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The real cost of owning a home

ericturner.dev

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Re: The real cost of owning a home

#881
post #875

Earlier quoted context omitted.

Yard work, gutter cleaning, power washing exterior, cleaning windows, bi-annual HVAC service, exterior paint (especially if the house has any wood) and trim upkeep. And as the house ages, you get things like repainting interior rooms, more frequent plumbing issues, major HVAC repairs, roof replacement, repaving driveway, electrical upgrades, remodeling, etc. We downsized to a townhome to avoid some of that (half the…

It never ceases to surprise me how North American homes are just a source of time wasting for the owners. I grew up in Italy and we never had to do any of that (except repainting the rooms once every 20 years with my father).

How you you occupy yourself without spending four hours every other day mowing the lawn (gas, ride-on) and then blowing the clippings and dust back and forth with your leafblower (gas, backpack) and then spreading fertilizer and chemicals to make sure you can continue mowing the lawn so frequently? My neighbor would lose his mind!

Re: The real cost of owning a home

#882
post #491

Earlier quoted context omitted.

If you treat your house like a rental that you rent to yourself, you can avoid a bunch of headaches - mainly because you’ve given yourself “permission” to spend on it.

wait ... There are landlords out there who will "spend on it"? Mine took 3 weeks to replace a broken HVAC when it was 35 degress out. 5 days to fix a toilet that when flushed dumped sewage into my downstairs neighbors ceiling. Maybe if you're treating yourself as a tenant but your run of the mill rent extracting (or worse, middle man) landlord is the cheapest creature on the land.

Owner-occupiers in 2-6 unit buildings (who don’t have RE empires beyond that). The incentives are wildly different.

Re: The real cost of owning a home

#883
post #89

Earlier quoted context omitted.

You're still paying a mortgage if you rent it's just someone else's mortgage.

Someone else's risk. Someone else's liability. I can end my lease and walk away without penalties or obligations. If anything happens to the property, it isn't my problem. I just need I can move on a whim, and the worst-case costs will be a modest lease termination fee and literal moving costs.

You also never see any of that money ever again, with a mortgage a % of the money spent a money gets converted into the best asset for retaining wealth there is.

Worst possible situation you can get in with a house: not being able to just walk away, difficulty to sell if the area has gone bad, even with all these the worst thing you can do is just walk away from the house and even then you're just back to the same position you'd be in if you had rented, you'd have nothing.

Re: The real cost of owning a home

#884

Beyond financial costs, I was caught off guard at how much time home ownership took up. House maintenance and projects have taken up most of every single weekend of mine for the past few years. Part of it is simply that I bought a house with more space than the places I usually rented. More to clean, more to maintain, more things that can go wrong, etc. But the biggest thing is that I'm the only one in charge of main…

... and thats why I prefer very much big apartment. There is concierge who takes care of all the outside, and we handle just the inside. Which in past 3 years meant 1 plumber and 2x heating specialist (but that was to give digital controls for floor heating for each room). My and my wife time is way more expensive than his. House? All the land with endless lawn mowing and vegetation maintenance, the fences, all the c…

Where I live (major city) because of zoning there are few apartment buildings and basically 100% are only for rent, not individually owned units. So if you want to own where you live it must be a townhome or detached house.

Re: The real cost of owning a home

#885

Earlier quoted context omitted.

In the US, there's a pretty significant capital gains tax exclusion on the sale of primary residence too.

In Sweden 30% of interest payments on mortgages is tax deductible. When I sold my old flat and even though it only appreciated like 10% over 4 years (about the same as inflation) I still got a lot of money when I got the loan settled. 4 years of amortization at 2% per year is 8% of the original value of the apartment, tax free. And my mortgage+HOA fee was actually lower than my rent was before even before the interes…

In the US, 100% of mortgage interest (for the first 750k of loan) and property tax (up to 40k combined w/ other state/local taxes) is deductible. Property ownership gets such favorable tax treatment that it’s kind of ridiculous.

Re: The real cost of owning a home

#886
post #61

people might scream about corporates owning housing - but one thing that's a blessing is if corporates sink their money into apartment blocks | buildings instead of single family homes. you can rent for multiple years at a favorable rate - then save some money into the stock market. however in america - people have been fed the propaganda you need to live in a single family home.

This isn't propaganda, a single family home is actually better housing along a bunch of axes people care about, as plenty of people in this thread are talking about at length. The idea that a person would be less likely to want a single family house if they weren't subject to propaganda is itself propaganda.

Re: The real cost of owning a home

#887

This is a South African take on owning a home. Author is correct that if you don’t live in the house long, the overheads such as transfer duties and legal fees make it somewhat expensive. But over here we have a pretty high interest rate of around 10% and comparatively high inflation rate, which makes the initial purchase of a house be a bit challenging, but if you start paying more than the minimum as soon as possib…

Is South Africa a place your family will want to be (or be able to be) for the next 20-30 years? What are you doing for electric power, water, and physical safety from violent thieves?

Re: The real cost of owning a home

#888

This is a South African take on owning a home. Author is correct that if you don’t live in the house long, the overheads such as transfer duties and legal fees make it somewhat expensive. But over here we have a pretty high interest rate of around 10% and comparatively high inflation rate, which makes the initial purchase of a house be a bit challenging, but if you start paying more than the minimum as soon as possib…

Is South Africa a place your family will want to be (or be able to be) for the next 20-30 years? What are you doing for electric power, water, and physical safety from violent thieves?

I’ve lived here most of my life.

Electricity has been essentially uninterrupted since the last load shedding about two years ago. I did get some solar panels and an inverter installed while load shedding was common as I work from home and didn’t want the stress due to lack of power. Another thing I put in our new kitchen is a couple of gas hobs next to the main induction ones, allows us to cook even during power outages. But as I said, no real outages in two years now.

Water is quite reliable, maybe interrupted half a dozen times in a year. I have 2kl of water backup tanks and a booster pump so I don’t generally feel any outage, although not uncommon, I expect that most middle class don’t have backup tanks like this. Regional water infrastructure hasn’t been keeping up with growth, so there is a large issue looming there.

Crime is common, but not so common that most people have been a victim of it. Most (middle class) people have house alarms linked to armed response services. I’m a member of community association which amongst other services they provide from membership fees, they also have a special arrangement with a security company and additional patrol vehicles are dedicated to our suburb.

Most security systems are door sensors and interior passive beams. I did however add outside beams which tends to catch intruders by surprise and gives early warning. I actually had an intruder in my garden last year and the outside beams caught the guy by surprise, he had dashed by the time the armed response got here. Harrowing for sure, but not tragic fortunately. Since then I added some IP cameras and there was a gap in my electric fencing above my garage which is where it seems they got in from, so I also had that remediated.

Our suburb (like many others, but not most) has road closures (gates get closed across most streets on the suburbs border) in effect except during morning and evening peak traffic times, this helps a lot, but criminals are regularly trying their luck in the area.

The intruder aside, and without load shedding, and being vigilant in case of criminals, it’s not that different than my 2 years I spent in Cork in Ireland where there was the occasional violence incidents with chavs and several water outages.

If I was living in a township (inhabited by those living well below a middle class wage) my experience would be quite different, probably lots more crime and I expect water and electricity to be quite spotty.

How will things be 10, 20 or 30 years from now?

My biggest worry right now is the water supply, but it’s more a worry of inconvenience of it being turned off regularly to manage demand. I’m expecting within 5 years they’ll have addressed it. Basically it’s a repeat of the electricity capacity shortage issue of the past, despite people telling government for over a decade they need to increase infrastructure to meet expanding demand, they do nothing until they run out.

Otherwise, I’m optimistic things will improve overall, not get worse. I think our democracy is maturing. The ANC which has managed to stay in power since the first democratic elections in ‘94 has been progressively losing voter share, it seems the masses are finally saying no to their excessive corruption and incompetence.

Re: The real cost of owning a home

#889

Earlier quoted context omitted.

Yes, this is broadly correct. The free market will (roughly) arbitrage out any differences between owning and renting. The hidden factor is that whatever money you have in house equity represents opportunity cost that it isn't in investments. If you have 400k in a house and the stock market returns 6% over inflation, then the opportunity cost is 2k per month in interest, which is comparable to what you'd pay in rent.…

There's significant personal financial benefits to renting, too, in that many local areas are dominated by one firm or industry as a major employer, so your employment prospects can be highly correlated with the local housing market. You do not want your investments to be correlated with your employment if at all reasonable. Detroit in particular was hard hit by this in the '08 financial crisis, iirc - the automotive…

This is something that is hard for people to factor in when decision making. Optimism will blind us from considering such a tragedy since not only was there buy-in on the home, there was buy-in on the future trajectory of the company you decided to work for.

Re: The real cost of owning a home

#890
post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

There’s also a psychological benefit of not having to worry about most problems. Sink broke? Call landlord to fix. Roof leaking? Call landlord to fix. And so on. You never have an unexpected $20k repair show up. And while I agree that it’s nice to customize things to your preferences, this has a downside in that it’s easy to get carried away and overspend. Might as well get the nicer finishes when you are remodeling,…

This is a personality difference. People who notice their surroundings and seek to improve them. People who are content with the way they are. People who are more type-A, DIY, etc. People who don't know the difference btwn a phillips vs flathead,etc.
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