Barker had hired discovered how much work was required to make the historic house safe and livable. As a result, she has since borrowed roughly $65,000 to fix up her newly purchased home.

Prior to her first foray into real estate, Barker said she had been diligently saving for retirement, all while paying off her student loans and car payments.

Despite online backlash about some of her decisions, Barker wanted to share her experiences so that others in similar situations wouldn’t think they “did something wrong.”

What happened

In one of her follow-up videos, Barker admitted that she knew the home more than 80 years old and needed work when she bought it.

According to her, the seller didn’t disclose that there were any major problems — nor did the home inspector she’d hired.

Once Barker got the keys, however, many problems quickly came to the surface. Within the first week of homeownership, for example, she had to get new electrical work done because the wiring was so faulty that it was deemed a safety hazard.

As a result, she wound up spending $25,000 on the electrical work, as well as a new HVAC system and substantial duct work.

But it didn’t stop there: Barker discovered that every joist under one bedroom was either damaged or destroyed by termites, in addition to the dry rot and water damage found throughout the house. She had to spend another $15,000 just to repair the foundation.

Barker was also told that she couldn’t get home insurance until the deck and porch were brought up to code. So, she took out a $10,000 personal loan to fix them.

Then there was the tree growing through the house, the hole in the attic and the roof with a dead valley. Barker put the $15,000 contractor fees for those fixes on her credit card — and has yet to pay it off.

She said she has now maxed out three of her credit cards and used her retirement savings to pay for the work on the house.

“I went from being the most financially-sound [and] responsible person to being eaten away alive by debt,” Barker revealed.

Buying a fixer-upper has increased in popularity in recent years. In fact, TD Bank discovered that 59% of first-time homebuyers hoped to buy an older home or starter home, mainly because of the lower costs to purchase.

However, Manny Angelo Varas, the CEO of a Miami homebuilding firm, told CNBC that there are some situations that aren’t worth the low cost of buying a fixer-upper. Everything he said was exactly what Barker encountered — from the roof problems to the dilapidated foundation.

“Those kinds of repairs can really lead into a more costly and time-consuming situation where you don’t see the yield on that return on the sale,” Varas said.

How you can avoid this situation

If the hassles associated with homeownership are too much at this stage in your life, there are other options available to you.

The situation for Barker was unfortunate because she did the right thing and got a home inspection — she just happened to hire someone who turned out to be dishonest.

Getting another contractor to come in to offer a second opinion and pinpoint the exact issues all at once likely would have saved her some money down the line. According to the home services website, Angi, the average cost of a home inspection in 2024 ranges between $281 to $403, depending on location and the size of your house. It’s something to consider should you find yourself in a similar situation.

If you can afford a fixer-upper, but can’t financially handle any additional renovations or repairs, don’t panic. You can still put your money into real estate investment trusts (REITs), which are an alternative to buying real estate directly. REITs are essentially a pool of real estate assets that are traded freely on the stock market exchange.

Since REITs are publicly traded, you can buy or sell shares at any time and your investment can be as little or as large as you want. It’s a nice way to skirt around down payments and mortgages, while still building your wealth.

Another upside of REITs is that you don’t have to worry about home repairs, you just put money into them and hopefully get a return on your investment.