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Is 1% of home value ok for home maintenance?
Old 01-14-2021, 09:42 AM   #1
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Is 1% of home value ok for home maintenance?

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?
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Old 01-14-2021, 09:46 AM   #2
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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.
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Old 01-14-2021, 09:49 AM   #3
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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.
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Old 01-14-2021, 09:57 AM   #4
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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.
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Old 01-14-2021, 09:57 AM   #5
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Originally Posted by OldShooter View Post
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?
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Old 01-14-2021, 10:00 AM   #6
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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.
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Old 01-14-2021, 10:48 AM   #7
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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.
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Old 01-14-2021, 11:27 AM   #8
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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.
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Old 01-14-2021, 11:31 AM   #9
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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!
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Old 01-14-2021, 11:36 AM   #10
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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%.
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Old 01-14-2021, 11:37 AM   #11
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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.
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Old 01-14-2021, 12:09 PM   #12
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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.)
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Old 01-14-2021, 12:34 PM   #13
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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.
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Old 01-14-2021, 12:35 PM   #14
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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.
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Old 01-14-2021, 12:55 PM   #15
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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.
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Old 01-14-2021, 01:02 PM   #16
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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.
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Old 01-14-2021, 02:10 PM   #17
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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.
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Old 01-14-2021, 03:27 PM   #18
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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.
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Old 01-14-2021, 05:26 PM   #19
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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
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Old 01-14-2021, 05:42 PM   #20
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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
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