Typical guidelines for home maintenance are 1-3% of value. If it's relatively newer construction and doesn't need significant repairs soon (e.g., roof, HVAC, hot water heater, appliances, interior or exterior paint) then you might get away with budgeting around 1%. However, if your area has depressed values (and I believe Phoenix qualifies), perhaps you should raise the percentage somewhat, since repair costs have not gone down in lockstep with property values, and they almost certainly will rise with inflation.
Good points. I will think about these for sure.
Keep in mind some of these things are pure maintenance and not just repairs too--cleaning the gutters, HVAC tune ups and filters, rodding sewer lines, unclogging sinks and drains, etc. are now your responsibility. Unexpected emergencies will also happen--basements can flood, fires can erupt on the stove, roofs can suddenly start leaking, pests can invade. All of this is on you now, and if you're smart you're not using your homeowners insurance unless it's really, really major.
We Southern Arizonans have heard tell of these "basements" and "gutters" before, yes. I think I may have seen such devices on TV. :-D
Seriously though, yeah, I know things can break and whatnot. As far as HVAC and plumbing, I usually handle that stuff myself when possible anyway, since it's faster and less hassle than bothering the landlord over it and waiting for contractors to show up. As far as snaking drains and fixing toilets, I wouldn't think of calling someone to do something trivial like that when I could do it myself for free or cheap. So the main change will be that I will be responsible for paying for the infrequent, big-ticket items that I
do get my landlord to handle now. I suspect, however, that when it is my dollars that have to go to the repairman or the tree trimmer or the plumber, that I will be much more motivated to do it myself. Certainly part of the reason I want to own my own house in the first place is that it's an excellent chance to learn some more DIY skills that I'm not allowed to practice currently because it's not my house to mess with.
You mention 0.7% of value for property taxes--perhaps that's accurate for Phoenix, but I think it's worth pointing out that percentage is highly location dependent--my property taxes are 2.5%. Yes, I realize that is crazy high. Different states have different relative levels of property tax vs. income tax vs. sales tax, and specific counties can be much higher or lower as well. The property listings generally will list the recent taxes, but also understand that the tax amount could change as soon as you buy it if the value is going way up or down from what the previous owner paid.
Tempe is generally in the 0.6-0.7% range. I made sure to find out; that's not just a number I picked. 0.65% is a pretty average value so I'm actually being slightly conservative. I'm well aware that this is ridiculously low compared to much of the country, which is one of the few reasons to be glad to live here rather than somewhere nicer.
Other potentially unexpected costs:
- Utilities will likely be higher for more sqft. Certainly as MMM advises, it's also highly dependent on you.
- You will likely need more furniture to fill up all your nice new bigger rooms. Possibly higher quality stuff than what you got by with while renting--things all of a sudden can seem more permanent, and something nice that will last 20 years may seem a better deal than college dorm quality stuff.
- Upgrades and renovations were not really a possibility before, and you may be very tempted once you own the place. I have spent a FORTUNE on renovations, additions, and upgrades to my home, none of which would have been spent if I was renting. It isn't all just cosmetic either--you might want to add insulation or a solar hot water heater or solar panels or an attic fan or more efficient replacement windows, all to lower energy costs--but there can be a large upfront cost to get those savings. Depending on what you want, finding the "perfect" house that has everything with no changes can be a challenge.
- Landscaping, lawn care, leaf raking, snow shoveling (OK probably not in Phoenix), etc. are now on you. Lawn care alone is not just buying a lawnmower--having a nice looking lawn can require fertilizer, weed killer, pest control, a variety of tools and supplies, not to mention water.
- Donations to the local girl scouts and kids sports teams--are you really going to say no to all your neighbors' kids? I literally get dozens of other miscellaneous people asking for money at my door every year, I say no to all of them but not the local kids.
- Decorations for holidays, which can again end up more elaborate when owning a home. Candy for trick or treaters on Halloween--probably neighborhood dependent but I get a constant flow of people, to the point where sometimes it's easier to just sit on the porch.
I'm definitely budgeting for 50% higher summer electric bills. We're also getting ourselves used to leaving the house at 85 during the hot months, which makes a huge difference. The other 8 months or so of the year make up for it with extremely mild temperatures, though, so it ends up being pretty cheap on average.
We never buy cheap crappy furniture--most of the stuff we have is vintage or second-hand nicer stuff, solid wood, leather, etc. We don't buy stuff we don't actually like and I don't expect that to change just because we own the floor it's sitting on. So I dont foresee any need to "upgrade". And I don't think I'll be in any rush to "fill up" the house. We've been on a simplifying spree the last few months and we're both enjoying the sense of relaxation and comfort that having a little free space in the house provides. I'm sure we'll need to purchase a few items (particularly storage furniture) and I'm expecting that, but we'll likely be keeping 90% of our current stuff, and what we do need we'll wait on until we can find it used.
Renovations is one area I
am worried about getting on the runaway spending train, though. I'm definitely planning on ripping out any carpet and putting down real flooring, and probably we'll want to nicen up bathrooms and stuff as well. Luckily I know how to do most of that kind of work myself (contractor for a dad) and what I don't know, I'm eager to learn. So I won't be paying anyone to do work for me. My plan right now is to establish a "home improvement account", put aside a small portion of my pay just for that, and only do improvements when I've had time to consider and plan them carefully and the cash is available to pay for them.
As for leaf-raking and lawn-cutting, what kind of awesome landlords have you had that do routine yardwork for you? I just assume I need to do that stuff wherever I live. It's also typical here for tenants to pay all utilities, including water, so that won't be any different. And I may not have a lawn at all--they don't make much sense in this climate. I might keep one if I get ambitious or I have a really nice yard for it. And, weirdly, I actually enjoy weeding by hand. No weed sprays for me! But I'll probably end up doing some nice xeriscape and avoid having to do much trimming or watering at all.
As for kids going on sales drives, I seriously doubt that's a frequent enough occurrence to significantly impact the household budget. I wouldn't give anyone going door-to-door more than a couple bucks out of my wallet anyway, since I only give significant sums of money to organizations that I am familiar with and have had the opportunity to learn about, and not because a small child was convinced to come give me googly eyes to play my social instincts for profit.
In the same vein I'm not much of a "joiner" and I don't get all that into holidays. My wife is a little more than I am, but then, she's also a creative type and likes to repurpose old stuff into cool artsy displays an drake her own decorations. Neither of us is going to Walmart to buy the motorized wireframe reindeer and sleigh with Christmas lights on it. I don't think we've spent more than $100 on decorations in 5 years and I don't expect next ear to be any different.
I don't mean to sound like a downer, but hey you asked not to be blindsided. Owning a home can be pretty expensive compared to renting.
Not at all! I appreciate the input, and it's definitely food for thought. And the better warning I have for this stuff, the easier it is for me to come up with ways to keep it from making me poor. :-D
