Buying a home is great – it allows you to “make it your own.” You don’t need to worry about the rules of renting someone else’s place. Not all aspects of homeownership are fun, though. First, you have to think about that whole “taking care of the home” thing. To help you prepare, here are a few things to consider as you budget for home maintenance and repairs.
The 1% Rule
One way to budget for home maintenance is what some people call the “1% Rule.” Just like it sounds, it means you’re expecting your annual maintenance and repairs to cost about 1% of your home’s purchase price.
So when you buy a home for $350,000, expect your annual repairs to be about 1% of that, or $3,500, every year.
Keep in mind that some years will be less than others. You may skirt by one year – or even two years – without having any significant repairs. But all of a sudden, the HVAC system gives out, and it costs you $10K to replace it. That just made up for the years when you didn’t have anything happen!
How Long Do Things Last?
Another factor to consider is the age of various parts of your home. If something is getting towards the end of its expected life cycle, it makes sense to start saving up to replace it.
This article on familyhandyman.com has some realistic timeframes to consider. For example, they say that asphalt shingles on your roof will typically last about 20 years. However, if you have something like a tile roof, it can last more than 50 years!
Another example is your deck. You can expect to get about 15 years out of it if it’s made from wood. Of course, this is just an estimate – if you take great care of it, it can last longer. On the flip side, if you never stain it, your deck probably won’t last as long.
Separate Your “Needs” from “Wants”
One of the common mistakes when selling a house is when the seller neglects significant repairs. They may know they have a major issue on their hands but hope to sell the house and get out of it without taking care of the issue.
But then the inspector may catch it, which hurts the seller’s credibility and may make the buyer consider backing out of the deal.
In this case, that major repair is what we’d consider a “need.” It needs to be done to keep the house from falling apart or having a really bad issue.
This is different than something that’s more of a want. For example, if your countertops are perfectly fine functionally, but you want something that looks different, that’s more of a want. Or maybe you don’t like the interior paint job anymore and want the whole house to get a paint job.
Wants are fine, but not at the expense of doing major repairs. If you have $8,000 to spend and the heat pump is broken, your best bet is to replace the heat pump. Don’t spend that $8,000 getting the house painted.
Keep “Rainy Day’ Money Aside For Repairs and Maintenance
Our last tip is to start budgeting for home repairs and maintenance before you even buy the home. How? You make sure you have money set aside just in case you have any “surprises.”
You don’t want to spend all of your cash on the down payment. Of course, it’s nice that it would lower your monthly payments a bit, but it’s best to keep some cash in the reserves. That way, if something happens – i.e., the dishwasher breaks or HVAC goes out, or your fridge dies, etc. – you have some money set aside to take care of it without having to put it all on credit.
According to Hippo, 66% of homeowners have some kind of unexpected repair in the first six months, and 77% have one in the first year! So that’s why it pays to repair.
That’s also why it makes sense to have the best real estate team for homebuyers advising you along the way. We’ll help you know what to look for as you go house hunting and help you connect with great home inspectors as well. So give us a call at (949)-271-7802 or send us an email here, and we’ll help you with every aspect of the homebuying process.