new - dirt cheap retirement?

[W2R]

It also helps if people who plan on living in a house over a condo or an apartment for most of their life learn how to do simple maintenance and repairs. If not, then expect to pull out the wallet or credit card every time something needs service.

That's a great idea too, although I must admit that in this economy, at least in my location, I find that if you look around you can find a handyman that knows what he is doing and is CHEAP. People need work, and handymen get discounts on parts that homeowners don't get. I don't think that most people save as much as they think they are saving, by doing their own work. The maintenance shouldn't cost much to begin with if you choose the house wisely with that in mind. Also a small house helps to keep maintenance down too.

 

[athena53]

I think paid-off houses at retirement used to be the norm; after all, if you bought a house in your late 20s and financed it with a 30-year mortgage, you'd have it paid off by retirement. Home equity loans and constant refinancing have changed that a lot. If you refinance 5 years into the mortgage at a lower rate that's great, except that you just started the clock again. Part of your "savings" is that you just extended the date at which the mortgage would be paid off unless you make extra principal payments.


Another change, I think, is the "need" to upgrade. The availability of the HELOC and/or cash-out refinancing is SO tempting- after all, you'll get it back when you sell, right? DH and I have made improvements over the years but we paid cash and considered them a sunk cost.

 

[Teacher Terry]

A paid off home is really an easy way to retire with less $. That is the biggest expense for most people. That was our goal & we reached it.

 

[Fermion]

A paid off home is really an easy way to retire with less $. That is the biggest expense for most people. That was our goal & we reached it.

I hear this, but what about maintenance and property taxes? A $300,000 home might have $5,000 in property tax and $3,000 a year in maintenance, for a total of $8,000 a year even if the loan is paid off. You may very well be able to rent a similar dwelling for $1500 a month or $18,000 a year and make more than the $10,000 difference with investment gains on the $300,000 you don't have tied up in the home (only need a 3% return after tax).

 

[Teacher Terry]

We live in a very low cost property tax state so only pay 700/year. Before we retired we replaced & updated everything so set for a long while.

 

[Music Lover]

I hear this, but what about maintenance and property taxes? A $300,000 home might have $5,000 in property tax and $3,000 a year in maintenance, for a total of $8,000 a year even if the loan is paid off. You may very well be able to rent a similar dwelling for $1500 a month or $18,000 a year and make more than the $10,000 difference with investment gains on the $300,000 you don't have tied up in the home (only need a 3% return after tax).

That may be true for some, but not everyone needs $8000 a year to run their house. I only pay $2000 a year in property taxes and am handy. In the 17 years I've been in my house, maintenance has averaged $1000 for 15 of those years. The 2 other years totalled $5000 for big ticket items I couldn't do myself. That's $56,000 for 17 years of operating costs as opposed to $204,000 in rent ($1000 per month) in rent.

 

[target2019]

We were just discussing the cost of home ownership. Counting insurance, taxes and maintenance we pay about 1500 average. In our area home rental would be significantly more than that.

 

[Fermion]

That may be true for some, but not everyone needs $8000 a year to run their house. I only pay $2000 a year in property taxes and am handy. In the 17 years I've been in my house, maintenance has averaged $1000 for 15 of those years. The 2 other years totalled $5000 for big ticket items I couldn't do myself. That's $56,000 for 17 years of operating costs as opposed to $204,000 in rent ($1000 per month) in rent.

Is this one of those tiny houses? A roof alone would be $10,000 for a small house and usually is needed every 25 years or so.

There is also some opportunity cost for the money used in the initial house purchase vs renting and investing said money. I don't know if you would have been able to make up the $150,000 difference in your example over 17 years.

 

[W2R]

Is this one of those tiny houses? A roof alone would be $10,000 for a small house and usually is needed every 25 years or so.

There is also some opportunity cost for the money used in the initial house purchase vs renting and investing said money. I don't know if you would have been able to make up the $150,000 difference in your example over 17 years.

His figures are right on the money, at least around here. My records show that I average less per year on maintenance (of my 1600 sq ft house) than he spends, and I don't do any of the maintenance myself. I bought my house in 2002 with a brand new roof on it then (right, that wasn't by accident! ), so it won't need a new one until 2027 according to your figures. I doubt I'll be in it in 2027.

 

[martyb]

1646 sf house, total property taxes on +$200k valuation is $1100 yr. Homeowners Ins. $945. House is 7 yrs old, so no big maintenance needed yet but a water heater is probably not too far off. Around here (NW Louisiana) a new composition roof would run around $5000, but of course insurance would cover 80% of that cost.

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[W2R]

Around here (NW Louisiana) a new composition roof would run around $5000, but of course insurance would cover 80% of that cost.

That is what they cost down here too, the last time I asked around. In any case, I probably won't stay in this house more than 13-20 years total so it's all hypothetical.

 

[Fermion]

Ok, you guys are in low cost of living areas. We pay $5k on a $300,000 house and a new roof for us would run just under $30,000. West coast problems.

In the deep south things would be cheaper, but so would rent. You can rent a 1600sq ft house in Georgia for $600 a month.

 

[W2R]

Ok, you guys are in low cost of living areas. We pay $5k on a $300,000 house and a new roof for us would run just under $30,000. West coast problems.

In the deep south things would be cheaper, but so would rent. You can rent a 1600sq ft house in Georgia for $600 a month.

It's about $1300-$1400/month here, the last I checked. I know, I know! These things are SO mind-blowingly different in different locations. I guess that's why they say that "all real estate is local" or something along those lines. At any rate, it seems hard to make broad, sweeping generalizations that apply anywhere but in one's local area.

Edited to add: This would be a huge factor to consider, when new retirees are thinking of where to live in retirement. Purchase and rental prices, cost of maintenance, property taxes, and more, need to be looked into.

 

[Teacher Terry]

WE live in Nevada where things aren't really cheap except for property taxes.

 

[Music Lover]

Is this one of those tiny houses? A roof alone would be $10,000 for a small house and usually is needed every 25 years or so.

There is also some opportunity cost for the money used in the initial house purchase vs renting and investing said money. I don't know if you would have been able to make up the $150,000 difference in your example over 17 years.

$10,000 is a lot...I guess it really does matter where one lives. I have a 1000 sq ft. house. It cost $1500 for shingles, water shield, etc., 10 years ago, but I did the work myself. $800 for a 24' x 28' garage. Yearly property taxes are $2050, insurance $680.


I helped my next door neighbor do a metal roof 3 years ago (1200 sq ft). Material cost was about $2400.

 

[flyingaway]

WE live in Nevada where things aren't really cheap except for property taxes.

No state tax is a plus.

 

[aja8888]

Around here (NW Louisiana) a new composition roof would run around $5000, but of course insurance would cover 80% of that cost.

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Who's your insurance company Marty (I may switch)? Mine won't cover a new roof unless there is a claim.

 

[REWahoo]

Around here (NW Louisiana) a new composition roof would run around $5000, but of course insurance would cover 80% of that cost.

Marty, I was shocked at the price of asphalt shingles when I had to replace our roof last year - it was almost triple what I paid in 2001. I suspect your $5,000 number may be overly optimistic.

 

[target2019]

We were just discussing the cost of home ownership. Counting insurance, taxes and maintenance we pay about 1500 average. In our area home rental would be significantly more than that.

Reading some of the additional comments, I realize that house size, acreage and location are important,
3000 sq ft, 5/8 acre, suburbs of NJ.
I think maintenance cost is higher. So we are probably in the range of 1750-2000 per month. We are planning on downsizing in a few years once we decide where to relocate.

 

[LRDave]

I'm sorry, but most buy-vs.-rent arguments are complete canards, imho. Lifestyle choices rarely provide equivalent rent-or-buy options.

 

[martyb]

Marty, I was shocked at the price of asphalt shingles when I had to replace our roof last year - it was almost triple what I paid in 2001. I suspect your $5,000 number may be overly optimistic.

In 2008 I had a new roof put on my 1900 sf house, same toqn where i live now, one of those steep pitched style roofs that are common in Louisiana newer houses, and it cost $4500. Allstate paid all but $1000, but I had to argue with them for awhile to get them to do it. More recently, my daughter had a less steep roof replaced on her 1550 sf house last month, and it cost around $5000. I've found the price can vary widely from contractor to contractor.

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[REWahoo]

Wow. Low cost of living in the arklatex.

I got four bids on replacing our roof last year and they were all very close to the $16,000 USAA said they would pay on the claim - less my $5,000 deductible.

 

[offroad]

I hear this, but what about maintenance and property taxes? A $300,000 home might have $5,000 in property tax and $3,000 a year in maintenance, for a total of $8,000 a year even if the loan is paid off. You may very well be able to rent a similar dwelling for $1500 a month or $18,000 a year and make more than the $10,000 difference with investment gains on the $300,000 you don't have tied up in the home (only need a 3% return after tax).

How dare you use math and logic to prove owning a house can be way more costly than it is worth. Lol!!

Am looking at buying a sail boat and renting a slip with water and electric all for $1000 a month including loan costs.


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[LRDave]

How dare you use math and logic to prove owning a house can be way more costly than it is worth. Lol!!

Am looking at buying a sail boat and renting a slip with water and electric all for $1000 a month including loan costs.


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I think we can all agree that the term "worth" is far more personal and subjective than it is financial and objective when it comes to the place you live day-in-and-out - right?

And your particular choice of where to live is more of a lifestyle choice than an optimal financial choice - right? (It's an intriguing idea! I'm not knocking it, but just not for me/DW.)

 

[aja8888]

Wow. Low cost of living in the arklatex.

I got four bids on replacing our roof last year and they were all very close to the $16,000 USAA said they would pay on the claim - less my $5,000 deductible.

For comparison purposes:

We replaced two roofs on family homes in the last three years (The Woodlands and Conroe, TX) area. One was on a 1,970 square foot single level house and a two story 2,600 square foot house. Both roofs were stripped of old shingles and replaced with GAF 30-year architectural shingles. Both roofs had new ridge vents put in, all new flashing, etc. Bids included a few sheets of plywood underlayment if necessary. Cost for the 1970 sq.ft. house was $4,800 and for the bigger house was $6,850.

Both jobs were done by a contractor that only works on re-roof job (stays away from new construction due to the cheapness of materials generally used and having to deal with GC's). This was the only roof contractor we found that had a Better Business Bureau account. He was near the low bid, but not the lowest.

Because I am a Veteran, GAF sent me a $300 rebate for one roof.