These are precisely the examples I was cursing after I bought my house. They were the ones existing homeowners always talked about.
A $150 repair for the AC is nothing. The prospective homeowner needs to think about things like:
"Your roof is shot." The lowest bid is $15,000. Check is due before they leave your property.
"Your trees are dying." Cost of cutting them out and replacing them is $2000. When you give us the check, we'll start the job.
"Your water heater needs to be replaced." And what you learn is that it's a special type of gas water heater that costs $2500 and up. Payment is due before they leave your house.
On any of these, you call the landlord (or don't even need to in the case of the dying trees) and you don't think about it again.
> "Your roof is shot." The lowest bid is $15,000. Check is due before they leave your property.
When you buy the house, you should have had an idea on how much it costs, and saved for it. $15K over 30 years is nothing.
Also, of course this depends on where you live and how big your roof is, but for my house, $15K is overpriced. I recently got bids and while the numbers varied quite a bit, $11K was more typical. Of course, there are people who quote as high as $25K - learn to shop around.
And none of them wanted all the money up front.
> And what you learn is that it's a special type of gas water heater that costs $2500 and up.
I think $2500 is a fairly standard price.
One definitely needs to research these costs before buying! Especially for:
Roof
Garage doors
Water heater
Furnace
Central AC
Any pending yard work (like dying trees)
Any kind of code related work you may need to do (asbestos, old electric wiring, etc).
> Home-ownership is a giant pain and often a poor financial choice
Yeah, this probably doesn't get discussed enough. I've had my house for a little under a year, and it's required a new roof, a gas stove for a finished basement that turned out to be severely under-heated, problems with electrical wiring, and a few little odds and ends that weren't up to code, which I had to fix to get home owners insurance.
I'm saving a bundle when you only consider the difference between my old rent and my new mortgage, but home ownership comes with many incidental one-off costs.
> It can also be hard to find a really skilled person that cares about your home as much as you.
This is something I've found to be true.
We bought a house that we later found had some significant water damage issues. I hired a professional the first time we noticed it and he did little more than paper over the problem.
I ended up spending the next two years basically tearing the wall apart and redoing all the sheathing and insulation and house wrap.
Sure I could have hired someone and they would have eventually done all that for me, but I'm pretty confident it would have been in the tens of thousands of dollars by that point.
Caring about the end result will get you a long way.
But part of it is probably also that I come from a working class family and was immersed in the basics of that sort of work for my entire growing up time.
> and decides to maintain an older home rather than build a new one.
Ye doing maintenance is probably almost always worth it. Doing something before it is too late is like one or two orders of magnitude cheaper. Like painting the outer walls before the wood rots, etc. Fixing the roof before it leaks through both layers of protection.
The point I am trying to make, is that buyers seem to underestimate the cost of fixing stuff when it is "too late". I have a theory that there is more competition for houses the cheaper they are. So poorer people are forced to buy homes that are not worth what they cost. I.e. the poorer buyer would be better off buying a more expensive home that is cheaper to maintain in the long run, have to buy the cheaper home that need expensive repairs. If the market was only "rich" people, the bad homes would have a lower price to offset their repair costs. Or something ...
> Condos can be dangerous. One second you're enjoying your nice condo, the next you're paying your $15k share of the repair cost of the buildings elevator.
Isn't the same true of houses? Don't you have to pay for roofs, water heaters, air conditioners, etc?
> I've heard a rule of thumb that home maintenance costs are 1% of the home's value per year
It's a very poor rule of thumb. Contrary to the other comment, these costs don't increase linearly with value of the house. Sure, if I live in an expensive area, it may go up 30%, but not much more. Looking at how much my house has appreciated, I can assure you I pay not much more in maintenance than when I bought it.
The 1% rule came about when the median house price was under $200K.
> buying outdated property only to face long, drawn out and expensive renovation projects
I'm in a nearby country and this accurately describes my house. I gave up, we live in it, halfway renovated, crazy plumbing, mixed masonry, hairball electric panel, dangerous corners everywhere. Contractors are too expensive and the DIY spirit only goes so far when you're working parents.
> There are lots of pros out there who don't know what they are doing.
Often these pros are also the ones that are easiest to find because the ones that know what they are doing are in high enough demand that they go mainly off word of mouth and friend-of-a-friend type business.
We bought a house three years ago that was built in 2006. The number of things I've found that were done just blatantly wrong has soured my opinion of general contract labor quite considerably.
I hired someone to fix some water damage by a door about three months after we moved in. The next spring when it rained we had a literal waterfall coming in from the top of the door frame.
Never again.
I've since torn that entire wall down to the studs, cleaned everything up, put it back together correctly, and rebuilt the attached deck.
I don't know how much that would have cost to get fixed by a professional (supposing I could have found one that actually knew what they were doing), but I'm guessing it was easily $10-$20k of work if labor was factored in.
> Does "I didn't have to find a contractor to tear out the kitchen wall when a leak on the third floor got all the way down to my first floor apartment, nor did I have to pay for them to do this, and could just keep on going to work as normal" count as value?
How often does this happen, and how much does it cost? I can guarantee you your time is not worth this much and it is still less expensive and safer for you to buy a house than rent one.
If you rent for 30 years, at the end of these 30 years you will have nothing and if anything happens, you'll be left in the streets.
If you take a loan for 30 years, at the end you will have a roof above your head, for the rest of your life. The small amount of time you spend finding a contractor and cost of those infrequent leaks repairs represent nothing.
> So, that average-value three-bedroom home ended up requiring an outlay of about $623,290 over 13.2 years of ownership. Mortgage payments alone accounted for $270,593 of that, with maintenance and repairs adding up to $192,139. Utility payments came out to $54,662, surpassing the initial down payment of $46,266.
On a $350k home, they found the average maintenance cost to be $192k in just 13 years??? That must include voluntary upgrades right?
Horseshit. When looking for a house earlier this year we had an offer accepted on a place we loved. Only question mark was the basement. Independent inspector took a through look at the basement and plumbing and basically said we will be living with water during the storm season without mitigation that could range between 5k and 25k. I have two plumbers in my family that took a look at the photos/report and confirmed the price estimate/work was spot on.
On top of that he found asbestos (we knew before hand) and high radon levels (we did not know). Needless to say the $600 I paid for the inspection was the best money I've spent in a long time.
>But then it’s 200 years old and was in serious maintenance debt when I bought it.
That's a pretty big disclaimer that you probably should have mentioned up front. Your choice of house is far from typical, and they make the costs some standard deviations from typical.
> Especially people buying condos; a big part of the point is that a lot of the hassles are taken care of for you.
I sometimes wonder about that. For what it costs in ongoing condo fees, you could pay someone to provide exactly the same level of worry-free maintenance on a regular house.
> You can drive through old neighborhoods near me with 1000 sq ft houses that sell for $40k because nobody wants a house that small.
Sure, but a $40k house will need anywhere from $90k to $160k worth of additional repairs to be safe to inhabit.
And since that cost isn't in the equity, most people in most areas can't qualify to finance that. (A $200k mortgage is not identical to a $40k mortgage and $160k reno loan).
>> After 30 years of mortgage payments, you own a house. After 30 years of rent, you have nothing.
You also haven't spent 30 years landscaping the yard, paying for plumbing, appliances, carpet, 2 asphalt roofs, new windows, a furnace or three, a septic tank...
A house can be a very, very expensive asset to maintain. And if your neighborhood goes downhill or the market in your area goes down you can lose a lot of money quickly.
> Most people don't consider all costs associated with buying a house which include closing costs (when you sell as well, renting has no such costs), property tax, maintenance, insurance, HOA, etc...
100%. I was in escrow on what would have been my first home purchase. The amount of money that goes into just buying a house was insane.
After the sale fell through I ran the numbers for my parents home and much like the article says over the last 25 years or so they made next to nothing or maybe even lost money after interest, taxes, upkeep, etc even though the cash value went up over 30%
> I have heard stories of this applying to buildings and homes, as well.
I foresee a future Black Mirror episode about Apple Home: $1m for a $250k condo. When the fridge breaks that’s gonna cost you $990k to repair. Might as well just buy a whole new home.
These are precisely the examples I was cursing after I bought my house. They were the ones existing homeowners always talked about.
A $150 repair for the AC is nothing. The prospective homeowner needs to think about things like:
"Your roof is shot." The lowest bid is $15,000. Check is due before they leave your property.
"Your trees are dying." Cost of cutting them out and replacing them is $2000. When you give us the check, we'll start the job.
"Your water heater needs to be replaced." And what you learn is that it's a special type of gas water heater that costs $2500 and up. Payment is due before they leave your house.
On any of these, you call the landlord (or don't even need to in the case of the dying trees) and you don't think about it again.
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