Author Topic: Estimating Costs  (Read 2232 times)

spider1204

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Estimating Costs
« on: July 01, 2012, 09:37:32 PM »
I've recently moved to a new area and started my first "real" job whatever that is supposed to mean.  Anyway, I've moved to KY and have noticed that real estate around here can be found for very cheap compared to where I grew up.  I located a REO house for ~$8000 and have been considering it for a while now, but would like to try and get some feedback/opinions.

I'm trying to estimate the costs associated with the initial purchase as well as the holding costs, so far I have.

Fixed Costs
House Cost - $8000
Repairs - ???  Will have to try to estimate after inspecting the house.
Closing Costs - ??? I have no idea, does anyone know how to estimate these?
Inspection - ??? Again, not sure what the rate might be.
Lease - $700 I'm currently in a lease and this would be the cost to exit smoothly.

Holding Costs (per Month)
Property Tax - $20300 (Assessed Value) * 1.1191% (Tax Rate) = $18.93
Insurance - ???
Electric - ???
Water - ???
Sewer - ???
Internet - $35

Revenue (per Month)
Rental Savings - $350
Roommate - $200 This will probably not be able to happen until after the house has been fixed up quite a bit but is still an option.

Does anyone have any ideas on how to get good estimates for these costs that are still unknown?  Are there any other extra costs that I haven't accounted for?

ShavinItForLater

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Re: Estimating Costs
« Reply #1 on: July 02, 2012, 05:29:11 AM »
Since it sounds like you're planning to live there, I'll refer you to this other thread where later on we discussed "hidden" costs of homeownership:  http://www.mrmoneymustache.com/forum/ask-a-mustachian/best-place-for-a-home-loan/

Regarding your question marks:
- Repairs--no way to help you on that.

- Closing Costs--most closing costs are from a mortgage, but since you'd be paying cash, these might include some tax like transfer stamps (typically indexed to property value, if they apply in your area), title insurance, and a real estate lawyer if you use one (I'd recommend you do).  You can call around for estimates on the last two, and the first one your local government or a local real estate agent can tell you.

- Inspection--typically $200-300, but might be less if it's a small property which I presume this is.

- Insurance--can call for quotes, certainly it is indexed to property value, but there are a lot of other variables (e.g., crime rate in the neighborhood, safety features like burglar alarms, age of the home, types of materials used, are you in a flood zone, your credit score).  I expect an insurance company could give you a ballpark based on property value for your area, and if you can answer enough questions about the property you should be able to get a firm quote.

- Utilities--typically you ask the previous owner for utility bills, the bank might be able to tell you, or you might somehow be able to get the historical usage from the utility companies somehow.  Certainly they could tell you the rates, but usage patterns, maybe or maybe not.


James

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Re: Estimating Costs
« Reply #2 on: July 02, 2012, 07:33:27 AM »
Might be a good idea to just talk to some of your prospective neighbors, let them know you are interested in buying and fixing up the house and are wondering about costs in the area, etc.  Neighbors matter a lot, so this also serves to give you an idea of what sort of neighbors you would be having, even if you don't get the exact info you were after.

Whatever you do, don't skimp on the inspection.  Sometimes people skip it when paying cash or when paying less for a house since it "doesn't matter and needs repair anyway".  Unseen or major repairs can quickly bring the cost up beyond what you would pay for a house in better condition if you aren't careful.

spider1204

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Re: Estimating Costs
« Reply #3 on: July 02, 2012, 03:24:17 PM »
Awesome, thanks for pointing me in the right direction for so many of these estimates.  I should be able to estimate just about everything now after tracking down the sources you mentioned.

Your also absolutely right about this being a small property, ~800 square feet, but still bigger than anything I've lived in during/after college.  That's why I'll need a roommate!