Windsor real estate agents, myself included, are often asked for advice from buyers about purchasing their first property. Questions range from how to save for a down payment to where is a pet friendly condo. Buyers today, particularly those first timers are very educated about the real estate process, however, there are some issues that a buyer may not have considered.
Again, while I get many questions regarding the down payment, I’m not often asked about how much a new homeowner should set aside for home repairs and maintenance. Quite frankly, this is something that every buyer needs to consider and prepare for, especially when buying an older home. There is no doubt that at some point, an unexpected issue will come up that will take a bite out of your budget. Hopefully, a homeowner has a good savings where the costs won’t impact them too much. But, things happen as we all know that we can’t always prepare for, but here are some excellent tips one should consider when establishing a household budget. And such a budget should be created BEFORE buying a home, so you are less likely to buy a home that you can’t afford.
1. $1 per square foot rule:
It has been said that a homeowner should save one-dollar per year per square footage of a home. So if you own an 1,800 square foot home, then you should save that same amount each year. Others suggest a the one-percent rule, where you save this amount from the purchase price. For example, if you buy a $200,000 home, then you should put away $2,000 per year. Are these rules accurate? No one knows for sure, but it certainly is a good starting point.
2. What to consider:
When buying a home, you need to look at if from various viewpoints. Yes, certainly you need to see if the neighbourhood is in a good location, as well as looking over the size of the bedrooms, but also look at the home from a maintenance and repair standpoint. For example, you may love the large backyard and first class swimming pool, but can you afford to maintain? Other factors to consider:
Age: How old is the home? Older properties take more work and more maintenance and more likely to need repairs than new construction where home warranties are often included.
Weather: Because we live in an area where the winters are cold and wet, our homes require more maintenance than those in warmer climates. And don’t forget to consider plowing during those cold months.
Single family homes v. condos: Naturally, single family homes cost more to maintain than condos and townhouses. Once you are a homeowner and your home needs painting, it is up to you. With condos/townhouses, the Homeowners Association will make that repair (from resident’s monthly fees of course).
If you are a new homeowner with an older home in Windsor, then the one-percent rule or one-dollar square foot rule needs to modified. A good rule of thumb is to increase your savings an additional ten percent thanks to weather, age and the likelihood that some sort of repair will be needed sooner rather than later. This is especially true if the home will need a new roof in the future or if the heating and air conditioning unit has not been replaced for many years.
Of course, there is no exact science to preparing a household emergency fund, but it is necessary and again, should be included in a budget before you even start looking for a home. Too many times myself, and other Windsor real estate agents, have found buyers that go over their budger because they found a home they say they can’t live without. The problem is, buyers often feel remorse when they realize they are living paycheck to paycheck once an unexpected repair needs to be made. Or worse, that their leaky roof can’t be repaired because there is no money for it.
Not too long ago I had a client who wanted to sell their home despite the fact they loved living there. They bought it brand new over 20 years ago, but they knew, that in a few short years, the home would need some expensive maintenance, such as a new roof and major remodeling and updating. Rather than work overtime or find a second job, they decided to sell, take their profits, and buy a condo. The point is, repairs can be costly so if you don’t prepare for them, then being a homeowner isn’t quite so fun.