How Much I Spent On Housing In 2016
I bought my condo in Portland for $142k almost exactly one year ago. Like most homeowners, I expected to have some expenses when moving into a new place, but I didn’t expect my 2016 housing expenses to be nearly $10k, $9,251 to be exact.
I spent around $5,100 on furnishing the condo or buying things such as tools, running some wires, upgrading lighting etc. I didn’t even spend any money hiring contractors or handymen.
Traditional Condo Expenses
Most condos are fairly low maintenance. As the owner, you have HOA dues and property taxes along with condo insurance.
Rarely, the HOA can impose an extra expense should there be need for major repairs that simply can’t be covered with the HOA dues. If the HOA company doesn’t have good reserves saved then that assessed cost is split among all the owners equally – this could be a $2k assessment, for example, that each owner has to pay, which can be broken up into monthly payments.
My Necessary Condo Expenses
I have monthly HOA dues, annual property taxes and annual property insurance. I won’t count utilities since I would have those regardless of my living situation. In total, my minimum overhead is $317 every month or around $3,800 for the year, it breaks down as follows.
Monthly HOA dues. I pay $167 every month, this is a fee that covers maintenance of the property, provides insurance against damage to the foundation or the studs and pays for water in my particular case. This fee goes up generally every year or every few years.
Property taxes. These are also reassessed every year. I currently pay $1,932 annually for this. I expect they will go up as the value of the condo goes up.
Condo insurance. I pay around $200 annually for this and I don’t expect it to go much higher. There are many ways to lower this and of course there are ways to pay more. I like the Geico Condo site because I can play around with the numbers and coverage as much as I want.
Was It Worth It?
I spent exactly $142k of my savings on this condo, I put in another $5,100 in furnishing and simple repairs. I’m not sure what the exact value is, looks like it’s somewhere around $170k – which is less important since I’m not planning on selling the condo.
I love my views out of the condo.
In order to live in this condo I have to spend 2.6% of its value on overhead every year. This doesn’t include any repairs.
By comparison, a single-family home, let’s say one that costs $500k, would have approximately $5,000 in annual property taxes, around $500 in annual property insurance and maybe $5k in repairs/maintenance every year. This would total around 2% – not a whole lot less despite the lack of HOA.
Savings on rent. People love saying that paying rent is “throwing money away”. But that’s not true. You must pay money to someone, somewhere, somehow in order to live on a piece of land. Lands are owned by the government, then by the local jurisdiction and finally by the person who holds the title. Even living out of a van will cost you money.
As for the rent, I would have to pay around $1,000/month for a studio apartment in this neighborhood. That would be $12,000 per year for just housing expenses, compared to the $3,800 I would have owning the condo (assuming I stop buying fucking furniture).
What about the investment, though? Well, if I had let that $142k grow and invested it in the mutual fund scene instead of buying a house with it then I would make somewhere around $7,100 before tax on those investments, annually.
If my $142k can make me around $7k a year and I have $12k in rent, then I would be left with $5k that I would need to still pay out of pocket in order to live somewhere.
By choosing to pay for the condo with that money I only lose around $3,800, so my $142k is better invested in the condo than in a mutual fund.
Looking Ahead To 2017
In 2017 there should be some expenses still for the condo outside of the basic overhead. It will need some drywall work, I will be fixing some plumbing (which the HOA won’t allow me to do myself, I have to hire someone), I will need to restore a few sections of the wood floors as well as the 2 sinks and bathtub.
I won’t have any furniture expenses so hopefully I can recoup some of this year’s costs by saving on my condo expenses in 2017.
Take a look at your housing expenses for 2016. If you haven’t kept track of it consider starting now. It’s so easy to forget those little expenses, but they add up.
Knowing how much it costs you to live where you’re living will help you make better decisions in the future, especially regarding a potential move. All of a sudden the house you’re renting won’t sound so bad once you face having to fix a leaky roof or pipe on a house which you own.