Author Topic: Income Property Show's faulty math  (Read 57358 times)

Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Income Property Show's faulty math
« on: December 14, 2012, 03:59:02 PM »
On HGTV, there is a show called Income Property.  The premise of the show, is that the host, an experienced landlord, provides people options and suggestions to make their rental suite more rentable.  At the beginning, he usually provides two options for owners to choose from, both with different initial costs, and projected rental incomes.  He often talks about how the owners options will reduce their mortgage payments by $600-2000/month, depending on what renovation options they select. The math problem comes from the fact that he completely neglects the costs of borrowing, in his calculations.  Most of the people on the show have large mortgages, and likely don't have the $10,000 - $40,000 needed to complete the renovations.

It drives me nuts every time I watch the show, and I just needed to get it off my chest somewhere!  GAH

http://www.hgtv.ca/incomeproperty/ if anyone is wondering what I am talking about. 

In today's episode, he counsels a couple in serious financial distress, to take a loan for $20,000 for renovations, to 'help them afford the home they love'.  The wife is on maternity leave, and the husband has been unemployed for 7 months.  Oh, I want to reach through the TV and slap all three! 


Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Re: Income Property Show's faulty math
« Reply #1 on: December 14, 2012, 04:04:02 PM »
Their mortgage payment was $2500/month, by the way! 

mlipps

  • Handlebar Stache
  • *****
  • Posts: 1062
Re: Income Property Show's faulty math
« Reply #2 on: December 14, 2012, 04:12:54 PM »
Ouch. My fave HGTV show is the "Love it or List It", which defies all rules of real estate w/renovations that always increase the value of the house more than the cost of the professional reno. *Rolls Eyes*

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4835
Re: Income Property Show's faulty math
« Reply #3 on: December 14, 2012, 04:17:16 PM »
You would think a savvy landlord like the host could do a better job on the income math.  The mortgage payment is $x, the income suite will rent for $y, so the net mortgage payment is $x-$y.  No vacancy and collection loss or operating expenses in his world.  I would bet if you followed up on some of the owners that were really stretched, you would find some foreclosures or short sales. 

Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Re: Income Property Show's faulty math
« Reply #4 on: December 14, 2012, 04:25:24 PM »
That bothers me as well, but not nearly as much as the fact that most people are borrowing $15,000+ to do these renovations, and unless they are refinancing their mortgages for longer terms, they'll have extra payments to make *somewhere* every month, that he just never ever mentions! 

He usually provides a cheaper option that will get less in rent, and a more expensive option that will get slightly more in rent.  I've seen episodes where people are spending $8,000 more, to get an additional $150/month in rent, with no ROI calculations addressed AT ALL.

Richard3

  • Bristles
  • ***
  • Posts: 292
Re: Income Property Show's faulty math
« Reply #5 on: December 14, 2012, 05:24:25 PM »
Part of me hopes that there's a lot more finance discussion that goes on behind the scenes that is edited out for the sake of making an understandable and exciting TV show. Then I watch just about any other show on that channel (like till debt do us part - where people are overspending by $2500 a month and don't see that this is a problem) and realise that people are stupid.

Sylly

  • Bristles
  • ***
  • Posts: 267
Re: Income Property Show's faulty math
« Reply #6 on: December 17, 2012, 09:16:11 AM »
Ouch. My fave HGTV show is the "Love it or List It", which defies all rules of real estate w/renovations that always increase the value of the house more than the cost of the professional reno. *Rolls Eyes*

It's even more amusing when a big chunk of the reno goes to things that don't really add visible value and yet the appraised value *still* goes up beyond the cost of reno. It's become a game here to guess how much the final appraisal is going to be. I do wonder whether they just severely low ball the initial appraisal, or way overestimate the final one. If it's the later, I'd like to see the home owners' reaction when they can't get the supposed new value of their homes when trying to sell. Either way though, it's very misleading.

Sylly

  • Bristles
  • ***
  • Posts: 267
Re: Income Property Show's faulty math
« Reply #7 on: December 17, 2012, 09:19:42 AM »
Then I watch just about any other show on that channel (like till debt do us part - where people are overspending by $2500 a month and don't see that this is a problem) and realise that people are stupid.

Don't think they're on HGTV, but if you enjoy watching the train wreck that is Till Debt Do Us Part, you should check out Princess (same lady, but usually advising single young women).

Richard3

  • Bristles
  • ***
  • Posts: 292
Re: Income Property Show's faulty math
« Reply #8 on: December 17, 2012, 09:27:29 AM »

Don't think they're on HGTV, but if you enjoy watching the train wreck that is Till Debt Do Us Part, you should check out Princess (same lady, but usually advising single young women).

I've seen it on the cable guide but I've usually finished eating breakfast by the time Princess starts. There's only so much stupidity I can voluntarily expose myself to in a day :)

noob515

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Income Property Show's faulty math
« Reply #9 on: December 17, 2012, 09:34:17 AM »
Ouch. My fave HGTV show is the "Love it or List It", which defies all rules of real estate w/renovations that always increase the value of the house more than the cost of the professional reno. *Rolls Eyes*

Oh, my mom HATES this!!!  She likes watching the show, but can't stand their math.  Especially because half the reno money seems to go to stupid decorations, like throw pillows. 

Also, for "Income Property", I always wonder why these people buy houses that they apparently can't afford without the apartment income.  They're always huge mortgages, and the couple is usually expecting a baby.  As if a huge renovation and debt burden is something everyone wants to go through right before having a baby.

Now I'm curious what "Till Debt do Us Part" is...

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 1989
Re: Income Property Show's faulty math
« Reply #10 on: December 17, 2012, 12:48:41 PM »
Ouch. My fave HGTV show is the "Love it or List It", which defies all rules of real estate w/renovations that always increase the value of the house more than the cost of the professional reno. *Rolls Eyes*

I've seen parts of that show maybe 3 times. Each time, they discovered some "hidden" set of problems that blew through half the renovation budget (and the owner's temper) without providing any increase in value whatsoever -- things like water in the basement, inspection failures, broken pipes, drainage problems. Yet the net $15,000 in improvements they were able to make (i.e. throw pillows) somehow increased the value by $100,000+

Not to be outdone by the shows where they have only $2,000 to completely transform/stage a home in order to sell, and they do. That cost always manages to ignore the 50-person crew of professional designers, painters, furniture movers, construction workers, carpenters, and is only the cost of "some fabric and frames I picked up at Target"

Hamster

  • Pencil Stache
  • ****
  • Posts: 623
Re: Income Property Show's faulty math
« Reply #11 on: December 17, 2012, 01:23:32 PM »
I've seen episodes where people are spending $8,000 more, to get an additional $150/month in rent, with no ROI calculations addressed AT ALL.

You don't have to do the math to know that's fantastic ROI. It passes the between the eyes test--just hits you between the eyes.
(If you do calculate, it's over 20% ROI not accounting for vacancy/depreciation/taxes/interest)

Richard3

  • Bristles
  • ***
  • Posts: 292
Re: Income Property Show's faulty math
« Reply #12 on: December 17, 2012, 03:37:50 PM »
Till debt do is part is a couple with money problems and this (possibly quebecois) woman comes in and tells them to stop spending so much money.

She puts them on a strict cash budget for a month, makes them put together a debt repayment plan, and gives challenges / exercises to help their relationship with each other and money. It's fairly interesting as reality TV goes.

Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Re: Income Property Show's faulty math
« Reply #13 on: December 17, 2012, 03:46:14 PM »
I've seen episodes where people are spending $8,000 more, to get an additional $150/month in rent, with no ROI calculations addressed AT ALL.

You don't have to do the math to know that's fantastic ROI. It passes the between the eyes test--just hits you between the eyes.
(If you do calculate, it's over 20% ROI not accounting for vacancy/depreciation/taxes/interest)

Sure, it might be a fantastic ROI, depending on how they are funding the renos.  I'd just like to see the calculations done, or at least addressed somehow.  So many people don't know how to do that math, at all.

totoro

  • Handlebar Stache
  • *****
  • Posts: 2091
Re: Income Property Show's faulty math
« Reply #14 on: December 17, 2012, 03:48:13 PM »
I love income property but I agree the math does not work. 

Almost all of those folks are borrowing the reno money and the repayment of this is never factored in.  When a reno costs $30,000 and you get $1000 a month I agree it is better than not doing it BUT it is misleading to simply deduct this amount from the mortgage with no borrowing costs, income tax, vacancy or anything else. 

The whole costs of home ownership are never addressed either, only the mortgage amount.  I still wish Scott would come to my place... maybe I can get MMM instead :)


Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Re: Income Property Show's faulty math
« Reply #15 on: December 17, 2012, 04:46:25 PM »
I LOVE Til Debt Do Us Part and Princess.  Much love for Gail Vaz-Oxlade!

chucklesmcgee

  • Pencil Stache
  • ****
  • Posts: 613
Re: Income Property Show's faulty math
« Reply #16 on: December 17, 2012, 06:38:41 PM »
The whole costs of home ownership are never addressed either, only the mortgage amount.  I still wish Scott would come to my place... maybe I can get MMM instead :)

I feel like the real estate industry is backs HGTV and a lot of consumer articles about mortgages and the like.

Jack

  • Magnum Stache
  • ******
  • Posts: 4734
  • Location: Atlanta, GA
Re: Income Property Show's faulty math
« Reply #17 on: December 18, 2012, 08:59:00 AM »
I like Income Property -- which I haven't watched in a while since ditching satellite -- but what I don't understand is how do those people get financing in the first place? Toronto must be a screwy place, because in my neck of the woods no bank would approve loans at those kinds of debt-to-income ratios, let alone the renovation loans on top of them!

Love It or List It just pisses me off because neither the designer nor real estate agent listens to the client and it seems like a contest to see who can be more incompetent.

MooreBonds

  • Stubble
  • **
  • Posts: 193
  • Location: St. Louis, MO
Re: Income Property Show's faulty math
« Reply #18 on: December 30, 2012, 02:48:06 PM »
Love It or List It just pisses me off because neither the designer nor real estate agent listens to the client and it seems like a contest to see who can be more incompetent.

They have to stretch it out to fill an entire show (30 or 60 minutes, whichever it is, I can't recall). If they only edited it out to show the agent bringing them to the final house that they love, it would be a 10 minute show. By adding in the 'complete miss' first and/or second home, and first attempt at remodeling designs, it builds drama, and tries to entice you to keep watching to see their reaction to the final house and remodeling they are shown (which makes it past editing).

Aloysius_Poutine

  • Stubble
  • **
  • Posts: 127
  • Age: 2014
  • Location: canada
Re: Income Property Show's faulty math
« Reply #19 on: December 30, 2012, 04:27:25 PM »
Re: Income Property, the other thing they never mention is that rental income is taxable. Big implications there. A lot of people who put suites in their basements want to do it under the table. Good luck getting away with that when you've gone on national TV advertising the fact you're gaining an extra $1200/mo from it.

Jaherman99

  • 5 O'Clock Shadow
  • *
  • Posts: 37
Re: Income Property Show's faulty math
« Reply #20 on: December 31, 2012, 01:34:38 PM »
It seems to me that the homeowners are getting paid by the show, so the cost is immaterial. That's the only reason that anyone who is not a total moron would participate.

WageSlave

  • Stubble
  • **
  • Posts: 178
  • Location: Chicago, IL, USA
Re: Income Property Show's faulty math
« Reply #21 on: December 31, 2012, 04:00:16 PM »
We don't have cable, so no HGTV, buy my in-laws do, and my wife loves that channel.  So when we visit, and the kiddo goes to sleep, I often find myself sucked in... more often than not, we end up watching "Househunters".  It's kind of a fun show, just because I like looking at houses.

But the thing that always strikes me is that the people they show always have astronomical budgets, such as: fresh college grads looking at $300k homes, and high-school-teacher-one-income-family looking at $500K homes.  My gut feel is that most of these people must be over-leveraging themselves.  I don't recall ever seeing an episode of that show where people looked at what I consider modestly-priced houses.

mlipps

  • Handlebar Stache
  • *****
  • Posts: 1062
Re: Income Property Show's faulty math
« Reply #22 on: December 31, 2012, 08:32:33 PM »
I saw a Househunters recently where a recently graduated accountant was earning around $50k and buying a house for only $100k or so. Unfortunately he had little savings and was buying it at the insistence of his girlfriend. Gotta have the drama somewhere I guess.

Hamster

  • Pencil Stache
  • ****
  • Posts: 623
Re: Income Property Show's faulty math
« Reply #23 on: January 01, 2013, 12:20:00 AM »
Re: Income Property, the other thing they never mention is that rental income is taxable. Big implications there. A lot of people who put suites in their basements want to do it under the table. Good luck getting away with that when you've gone on national TV advertising the fact you're gaining an extra $1200/mo from it.

It's taxable, but you also get to claim depreciation of the structure, renovations, etc which greatly reduces the tax liability on the rental income. If you rent out part of your home, then part of your home and associated expenses become business expenses which adds to tax benefits. And, of course taxable income is still income and still adds to the stache after taxes. I haven't seen the show, so I can't comment on how they portray anything. Of course it's important to understand tax implications, but it's still very possible to come out way ahead by renting out part of your home.

I'd say anyone who is trying to rent under the table is asking for trouble. Why not just do it by the rules and sleep well at night?

Jack

  • Magnum Stache
  • ******
  • Posts: 4734
  • Location: Atlanta, GA
Re: Income Property Show's faulty math
« Reply #24 on: January 01, 2013, 11:58:59 AM »
Love It or List It just pisses me off because neither the designer nor real estate agent listens to the client and it seems like a contest to see who can be more incompetent.

They have to stretch it out to fill an entire show (30 or 60 minutes, whichever it is, I can't recall). If they only edited it out to show the agent bringing them to the final house that they love, it would be a 10 minute show. By adding in the 'complete miss' first and/or second home, and first attempt at remodeling designs, it builds drama, and tries to entice you to keep watching to see their reaction to the final house and remodeling they are shown (which makes it past editing).

But all the other shows on HGTV manage to fill up the time without making the hosts look like total fuck-ups...

JessicaRed

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Income Property Show's faulty math
« Reply #25 on: March 12, 2013, 12:11:14 PM »
I love Income Property because a) I think Scott McGillvray is a total charmer and b) I like design makeover shows, but OMG I so get you on the bad math point. It drives me crazy every time he says that! I'm like, but wait, you're already completely underwater and it will be YEARS before you recoup your losses on the reno! It matters less when people are clearly planning on selling the whole house soon, because they often double their value in appreciation, but when they're planning on keeping it we're back to the stupidity again.

(Also, the finishes his designer picks really bug me...sure, they're "modern" but I'd bet you $100 that 90% of them will be considered "super dated" in 10 years)

Landlord89

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Income Property Show's faulty math
« Reply #26 on: June 14, 2014, 10:45:32 AM »
Been a while since anyone has posted in here... But oh well.

Just started watching the show, and while a large portion of the show's math is hard to believe, the decision to renovate a rental is always the right one.

I've been a landlord for just over 5 years now and am on property #12, so I'm starting to really get the hang of it.  I just want to address some comments here:

1- "income property doesn't ever mention the cost of loan payments for Reno's" First off, I've seen a number of episodes where this is mentioned, and taken in to account.  Second, most of the time when I buy a new home I get a MTG+improvements deal so that everything is included in one MTG pmt.   Also, when banks calculate debt/income ratio it isn't an exact translation in the income property biz. Basically  80% of your rental income is subtracted from your MTG pmt+property tax.  The number left over is either added or subtracted from/to your income which makes it easier to get approved for the next MTG.  If you play your cards right, you will get approved for more each time.   The beauty of it, is that all these debts are being covered by tenants. So none of it is ever your own money.
2- Why spend an extra $15k for only $150/mo more?  There are TONS of reasons:  That extra $15k is made up instantly about %80 of the time in equity gain, and often it can add more than $20k in equity if you pick the right home in the right location and do a good job with your Reno's..  It also allows you to broaden the market you rent to, which allows you to be pickier with tenant selection, which WILL save you thousands on long term maintenance problems because better tenants take better care of their homes.  This also reduces the risk of getting tenants who miss payments(brutal headache).  Most ppl choose the cheaper reno option, MISTAKE.  When you have a one bedroom suite and nobody but bachelors are available to rent it you will be kicking yourself.  I was.

3-  Scott's style is going to be dated so quickly.  Maybe, but if you notice, he often installs universal cabinets from ikea and laminate flooring, which means the cabinets can be re-faced for dirt cheap, and laminate flooring is infinitely more durable than hardwood, not to mention super easy to install and remove.  Besides, the most you can hope for on a reno cycle is 15-20 years, so you want to set it up so the next reno is super cheap and quick without sacrificing quality.

4-" His budgets don't make sense, those Reno's would cost way more.". Not sure about you, but my reno costs are only about 10% higher than his. 

« Last Edit: June 14, 2014, 11:00:19 AM by Landlord89 »

homeymomma

  • Bristles
  • ***
  • Posts: 335
Re: Income Property Show's faulty math
« Reply #27 on: June 14, 2014, 11:56:24 AM »
I always figure these people must come out ahead because they must get so much more for their money, because they have the professional designer guy, who i assume is paid by the network, not the homeowners. Plus the probably get paid by the network for being on the show. Just my two cents. I also think the people who do love it or list it must get a pretty sweet deal- payment for the show, plus a free designer to increase their home's value.

mm1970

  • Walrus Stache
  • *******
  • Posts: 6448
Re: Income Property Show's faulty math
« Reply #28 on: June 14, 2014, 01:25:38 PM »
Ouch. My fave HGTV show is the "Love it or List It", which defies all rules of real estate w/renovations that always increase the value of the house more than the cost of the professional reno. *Rolls Eyes*
I love watching this show!  But it does totally crack me up in an eyeroll kind of way.

Cpa Cat

  • Handlebar Stache
  • *****
  • Posts: 1564
Re: Income Property Show's faulty math
« Reply #29 on: June 14, 2014, 02:39:50 PM »
The thing that got me about Income Property is that when he's done, he'll give them a third option "OR, you could move into this newly renovated space and rent out the part of the house that you live and pay off your mortgage in <Insert Ridiculously Short Time>." And they never choose that option, despite the fact that they're broke and in debt up to their eyeballs now that they just took out a HELOC to do the renovation.

But Love it or List It... oh my god. It's like a script.
1. Here is the scope of our project and our budget.
2. "It'll be hard, but we can do it... BUT WAIT OH NO SOMETHING UNEXPECTED CAME UP. Now we can only do 1/3 of the project."
3. Rawr! How dare you! Now we will certainly move.
4. "No problem - what's that? You hate every house I show you? Let's raise you budget by $100,000 and look a better house!"
5. Wow, you're right, houses that are 100k overbudget -are- nicer.
6. Taa Daa, our renovations have vastly increased the value of your home through the magic of television compounding!

That said, I've read that the people on that show get basically free labor, which isn't factored into the "cost" of their renovation and vastly understates the renovation cost and overstates the renovation return. And then they film both the Love It ending and the List It ending and air whichever one plays better.

taekvideo

  • Bristles
  • ***
  • Posts: 264
Re: Income Property Show's faulty math
« Reply #30 on: June 14, 2014, 03:50:37 PM »
Been a while since anyone has posted in here... But oh well.

Just started watching the show, and while a large portion of the show's math is hard to believe, the decision to renovate a rental is always the right one.

I've been a landlord for just over 5 years now and am on property #12, so I'm starting to really get the hang of it.  I just want to address some comments here:

If you had paid attention in high school, you would have figured out that statements with the word "always" or "never" in them are usually wrong.

greenmimama

  • Pencil Stache
  • ****
  • Posts: 718
Re: Income Property Show's faulty math
« Reply #31 on: June 14, 2014, 08:16:26 PM »
Did you know you only get $500 for being on House Hunters? You can already be in closing with the home you are purchasing and then they stage a few more house showings and you have to film for FIVE days!!!

We were in talks with them, but once they said film for 5 days and you only get $500, we were out, we didn't care so much about being on TV, just wanting the money, my DH didn't understand how it could be so little, he opted to just work and make more than that ;)

Landlord89

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Income Property Show's faulty math
« Reply #32 on: June 15, 2014, 02:20:24 AM »
Been a while since anyone has posted in here... But oh well.

Just started watching the show, and while a large portion of the show's math is hard to believe, the decision to renovate a rental is always the right one.

I've been a landlord for just over 5 years now and am on property #12, so I'm starting to really get the hang of it.  I just want to address some comments here:

If you had paid attention in high school, you would have figured out that statements with the word "always" or "never" in them are usually wrong.
.  Well that's because I was overstating for effect.  There are lots of obvious reasons not to renovate a rental: 1) I just finished a reno yesterday, why would I re renovate again today? 2) I'm already getting the top price from top renters in my neighborhood 3) my home is already valued higher than most in the neighborhood.... 

So what I meant was,  it is often a good idea to renovate a rental. 

CarDude

  • Pencil Stache
  • ****
  • Posts: 611
  • Location: Chicago, IL
  • Beep Beep!
    • The CCD
Re: Income Property Show's faulty math
« Reply #33 on: June 15, 2014, 11:20:58 AM »
Did you know you only get $500 for being on House Hunters? You can already be in closing with the home you are purchasing and then they stage a few more house showings and you have to film for FIVE days!!!

We were in talks with them, but once they said film for 5 days and you only get $500, we were out, we didn't care so much about being on TV, just wanting the money, my DH didn't understand how it could be so little, he opted to just work and make more than that ;)

Hah. My favorite are all the folks who are clearly just on the shows (HH, My first place) to push their businesses (usually wedding photographers and "non profits").

lisahi

  • Stubble
  • **
  • Posts: 225
Re: Income Property Show's faulty math
« Reply #34 on: June 15, 2014, 07:16:54 PM »
I've seen episodes of Income Property where the cost of the loan are taken into account. I don't know why they don't always mention it, though, because it clearly makes a difference. It was what bugged me about the show (which I otherwise love, just for the reno aspect).

I hate Love It or List It. HATE IT. lol. The hosts are annoying and they can't even bothered to be decent actors. Clearly scripted.

RetiredAt63

  • Senior Mustachian
  • ********
  • Posts: 10383
  • Location: Eastern Ontario, Canada
Re: Income Property Show's faulty math
« Reply #35 on: June 16, 2014, 05:52:21 AM »
That is Gail Vaz-Oxlade. She lives in Ontario and she is originally from Jamaica.  If you want to see what she is doing now, she has her own web site and blog.  I go to her blog every day.  Even though I think I am fairly financially responsible, she often has interesting information or points to make.  And it is Canadian - so many of the personal finance books in the bookstores and libraries are US based, so the specifics are totally wrong for us.

Princess was a bit much, I was so mad at the parents and boyfriends for their enabling behaviours.  She had a few Princes as well, and I would have liked to see more - I have seen lots of young men who were just as financially irresponsible as the girls, but they seem to be almost invisible on this show.  Lots of financially irresponsible men on Til Debt Do Us Part, though.  TTDUP was often sad, partners who had no idea what was going on with their finances.  Some got it, and some didn't.  One guy really didn't, and I sometimes wonder what ended up happening with them - his ego was so into providing well (in a showy way) for his kids now that he was totally unwilling to admit the long-term harm he was doing.  Three kids and a stay-at-home Mom - I think she felt trapped, but she never said it.  But the situation obviously worried her a lot, she was the one who volunteered them for the show.  I never saw Money Morons, but I am sure Gail had no trouble finding some for the show.  Canadians are just as clueless about money as the rest of the world.  We used to be good savers (statistically) but not any more.

Till debt do is part is a couple with money problems and this (possibly quebecois) woman comes in and tells them to stop spending so much money.

She puts them on a strict cash budget for a month, makes them put together a debt repayment plan, and gives challenges / exercises to help their relationship with each other and money. It's fairly interesting as reality TV goes.

Travis

  • Handlebar Stache
  • *****
  • Posts: 2376
  • Location: Arizona
Re: Income Property Show's faulty math
« Reply #36 on: June 16, 2014, 07:52:34 AM »
Reading the discussions above about these HGTV shows with fuzzy math got me thinking about other renovation shows.  Has anyone read or experienced this? (Article #3)

http://www.cracked.com/article_20299_5-depressing-realities-behind-popular-reality-tv-shows.html

greenmimama

  • Pencil Stache
  • ****
  • Posts: 718
Re: Income Property Show's faulty math
« Reply #37 on: June 16, 2014, 02:39:40 PM »
Reading the discussions above about these HGTV shows with fuzzy math got me thinking about other renovation shows.  Has anyone read or experienced this? (Article #3)

http://www.cracked.com/article_20299_5-depressing-realities-behind-popular-reality-tv-shows.html

That's really sad but not at all surprising, I have noticed on the newer shows, they will also give them a large cash prize for help with utilities and such.

cbgg

  • Stubble
  • **
  • Posts: 192
  • Location: Vancouver, BC
Re: Income Property Show's faulty math
« Reply #38 on: June 16, 2014, 07:01:27 PM »
God I hate HGTV.  Every show they have is not only hokey but totally unrealistic.  If you ever know anyone who's behind the scenes on those shows you hear about just what a fabrication the whole thing is.

I know many people who's homes have been featured on episodes of Love it or List it, Home Hunters, Urban or Suburban, etc.  Often the homes they see as options are not even on the market, the couple has already purchased one of the homes shown (or a different home that's never shown) and the homes listed are not in the neighborhoods indicated, etc. 

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 3307
  • Age: 36
  • Location: Madison Heights, Michigan
Re: Income Property Show's faulty math
« Reply #39 on: June 16, 2014, 07:20:29 PM »
I never understood why they dpn't account for HOA fees, despite clearly mentioning them.  You can move to this house with your own driveway and no HOA fees for $1200/mo, or for just $1200/mo you can get this condo and also pay $800/mo in HOA fees and another $200/mo to park.  Like the extra $12,000 in yearly fees doesn't factor into the equation or something.

Forcus

  • Pencil Stache
  • ****
  • Posts: 714
  • Location: Central Illinois
Re: Income Property Show's faulty math
« Reply #40 on: June 17, 2014, 10:54:43 AM »
God I hate HGTV.  Every show they have is not only hokey but totally unrealistic.  If you ever know anyone who's behind the scenes on those shows you hear about just what a fabrication the whole thing is.

When the wife is house sitting we watch a little bit of HGTV (a little goes a long way). We know 95% of it is drama, or just not real, but 5% of it is useful. Places we'd like to travel, even locales we thought were out of reach but are more affordable than we thought, ideas for house renovations, etc. Of course there are people who will watch it and think it's real and won't do the maths, they are in trouble.

Cassie

  • Walrus Stache
  • *******
  • Posts: 5298
Re: Income Property Show's faulty math
« Reply #41 on: June 17, 2014, 11:16:24 AM »
I like to watch all these shows. Once on property Brothers a single mom chose to move into her finished rental suite in the basement to pay off her mortgage quicker and rent the upstairs where she used to live. Smart woman!

lisahi

  • Stubble
  • **
  • Posts: 225
Re: Income Property Show's faulty math
« Reply #42 on: June 17, 2014, 12:53:40 PM »
God I hate HGTV.  Every show they have is not only hokey but totally unrealistic.  If you ever know anyone who's behind the scenes on those shows you hear about just what a fabrication the whole thing is.

I know many people who's homes have been featured on episodes of Love it or List it, Home Hunters, Urban or Suburban, etc.  Often the homes they see as options are not even on the market, the couple has already purchased one of the homes shown (or a different home that's never shown) and the homes listed are not in the neighborhoods indicated, etc.

Yeah, a lot of it's fake. But HGTV's tagline for House Hunters for awhile was, "you know you want to look," because a lot of people do. We want to see what other people have. With House Hunters (or HH International), the thrill (if you could call it that) is going to a bunch of open houses all over the world and seeing what's out there. When I watch it, I can guess the house they pick 99% of the time (it's generally the one with no furniture because the couple is already in escrow but haven't moved in yet), but I still want to see the different types of homes in different cities.

With the reno shows, I just like getting ideas for options I could use in my own house or backyard. Color schemes, furniture looks, kitchen styles, landscaping... I'm constantly looking at ways I can improve my home (hopefully for not much money) and HGTV is a good way to get new ideas.

I will have to find new ways to get ideas, however, once I cut my satellite.

KBecks2

  • Pencil Stache
  • ****
  • Posts: 618
Re: Income Property Show's faulty math
« Reply #43 on: November 21, 2014, 11:00:01 AM »
I just started watching Income Property because I am interested in becoming a landlord, and because home shows are fun (I great up watching This Old House, of course!).   I might be late to the party but there are episodes on Netflix now (along with Love it or List It) and other HGTV episodes (older seasons, I'm guessing).

There are interesting things to learn. It seems as if Scott is experienced as a landlord but they don't get into the financial math on the show.  It's mostly about the pretty stuff.

Cassie

  • Walrus Stache
  • *******
  • Posts: 5298
Re: Income Property Show's faulty math
« Reply #44 on: November 21, 2014, 11:19:56 AM »
I also love all these shows. As someone earlier stated hopefully behind the scenes the real figures are given to people. 

blue mutant

  • 5 O'Clock Shadow
  • *
  • Posts: 29
  • Age: 40
  • Location: Red Deer
Re: Income Property Show's faulty math
« Reply #45 on: November 21, 2014, 11:43:41 AM »
I love to watch income property but wish the math was laid out more clearly. For many of the houses though, when they discuss the mortgage payment, you can extrapolate that the homeowners have sizable down payments. ie. The mortgage payments are low enough that these are not CMHC insured mortgages. One of the earlier posters also mentioned that the homeowners are likely rolling their renovation costs into their mortgage, which is what I've always assumed to be the case as well.

My favourite thing about house humters are people with a budget of around $100,000 to $125,000 complaining about not seeing
-only hardwood flooring
-Granite
-stainless steel applicances
-etc.etc

irishbear99

  • Bristles
  • ***
  • Posts: 295
Re: Income Property Show's faulty math
« Reply #46 on: November 21, 2014, 02:12:12 PM »
I loved watching HGTV when we had cable. I enjoyed house hunters because they show so many different options you can have in your house. It was fun to see what people did design-wise and get ideas. However, I had to stop watching because the more I did, the less happy I became with my own house. I started seeing all the "potential" (aka, flaws) and spending gobs of money (in my mind only, thank goodness) to "fix up" the house. Now, I don't live in the fanciest of places, and yes I would love to do some upgrades, but it's a good house in a good neighborhood and there's nothing actually wrong with it. I've found I'm much happier when I'm grateful for what I have instead of longing for what I don't.

The other shows I loved to watch on HGTV were the Property Brothers and Holmes Inspection. With Property Brothers, I liked how they gave people alternatives for getting at least some of the things they wanted in a house without buying something way above their budget. Plus, it was nice to see the couples actually do some of the work for their dreams (at least, on camera), helping with demo, etc.

Holmes Inspection was educational for me because it went beyond the asthetics and got into fixing the guts of the house - wiring, plumbing, foundation issues - stuff I knew nothing about. Plus, Mr. Holmes seemed like a nice, compassionate guy who really felt for the home owners that got stuck with lemons and had no idea how to fix them.

Gen Y Finance Journey

  • Stubble
  • **
  • Posts: 209
  • Location: CA
Re: Income Property Show's faulty math
« Reply #47 on: November 24, 2014, 09:27:04 AM »
I've always wondered how the financials work on shows like Property Brothers, when someone is buying a house and doing immediate renovations. They always treat the budget as home purchase price + cost of renovations, but is that correct? Presumably if a couple comes in with a max budget of, say, $400k, that's because they got pre-approved for that amount, specifically for a mortgage and tied to an interest rate. But will the bank let you divide that amount between a mortgage loan and a renovation loan? Are the interest rates comparable? How does it work?