Keeping Your Home in Good Shape
So, you did it! You bought a home. Now, it’s time to take care of your investment.
The good thing about home ownership is that the money you put into your home builds
equity (value). The bummer is that you need to spend the money, and savings for a new
water heater is really boring compared to, well, almost anything else.
One of the best ways to make sure you don’t get caught with an expense you can’t
afford is to create a savings account where you put money aside for home repairs and
expenses. How much should you put away? Let’s estimate.
If you bought a house for $250,000, you’ll need about $3,750 per year (estimate
about 1½ percent of the purchase price). Expenses will include insurance: homeowners,
flood, and earthquake. Homeowners insurance is required, and it will cost about $500 per
year. If your home is in a flood plain, you’ll have to purchase flood insurance, and it costs
approximately $800-1000/year. Earthquake insurance is optional, but if I lived on the side of
a hill or along a known fault line in a masonry house, I’d consider it. It costs about $500 per
year with a 15 percent deductible. If you do the math, the earthquake insurance may not be
worth it, but I’m sure not going to be the guy who tempts fate and tells you to forgo the
insurance! Thanks to Mark Davis Insurance who provided these estimates at a moment’s
Now that insurance is accounted for, we need to consider long-term expenses to
maintain the structure. At some point, you’ll need to repair or replace the paint (inside and
out), flooring (carpet, linoleum, wood), roof, and appliances (water heater, heating/air
conditioning). You also may have some issues to take care of that came to light through
inspections during the escrow process.
How quickly or how often you’ll need to maintain your home depends on how hard
you are on it. Children typically increase wear and tear on a home. As the father of several, I
can personally attest to this. Pets can also speed up the need for new flooring, for example.
In addition to the long-term maintenance, you’ll want to do annual upkeep, too.
Clean rain gutters, caulk window frames, make sure downspouts move water away from your
foundation, replace air filters on central air systems (every 4 to 8 weeks), and clean chimneys.
Annual upkeep will save you money (and keep your family safe).
Some repairs can wait, and others can’t (or shouldn’t). A faulty electrical outlet above
a sink should be fixed as soon as possible. A leaky faucet is unlikely to improve, so you
might as well save yourself the irritation of listening to it drip and wasting the water. A
drippy faucet may cause a bigger plumbing problem, and you always want to find those
sooner than later.
Depending on whether you’re handy with tools and the scope of a job, you may
want to consider hiring a contractor to do certain repairs. If you need a list of contractors
with valid licenses and current workers’ compensation and liability insurance, call your real
estate agent. They can provide you with a list. If you’re debating about whether to take on a
project yourself, here’s my suggestion: if it deals with electricity or gas, hire an expert.
Skimping here can cost lives. If you feel comfortable doing the work and have the time to do
it, by all means, take it on. Be aware that some work may require permits from the City or
When money is tight, you may think that choosing the lower quality product that
saves a few bucks is a good idea. Think again. If you have your house painted, for example,
you are mostly paying for the labor. If you choose the highest quality paint, you won’t have
to hire painters again for a long time. If you need to replace your water heater, different
heaters come with different warranties. As a property manager, I can tell you that if they say
it’s a five-year water heater, it is. For the additional cost of the better quality product, it is
usually a savings over the long term. Prevention doesn’t cost; it saves.
Next time, I’ll talk a about preparing your home for sale. If you have questions in the
future, please don’t hesitate to call me, Patty McMillen 707-467-3637.