House maintenance cost

[tmm99]

I live in Silicon Valley. My current annual spending is about $50K. 22K of it is for rent plus water/garbage, so without the rent, my spending is 28K.

I tracked my spending using Pear Budget for a few years (my spending was $45K total and I made it within that amount but I didn't enjoy it,so the last couple years my budget is $50K and I can buy just about everything I want.)

I am thinking of moving to a rural area (most likely outside of CA) when I retire and pay cash to buy a small place.

For retirement, I need to add healthcare to the budget and other miscellaneous items (I only budget $4K for vacation now, but that may increase, while wardrobe will probably be less), but what number would be reasonable for house maintenance/property tax etc (I realize there is no cookie cutter answer for this, but I am just trying to plug in a resonable number for the housing part because I feel 22K may be too high.)

Any comments will be greatly appreciated!

 

[W2R]

A lot depends on the size and value of the house, location, and so on.

My costs here in New Orleans, Louisiana, for a 40-year-old house are:

$1584/year maintenance and repairs, average over 10 years and including hurricane repairs (0.9% of home's present value)
$1200/year to have the lawn mowed for me, approximately (0.7% of home's present value)
$896/year property tax (0.5% of home's present value)
$2241 homeowners+flood insurance (1.3% of home's present value)

$5926/year total (3.5% of my home's present value)

I think this is probably high, since I do none of my own maintenance/repair and don't even mow my own lawn. If you are good at handyman type jobs, you could probably cut back quite a bit on the maintenance/repair and lawnmowing.

Here, homeowners' insurance is very high due to the hurricane risk, and property tax is very low, so I think they balance each other out.

In the countryside, your costs would probably be much lower I would think.

 

[Brett_Cameron]

A lot depends on the size and value of the house, location, and so on.

My costs here in New Orleans, Louisiana, for a 40-year-old house are:

$1584/year maintenance and repairs, average over 10 years
$1200/year to have the lawn mowed for me, approximately
$896/year property tax
$2241 homeowners+flood insurance

$5926/year total (3% - 4% of my home's present value)

I think this is probably high, since I do none of my own maintenance/repair and don't even mow my own lawn. If you are good at handyman type jobs, you could probably cut back quite a bit on the maintenance/repair and lawnmowing.

Here, homeowners' insurance is very high due to the hurricane risk, and property tax is very low, so I think they balance each other out.

In the countryside, your costs would probably be much lower I would think.

Home owner's insurance varies a lot by location and the available infrastructure. My homeowner's insurance is about the same as yours. I live 7 miles outside the nearest town and have volunteer fire department protection.

 

[Mulligan]

Like W2R wrote, it will be varied depending on a multitude of issues including whether you mow your grass to condition of home when moving in. My approximately $150,000 house for the past 9 years has been about $2500 a year. That essentially is just property tax and insurance as I bought my house brand new. I have read on more than one occasion you should budget 1% of value of home for basic maintenance this is NOT including major repair items or insurance. One site I had read suggested an additional 1% for major repairs so about 2% total plus insurance. The trouble with that is if the major expenses come early, you wont have enough built up in the kitty to pay for it. I imagine the reason I have read in terms of percentages used, this helps bake into the cost of maintenance as higher priced homes usually equate to an area that has higher costs to repair items.
While I do have an emergency fund to help pay for something, I imagine outside of a roof repair, I would just get a low interest or 0% finance offer at Lennox or Lowes or whatever it is and just finance it out of my monthly income as I have enough leftover each month to cover it.
Housing costs are sure eating a huge hole in your monthly expenses. I have about 60k after taxes are taken out each year and my total housing costs which includes a monthly mortgage only consumes 12 k or 20% of my yearly income. I certainly couldn't live my lifestyle if I had to pay that much in housing costs, though I know SJ probably is a HCLA.

 

[FIREd]

I live in a mid-size city in the South. Property taxes are about 0.5% of house value per year. Maintenance and repairs have run around 1.5% of house value per year on average for the past 7 years, including some big repairs (new roof, new A/C, new paint job on the outside, etc...).

Edit to add: home insurance with high liability limits about 0.5% of house value per year.

 

[W2R]

I live in a mid-size city in the South. Property taxes are about 0.5% of house value per year. Maintenance and repairs have run around 1.5% of house value per year on average for the past 7 years, including some big repairs (new roof, new A/C, new paint job on the outside, etc...).

My property taxes are about the same as yours, percentage-wise. That's great! I was inspired by your breakdown of percentages, and updated my original post to reflect mine. No new roof for me, or outside full paint job (since it is a brick home), but I did need new HVAC and hurricane repairs. The latter I did mostly by myself, because it was impossible to get reasonably priced help right after the hurricane, so they didn't cost that much.

I bought my home for $160K in 2002, and based my percentages on $170K which is my best estimate for its current value.

 

[walkinwood]

You should be able to find out what property tax rates are today in the area you are buying. Most municipalities put that information online. Also real-estate sites list property taxes on the "for sale" pages.

Same for insurance. You should be able to call an insurance company & find out what it will cost.

Cost of utilities & home repair/maintenance are tough to figure out unless you speak to a specific owner and is very home-specific. Call a real-estate office in the area you're thinking of moving to and ask. They are usually very helpful.

 

[Live And Learn]

. Also real-estate sites list property taxes on the "for sale" pages.

Many places have limits on the amt taxes can increase per year for current owners. If the current owner has been in the house for a long time there could be a significant jump between what you pay and what they paid. WalkInWood is spot on with using the municipalities website. Generally they will list the taxes "excluding all adjustments" which would be what a new owner would pay.

All the best to you !

 

[marko]

A lot depends on the size and value of the house, location, and so on.

My costs here in New Orleans, Louisiana, for a 40-year-old house are:

$1584/year maintenance and repairs, average over 10 years and including hurricane repairs (0.9% of home's present value)
$1200/year to have the lawn mowed for me, approximately (0.7% of home's present value)
$896/year property tax (0.5% of home's present value)
$2241 homeowners+flood insurance (1.3% of home's present value)

$5926/year total (3.5% of my home's present value)

I think this is probably high, since I do none of my own maintenance/repair and don't even mow my own lawn. If you are good at handyman type jobs, you could probably cut back quite a bit on the maintenance/repair and lawnmowing.

Here, homeowners' insurance is very high due to the hurricane risk, and property tax is very low, so I think they balance each other out.

In the countryside, your costs would probably be much lower I would think.

Your property taxes are ONE TWELFTH of mine! Holy crap! I'm on the next plane to NOLA!

 

[FANOFJESUS]

Your property taxes are ONE TWELFTH of mine! Holy crap! I'm on the next plane to NOLA!

Be thankful you don't live in NJ.

 

[W2R]

Your property taxes are ONE TWELFTH of mine! Holy crap! I'm on the next plane to NOLA!

Your profile says you live in MA. Isn't that Mass-O-Taxes? This would be an example of that, in comparison with us anyway.... Aw, just kidding because I would imagine that you probably get a lot of services for those taxes, too. Just a different set-up.

I live just outside the city boundary, so my property tax is lower than if I lived a mile or two to the east in New Orleans proper.

 

[ChiliPepr]

Isn't that Mass-O-Taxes?

Actually... it is Tax-achusetts!

I live in Mass, my taxes are about $9,100 a year, just about 1.4% the value of my house. But, my insurance is only about $1,100 about 0.2% the value.

 

[marko]

I would imagine that you probably get a lot of services for those taxes, too. Just a different set-up.
QUOTE]

Services? You're not from here so I can forgive you for confusing 'paying' with 'getting' <grin>

The wealthier towns do alright (same everywhere) but the working class towns are a mess.

A good portion of the taxes (property, income, sales, excise, meals, gas, tolls etc etc) get diverted directly/indirectly to some fairly generous entitlement programs (we're also known as the 'gimme' state).

As a result the trash pickup, roads, parks, beaches, highways, snow removal, infrastructure, general public recreation/services, etc etc end up getting the short end.

DW and I figure we could save close to $20K a year by moving to another state (having factored in that state's other taxes); as soon as she finnishes up her w*rking time, we're otta here.

 

[Texas Proud]

Taxes in Texas (at least where I am) are usually between 2% to 3%... a bit less if over 65... one benefit of being over 65 is some property taxes are frozen... some places are more, some less... one of the benefits here is that RE is not as expensive as CA or some other states (Hawaii comes to mind also)...

Insurance is, like other, .7 to 1.0%

 

[meierlde]

Taxes in Texas (at least where I am) are usually between 2% to 3%... a bit less if over 65... one benefit of being over 65 is some property taxes are frozen... some places are more, some less... one of the benefits here is that RE is not as expensive as CA or some other states (Hawaii comes to mind also)...

Insurance is, like other, .7 to 1.0%

It should be noted that due to hurricanes house insurance costs more near the coast, and on the coast costs a lot more since you have to buy the windstorm insurance from the state. In the Hill country homeowners is more like .5%. (Its also not in the EF-5 belt like Dallas Fort Worth and west).
So geography can make a difference in insurance rates. As to property taxes at 65 in Tx the tax is frozen against increases in assesed value, which over time can make quite a difference.

 

[marko]

Actually... it is Tax-achusetts!

I live in Mass, my taxes are about $9,100 a year, just about 1.4% the value of my house. But, my insurance is only about $1,100 about 0.2% the value.

...and lemme guess: your prop taxes didn't go down with your house's current valuation.

 

[Livefree]

I live south of Boston and my taxes are $4000..up from $2700 when I purchased in '95

 

[Midpack]

2011 Totals FWIW...not including any periodic remodeling or major repairs.

$1,599	Insurance
$280	Lawn & Garden
$648	Other
$1,804	Prop Taxes
$850	POA
$5,181	Sub Total Home
$1,700	Gas & Elec
$780	Sewer
$505	Water
$220	Trash
$3,206	Sub Total Utilities
$8,387	Total Damages

Our current home is (only) 2300 sf, our next (last?) home will be smaller and cheaper...

 

[JOHNNIE36]

Midpack, I like how you presented your maintenance cost and I will present mine in a similar format.

$1750 Insurance (fire and wind-no flood)
900 Lawn care
500 Shrub trimming
2150 Property taxes
500 Community Assoc.
260 HOA
$6060 Sub Total Maintenance

$2200 Electricity only power
1200 Water and Sewer
300 Trash
$3700 Sub Total Utilities

$9760 Total maintenance and utilities.

Edited to add that I had all the numbers lining up but something in the forum's software left justifies and throws the numbers off. It just doesn't look right.

 

[tmm99]

Thank you for all the responses. Sorry for being late to respond.

I get a pretty good picture or how much people are paying for house maintenance and the amount seems to vary a great deal depending upon where they live etc. (And thank you for listing the breakdown of how the money is spent for maintaining a home. I wasn't thinking of lawn cost at all.)

I don't know where I will be living yet (I still have a few more years to go), or how much house I will get (probaby small - > 1500 sqft), but I have some ideas. For now, I think I will just add 4% of the house value as the house maintenance cost. - I guess I could always take extra from the emergency fund if it goes over.

What do you think? You think this is good enough for now? (I promise I won't live in MA. So far candidates are NM, NV, UT, or AZ.)

 

[accountingsucks]

I have always read either 1% or 2% as guidelines. In my experience I find 1% is too low and 2% is too high so somewhere in the middle. I have gone multiple years without any major costs and then get walloped with a whole bunch as I have recently redone shingles, hot water tank, new flooring on main floor, new garage door, new front door, etc. Also unfortunately for me I can not do anything handyman wise. I am just not good at it and I don't think it's something that I can ever get good at.

As for property tax and other costs, I haven't figured out what % they are as it's really irrelevant and it is what it is. There isn't much you can do to reduce these costs except for utilities. In my case prop tax is 2800 and utilities about 2700 per year and home is about $375K - 1750 sq two storey in an area where average home is about $400K

Couple other points - maintenance costs will vary depending on your level of extravagence. Friends putting in new hardwood floor and it will be in the 12K range. I on the other hand was a-OK with Costco laminate flooring and with install was under $2500 for more square footage. Gotten lots of compliments about it so far and i don't care about resale value as I will likely die in this house (I'm 36 now) and if I do resell, oh well I'll get $x less for it,but I saved $x prior to that and there is a time value of money. Also do not forget about cost to replace furniture, appliances, light fixtures, etc. Easy to forget about that stuff until you realize Hey I need a new couch and loveseat and minimum it's $1500 for a crappy set. I budget about $500 per year for all that stuff and that is part of my annual maintenance estimate which I peg at $5000 per year total.

 

[accountingsucks]

One other point. I see alot of the responses are detailing HOA fees, trash, etc. These costs are easy to know as you can get all that info before buying a house. The real mystery is in what to budget for actual maintenance and replacement costs of most everything in your home. I think that's what the original poster had more in mind.

 

[Midpack]

One other point. I see alot of the responses are detailing HOA fees, trash, etc. These costs are easy to know as you can get all that info before buying a house. The real mystery is in what to budget for actual maintenance and replacement costs of most everything in your home. I think that's what the original poster had more in mind.

There's plenty of reference material to estimate any budget item you might want online. Here's just one of many for home maintenance MintLife Blog | Personal Finance News & Advice | Budgeting for Home Maintenance and Repair Costs

 

[accountingsucks]

There's plenty of reference material to estimate any budget item you might want online. Here's just one of many for home maintenance MintLife Blog | Personal Finance News & Advice | Budgeting for Home Maintenance and Repair Costs

At least in my area i find any online resource way off. Around here for example it's $100 just to get a plumber to come to your house and then I believe $90 for the hourly rate. I am in a high cost of living area since our economy is booming (Alberta, Canada). Also very hard to find people and when you do they are flaky as hell since they have 20 other jobs lined up

 

[JOHNNIE36]

tmm99, your 4% for "maintenance" should be right on. If I use that figure, $10K maintenance is 4% of $250000 which is about the value of our home. Now if you move to AZ, NM or NV you can just about eliminate lawn care and use zerascape (sic). Up until four years ago I did all the lawn care and shrub trimming myself. I had a couple of surgeries and that was the end of that. I don't miss it a bit. Good luck on your future plans.