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Wow, that’s really high. My house is 30 years old and I pay about 3% a year including mortgage, taxes, insurance, maintenance, renovations. Houses that are pai

Wow, that’s really high. My house is 30 years old and I pay about 3% a year including mortgage, taxes, insurance, maintenance, renovations. Houses that are paid off and have no mortgage and have been built efficiently can easily get to 1%/year. But of course your mileage may vary. But if you’re paying 10%/year, you probably don’t want to rent as other houses will be much cheaper.

gs17 3y ago
>renovations Thank you for spelling it out. I had thought they meant they lived in Reno and were being cute about taxes.
SkyPuncher 3y ago
My understanding is that's pretty typical over the life time of a house. $500k house => $50k per year * $36k => $3k/month mortgage * $6k => $500/month for insurance, internet, gas, electric That's $42k right there. Add in occasional roof replacement, emergencies (e.g. tree falling on a house), mechanical upgrades, plumbing/repair, carpet/flooring (carpet is considered a 7 year wear item), etc, etc, etc. These are hard to amortize as they generally come in large leaps and bounds. However, you end up getting pretty close to that $50k annual number. ----- Obviously, a mortgage is the largest part of that. However, most people have a mortgage on their house.
- ryan_lane 3y ago
  > $36k => $3k/month mortgage That seems high. On a $1m house my mortgage is $3k (my interest rate is ~1.3% on a 35 year, but even at normal US rates/time periods $3k a month seems high). > $6k => $500/month for insurance, internet, gas, electric Most renters also pay these expenses. The insurance for most folks is probably the highest part, but my insurance isn't much more expensive than renters insurance was. > carpet/flooring (carpet is considered a 7 year wear item) Ongoing cost alone is a good reason to not have carpet. Carpet is also really awful for the environment. This is one of the places where it makes a lot of sense to pay for hardwood and ceramic tile upfront. 10% yearly would be much higher than my expected. Like the op, my expectation is closer to 3%.
- prepend 3y ago
  I think your understanding is wrong. 10% is not typical [0]. Home value != mortgage amount as houses appreciate and there’s some down payment. So maybe your $500k house has a $500k mortgage in the beginning but after 10 years your house is $1M. Common guidance is 1%/year in maintenance. So add that onto your mortgage and taxes and that’s more common. It’s not the worst thing to plan 10% as you’ll end up with lots of savings. But Im 10 years in my house and never replaced carpet or hardwood floors and certainly won’t every 7 years. I have 30 years left on a 50 year roof. There’s expenses, but there’s no way I spend $100k/year on expenses and my mortgage is locked in from 10 years ago when the house was worth less and interest rates were low. [0] https://www.amfam.com/resources/articles/at-home/average-home-maintenance-costs https://www.amfam.com/resources/articles/at-home/average-hom...
rufus_foreman 3y ago
>> Houses that are paid off and have no mortgage and have been built efficiently can easily get to 1%/year Property taxes differ by state, but the median is around 1% a year of the property value. So for most people, taxes alone will get you to 1%. Illinois is 2.3% a year, New Jersey is 2.5%. Insurance also differs by state by 0.5% to 1.0% is typical, higher percentage for properties with lower values. Looking at how much a new roof or HVAC system costs, you're likely going to have at least 1% a year in maintenance if not higher in the long term. Most people even with their mortgages paid off will pay at least 3% a year without including renovations.

gs17 3y ago

>renovations Thank you for spelling it out. I had thought they meant they lived in Reno and were being cute about taxes.

SkyPuncher 3y ago

My understanding is that's pretty typical over the life time of a house. $500k house => $50k per year * $36k => $3k/month mortgage * $6k => $500/month for insurance, internet, gas, electric That's $42k right there. Add in occasional roof replacement, emergencies (e.g. tree falling on a house), mechanical upgrades, plumbing/repair, carpet/flooring (carpet is considered a 7 year wear item), etc, etc, etc. These are hard to amortize as they generally come in large leaps and bounds. However, you end up getting pretty close to that $50k annual number. ----- Obviously, a mortgage is the largest part of that. However, most people have a mortgage on their house.

ryan_lane 3y ago
> $36k => $3k/month mortgage That seems high. On a $1m house my mortgage is $3k (my interest rate is ~1.3% on a 35 year, but even at normal US rates/time periods $3k a month seems high). > $6k => $500/month for insurance, internet, gas, electric Most renters also pay these expenses. The insurance for most folks is probably the highest part, but my insurance isn't much more expensive than renters insurance was. > carpet/flooring (carpet is considered a 7 year wear item) Ongoing cost alone is a good reason to not have carpet. Carpet is also really awful for the environment. This is one of the places where it makes a lot of sense to pay for hardwood and ceramic tile upfront. 10% yearly would be much higher than my expected. Like the op, my expectation is closer to 3%.
prepend 3y ago
I think your understanding is wrong. 10% is not typical [0]. Home value != mortgage amount as houses appreciate and there’s some down payment. So maybe your $500k house has a $500k mortgage in the beginning but after 10 years your house is $1M. Common guidance is 1%/year in maintenance. So add that onto your mortgage and taxes and that’s more common. It’s not the worst thing to plan 10% as you’ll end up with lots of savings. But Im 10 years in my house and never replaced carpet or hardwood floors and certainly won’t every 7 years. I have 30 years left on a 50 year roof. There’s expenses, but there’s no way I spend $100k/year on expenses and my mortgage is locked in from 10 years ago when the house was worth less and interest rates were low. [0] https://www.amfam.com/resources/articles/at-home/average-home-maintenance-costs https://www.amfam.com/resources/articles/at-home/average-hom...

rufus_foreman 3y ago

>> Houses that are paid off and have no mortgage and have been built efficiently can easily get to 1%/year Property taxes differ by state, but the median is around 1% a year of the property value. So for most people, taxes alone will get you to 1%. Illinois is 2.3% a year, New Jersey is 2.5%. Insurance also differs by state by 0.5% to 1.0% is typical, higher percentage for properties with lower values. Looking at how much a new roof or HVAC system costs, you're likely going to have at least 1% a year in maintenance if not higher in the long term. Most people even with their mortgages paid off will pay at least 3% a year without including renovations.