Housing Cost Revisit- What's your expense to keep your house afloat?

[Moemg]

What was your evaluation process given that the number was so much lower than the others?

What the scope of the work would be & their guarantee . Most of the companies we had give us estimates were larger companies . Surprisingly the $4,500 included much more work . This was a private contractor so he had no advertising fees or franchise fees . We are totally satisfied and saved a chunk of money .

 

[Mulligan]

No! Not me. I don't have the room for one, on my 50'x100' lot. Even if I did, I don't really want a pool. I have several projects in mind. I will probably start with new doors and windows as well as hurricane shutters. I doubt that I will complete this next year, and maybe never.

Sounds like you are a bit like me, W2R...."Gotta think about it for a little while" first....

 

[W2R]

Sounds like you are a bit like me, W2R...."Gotta think about it for a little while" first....

Yeah...

 

[HFWR]

I don't want a pool, just family/friends with pools.

 

[Gumby]

I don't want a pool, just family/friends with pools.

That's also a good rule with sailboats.

 

[kgtest]

That's also a good rule with sailboats.

Hey this Rule works for airplanes as well.

 

[Danmar]

Wow. I mean, wow.
That is more than my total personal spending for 2013.

Sure, different strokes for different folks. Where you spend your money is a personal choice. The real issue is how much do you have to spend. I am a little surprised that you are surprised after all this time.

 

[aja8888]

.............our place in the US is in Texas in a high cost area north of Houston.....................

Texas place.

Rent including water, sewage, trash pickup $15,428
Renter's insurance $132
Utilities $680

Total $16,240

I wonder if you are one of my neighbors....

Tony

 

[Meadbh]

Sure, different strokes for different folks. Where you spend your money is a personal choice. The real issue is how much do you have to spend. I am a little surprised that you are surprised after all this time.

I don't know MBMiner's financial details. Perhaps he/she has a very high net worth, or perhaps this big house in Florida is so fabulous that the Miners never go on vacation and always eat at home. I doubt it, though. Somehow I suspect there is a boat on the lagoon! Anyhow, compared to you, Danmar, the Miners are spending much less on housing, but we are all aware that you have four places to hang your hat and are rich beyond the dreams of avarice. In any case, I think you are both more than two standard deviations to the right of the mean. I think that's great. I admire successful people. But I would feel quite out of place in such a costly abode.

I guess I'm just a cheapskate at heart. A cheapskate without a pension.

 

[Danmar]

@meadbh. No problem. I can't help but notice that there are a lot of very big, obviously expensive houses around. Especially in such places as Florida, California, or Arizona. Stands to reason they are expensive to maintain and although these type of places are certainly not the norm, there must be some that are owned by members of this forum. it does raise a question though, as to whether North American society has over invested in our housing stock. I read somewhere that the proportion of our collective net worth tied up in housing is quite a bit higher now than it was in the past. Not sure how you would define " over invested" though.

 

[Meadbh]

@meadbh. No problem. I can't help but notice that there are a lot of very big, obviously expensive houses around. Especially in such places as Florida, California, or Arizona. Stands to reason they are expensive to maintain and although these type of places are certainly not the norm, there must be some that are owned by members of this forum. it does raise a question though, as to whether North American society has over invested in our housing stock. I read somewhere that the proportion of our collective net worth tied up in housing is quite a bit higher now than it was in the past. Not sure how you would define " over invested" though.

@danmar, you mentioned that 20% of your NW was tied up in your four homes. My home amounts to about 7% of my NW and income-producing real estate another 10% or so (7% if I subtract the remaining mortgages). Hardly over invested! I have never wanted to be "house poor". I paid off my first home mortgage within 18 months of moving in. Right now I have a mortgage-free very cost-effective home that is the right size for me and is easy to maintain. I also own recreational property.....but only a 1/12 fraction. That has bought me some vacation weeks as well as sufficient income to be self sustaining.

As for over investing in housing stock, I observed that very clearly in Ireland during the Celtic Tiger years. Housing prices there peaked in 2007 and have since fallen by ~55%. They are now demolishing 40 of the worst "ghost estates". I inherited a house there in 2005 and sold it close to the market peak. I invested a small portion of the proceeds in income producing real estate, but the remainder I put in the markets to comply with my asset allocation. My inheritance (and the Irish property market bubble) significantly contributed to my ability to ER.

My real estate philosophy is that it's a good idea to own your home if you plan to stay in it for at least 5 years, and so long as it meets your needs. I consider recreational property to be a lifestyle investment, not a financial tool. Hence I bought only what I felt I could use, with money I felt I wouldn't miss. Any other real estate should be making money for me, and it is.

 

[Apex1]

My real estate philosophy is that it's a good idea to own your home if you plan to stay in it for at least 5 years, and so long as it meets your needs. I consider recreational property to be a lifestyle investment, not a financial tool. Hence I bought only what I felt I could use, with money I felt I wouldn't miss. Any other real estate should be making money for me, and it is.

Hi Meadbh,

I agree with your philosophy. However, in our case, after looking for several years for a smaller first house in a pricey Toronto neighbourhood we were continually outbid on the homes we really wanted. We ended up buying a much larger home than we really wanted/needed because the sellers were very motivated and wanted a quick sale. In effect, we probably got a 15-20% off the market rate at that time.

Fast forward less than 7 years, the local market is HOT, and our direct neighbor recently sold their house (comparable to ours) for 2.5 times our original purchase price. Since we only payed 25% down and have a 17 year mortgage (currently 2.15%)....... we, in effect, have multiplied our principal equity here at least 5 fold!!! We would never have guessed this would happen to the local RE prices, instead we just thought we could do better in the stock market than paying off the 2% mortgage. It's been a win-win situation..... much of it being lucky rather than being good

We really should be selling now if we were really smart investors. But in the end, we bought the house to live-in and if it can maintain its current price...... it will be a very good plan B in my retirement.

And with regards to annual maintenance, it is currently less than 1% of the recent appraised value.

 

[Meadbh]

Apex1, 2.15% is an awesome rate on a mortgage. Sounds like it's a variable and if so it could rise in a year or two. I congratulate you on buying a home that you and your family are enjoying and that has increased in value. That said, you can only realize those gains by selling* and meanwhile you have high maintenance costs. Housing prices can go down as well as up. It's your choice.

PS. How about that Mayor Ford, eh?

*Note for our US friends: mortgage interest is NOT tax deductible in Canada unless it is an investment property; the payback is that there are no capital gains taxes on the sale of a principal residence.