HGTVs Dream Home Giveaway recently kicked off its 18th year, which means I got the phone call from my mother begging me to enter her name online for her chance to win. Her eyesight has been fading away over the past few years, making it difficult for her to fill out the online entry form, not to mention that would mean her trying to figure out how to get on the computer and find the HGTV website. But her vision IS still good enough to watch the tour of the Dream Home and this years Lake Tahoe home already has her imagining a roaring fire in the living room of her new home in the woods.  So every day until February 14th, I will try to remember to fill out the daily entry form for her chance at the Dream Home.

But what if she did win? Would my elderly parents move across the country, leaving their home state of Maryland behind?  Becoming CA residents would mean higher state taxes, not to mention the cost of maintaining the beautiful mountain lodge. And first, the IRS would want their share of taxes on the value of the home she hopes to win.

Just like many lottery winners, the stories of the prior Dream Home winners sometimes end up being more nightmare than dream.  Several of the winners ultimately lost their Dream Homes to foreclosure or ended up selling the home, after not being able to keep up the carrying costs and real estate taxes of a luxury home. They often would have been better off taking the cash instead.

The 2011 Stowe, VT ski lodge winner had the idea of turning the Dream Home into a vacation home and figured they could rent it out the rest of the time.  But with real estate taxes of over $27,000 and all the other expenses associated with rental real estate (including probably a local management company since the winner lived in IL) the house was put up for sale after the family only stayed there 5 times. The property certainly met the first rule in real estate:  location, location, location.  But when considering the rental real estate rule of thumb that a property should be able to provide gross monthly income equal to 1% of the property value, this WAS only a dream since the property had a supposed retail value of $3.8 million but may never have been able to yield $38,000 every month of the year.

What about a bed & breakfast business?  These Dream Homes are so beautiful, with typical square footage at around several thousand feet, and of course, the setting is usually in a resort area as was the Texas Dream Home at Lake Tyler.  That was the idea of the 2005 TX Dream Home winner, but town regulations wouldnt allow him to open a business on the property.

The lesson here: do your homework before considering a home-based business. Whether its a B&B for guests or a doggy day care for 4-legged friends, make sure local rules dont prohibit running a business out of your house BEFORE you open the business.  With the B&B idea a bust, the winner eventually couldnt keep up with the monthly carrying costs and after a few years, lost his Dream Home but even after the foreclosure — said he had no regrets, and hed do it all over again.

So if my mother gets an unexpected knock on the door between March 3-9, it could be HGTV informing her she is the winner.  Ill pack my bags to go with her on the winner weekend to visit the Dream Home in early April. Then after shes had a few hours to admire her new home,  Ill tell her to take the cash prize of $1,050,000, say goodbye to Lake Tahoe and leave behind all the hidden pitfalls of her mountain Dream Home.