Is 1% of home value ok for home maintenance?

[corn18]

Just trying to nail down my estimate for home maintenance. We just bought our new house last Aug. Nothing fancy, just a house. Paid $700k. 1/3 acre lot in a typical subdivision. I have $8k a year in for home maintenance and upgrades. Seems that should cover a lot of stuff over 35 years ($280k over 35 years). Does this seem ok for a guesstimate?

 

[tb001]

There are some calculators that use sq ft instead of value, which in some areas makes more sense. We have about 1% reserved for maintenance and improvements. When I went through and calculated the stuff that goes wrong and the typical lifespan and replacement cost, this was about right. There are some good spreadsheets online on this.

 

[OldShooter]

It's not clear to me that maintenance costs should be highly correlated with home value. Most homes have one kitchen, a couple of toilets, one gray/black water system, one or two garage door openers, etc. All uncorrelated with value. Lawn maintenance would be more closely correlated with lawn and landscaped area. Roof maintenance with roof area, etc.

 

[Sunset]

I always think of it as two separate things, as upgrades has no limit.

For maintenance I always rough estimate $2K for my rental per year, which is 0.5% of value.

A person can always work out a rough estimate of yearly amortization, as the big ticket items are: roof, furnace, A/C, fridge, stove, dishwasher, driveway.

 

[HawkeyeNFO]

It's not clear to me that maintenance costs should be highly correlated with home value. Most homes have one kitchen, a couple of toilets, one gray/black water system, one or two garage door openers, etc. All uncorrelated with value. Lawn maintenance would be more closely correlated with lawn and landscaped area. Roof maintenance with roof area, etc.

I agree with this. No rule of thumb applies here. My house is worth 4x what it would cost if I lived in Ohio, but the maintenance costs are roughly the same.

If you are able to DIY maintenance, it saves thousands of dollars each year. Imagine if you had an older house and needed a plumber a couple times annually. Are you hiring a landscaper or neighbor kid to cut the grass? Cleaning your own gutters?

 

[Music Lover]

It's not clear to me that maintenance costs should be highly correlated with home value. Most homes have one kitchen, a couple of toilets, one gray/black water system, one or two garage door openers, etc. All uncorrelated with value. Lawn maintenance would be more closely correlated with lawn and landscaped area. Roof maintenance with roof area, etc.

Very true. And if you're handy maintenance costs can be very low.

 

[Exchme]

Your allowance seems about right to me. Unless this is a palace, a lot of the purchase cost is land, but maintenance does add up with roof, A/C, furnace, electrical, plumbing, carpets, windows, paint, even drainage and landscaping/tree problems will crop up over time. I would increase the allowance if you have a pool/hot tub. This is your allowance for unknowns and you should make a specific allowance for anything that you know you will be updating/remodeling.

 

[Music Lover]

Just trying to nail down my estimate for home maintenance. We just bought our new house last Aug. Nothing fancy, just a house. Paid $700k. 1/3 acre lot in a typical subdivision. I have $8k a year in for home maintenance and upgrades. Seems that should cover a lot of stuff over 35 years ($280k over 35 years). Does this seem ok for a guesstimate?

It depends on how much of the work do you plan on doing yourself and how much will you pay someone else to do.

Also, a percentage of home value is meaningless as the exact same house can be $700k in one location and $175k in a different location but the maintenance cost will be about the same even though there's a 4x difference in cost.

 

[dak2018]

Maintenance costs can be low IF you do the maintenance.

Case in point - I have a steel fence in my yard. When we first moved in, I was very careful to inspect and touch up the paint to prevent rust. Got busy with our kids, plants grew up around the fence, an errant sprinkler or two... a few years later there is major rust damage to the fence and the only reasonable option was to replace the fence panels at a materials cost of $800.

The paint to maintain the fence would have probably cost me $50 for all of those years, and my labor is free

The point is - maintenance costs can vary greatly with how prompt the maintenance is being performed!

 

[MikeWillRetire]

As a guesstimate, it's ok. I actually did the math for my house where I assigned costs and lifespans to everything from flooring to siding, and I calculated about 1.5%.

 

[freedomatlast]

I've lived in older and newer houses and the maintenance was significantly less on the newer houses. When repairs were needed, everything was much easier to repair or replace on the newer houses, so that would have an impact on cost as well.

 

[l8_apex]

I've lived in older and newer houses and the maintenance was significantly less on the newer houses. When repairs were needed, everything was much easier to repair or replace on the newer houses, so that would have an impact on cost as well.

Yes, I was just about to say the same. My house was completed in early '15 and I haven't ever had an annual spend close to 1%. (this is also true of my prior homes, but I've almost always lived in homes that were less than 10 years old.)

 

[corn18]

Our house is 4 months old. I will do the basic stuff, but usually outsource electrical, plumbing and HVAC. I'll leave it @ $8k a year but split it up between maintenance and upgrades. I'm sure the first 5-10 years we won't need much maintenance but will want to upgrade stuff. Then that will transition over to more maintenance and less upgrades.

 

[Mr. Tightwad]

Yes, I was just about to say the same. My house was completed in early '15 and I haven't ever had an annual spend close to 1%. (this is also true of my prior homes, but I've almost always lived in homes that were less than 10 years old.)

My experience is maintenance is a small fraction of 1% of the value, until a new roof needs to be put in. So unless its new roof time, well below the 1% threshold. Every 10 years painting it will also bump up that years cost. Otherwise I don't spend much. YMMV.

 

[rodi]

I live in a place with out-of-control high home values. My exact house (60 year old tract home in a great neighborhood) 40 miles inland is $3-400k less. seriously. Yet the maintenance would be the same. Heck even 5 miles away knocks about $200k off the value.

Value (price) of home vs maintenance are not closely correlated in my area.

 

[MikeWillRetire]

My experience is maintenance is a small fraction of 1% of the value, until a new roof needs to be put in. So unless its new roof time, well below the 1% threshold. Every 10 years painting it will also bump up that years cost. Otherwise I don't spend much. YMMV.

I also didn't spend 1% every year, but now that the house is 27 years old, I'm glad that I saved what I didn't spend of that 1% for those 27 years. Because during the last few years, I've had to replace the shingles, remodel the kitchen, replace the HVAC units, replace the carpets, etc.

 

[Gumby]

I am mildly amused by this thread. My house is 164 years old; I believe the expression is "money pit". We've spent more restoring, repairing and upgrading it over the past 29 years than we did to buy it in the first place.

 

[Dtail]

1% has been mentioned in various financial articles I have read, but as others have stated there are many variables involved especially referencing @Rodi's example.

 

[CardsFan]

I am mildly amused by this thread. My house is 164 years old; I believe the expression is "money pit". We've spent more restoring, repairing and upgrading it over the past 29 years than we did to buy it in the first place.

Here you go:
https://www.imdb.com/title/tt0091541/

But you probably have already seen it, or lived through it

 

[HarveyS]

I agree that a percentage is possibly going to be unhelpful. For what is is worth, my former 4bed, 4.5bath house, on a quarter acre, cost about $5k/yr maintenance.
The house was built in 2004. Cedar siding - very quiet, but required stain every 3-4 years. Some of the items that added up to such a large #: Gardening (mulch, various plants/trees), tree trimming and removal, window repair and replacement as needed (wooden sash), dishwasher replacement, hot water heaters replacement, furnace tune ups, A/C recharge (once), sprinkler on/off each year, driveway sealing, painting outside and some inside, re-lay paver patio that sunk, garage door springs, install secondary sump pump with battery back-up, replace battery at year 5, etc. Even doing most of the work myself, when I added up the maintenance costs over the last 7 years, the average was $5335/year

 

[SecondCor521]

I've lived in my house for 14 years. The house is 16 years old.

Per Quicken - and I track things completely to the penny over that 14 years - I've spent less than 0.1% annually on House:Maintenance *plus* House:Repair. This excludes House:Landscaping and House:Improvement, so I think it might depend on how you categorize things.

It's a regular subdivision home with basic finishing and an average price. I do most of the maintenance and repair myself, but will hire out some stuff.

I painted it myself over the past two years. Paint was cheap, labor was free, no hospital visits. If I had hired it out, it would be about 1.3% of house value.

I haven't hit any major repairs. The roof has "20 year" shingles which are still in good shape but that will come up sometime in the not distant future. I won't DIY that because portions of my roof are too steep and I don't know how to do roofing. The cost there will probably be about 1.4% of house value.

Sometime after the cat dies I plan to redo the flooring, and that could be about 0.5% of house value depending on what I choose.

All of the above is based on what I think is current market value of my home, which is about 163% of what I paid for it 14 years ago.

 

[chassis]

The amount entirely depends on age and size of house and grounds.

New house = very little maintenance expense, mainly related to grounds (lawn and garden)

Old house = high maintenance expense, related to every conceivable system in the house, plus lawn and garden.

Large house and acreage brings more maintenance expense.

1% of home value for maintenance is about right for a 60 year old home with 2700-3000 sq ft and a smallish yard.

Maintenance and upgrades are not the same things.

Maintenance = gas for the mower, grass seed, fertilizer, light bulbs, faucet repair, new hinge on the screen door, cut down and remove a dead tree, etc. Generally small dollar item and of a recurring nature.

Upgrades are known as capital expenditures in the accounting world. This means higher dollar item, non-recurring and long lived. New dishwasher, remodel the bathroom, rebuild the patio, add a deck, new roof, repave the driveway, etc.

1% is not enough for maintenance plus upgrades. I have spent roughly 1% per year in capital expenditures (upgrades and renovations) and 1% per year in maintenance, for a minimum of 2% per year, based on market value of the house. This is for an older house with an average or below average yard size in the eastern US.

 

[GravitySucks]

Dang.
I don't even budget for grounds maintenance separately. A $250 lawn mower every 15 years and $800 for a snowblower every 20 years. $40 mulch $75 gas a year too. Guess the various plants I kill come out of hobby budget. I did have a $600 tree removal expense over the 19 years I've been here.
How do I keep from living under a bridge with such shoddy planning.
I put a SWAG of $1,500 a year for maintenance including a roof every 20 years. Seems about right.

I do most everything DIY and I can see this cost increasing the lazier I get. I hired a fence guy to replace a few posts. Digging up that concrete and dragging it to the street was a bear last time I did it. I've vowed to stay off the ladder and roof and this time I mean it.

 

[jollystomper]

Throwing my Quicken data into the the fray...

Our house was built in 77 or 78. We have lived in it since 1990. From 1/1/2001 through 12/31/2020, we spent about $115,000 on house repairs/maintenance/improvements/appliances. $5,750 on average per year. That is about 1.5% of the market value of our home in 2001, so it is a lesser percentage of the current value.

- Repairs (something broke, we need to fix it now) - 18%
- Maintenance (preventative/regular planned maintenance) - 19%
- Home improvement (includes stuff that could have been patched and repaired, but chose to replace/renovate to lessen that burden) - 57%
- Appliances (usually replaced when broken) - 6%

The big ticket items:
- Finishing about 700 sq foot of basement (improvement)
- New roof (improvement repair)
- New driveway improvement repair)
- Renovating 2 bathrooms (improvement repair)
- Tree service (storm debris and dying trees)
- 2 well pumps
- Heat pump
- Appliances (Oven/Range (twice), fridge, dishwasher)
- Riding mower (twice)

For retirement planning I started with an estimate of $5K/year. So far we have under spent that in 2.5 years. That does not include some additional non-necessary-but-desired improvements.

 

[Ready]

In California the majority of a home’s value is the land, so trying to assign a percentage of the home value to maintenance expenses would be pointless.

If you really want to try and correlate home value with maintenance expenses you would need to separate the value of the home from the value of the land. Even then it would have many variables - age and condition of home, etc.