Is Home Maintenance More Than We Can Handle?
Should We Be Renters?
I'm hoping someone can give us some advice. Here's our problem: My hubby and I are not "fix-it" types, and lately our house seems to have a million things that have gone wrong with it. While I might be able to learn to fix a few things, my hubby is DEFINITELY not--no patience or aptitude. So, with our budget stretched as far as it will go, and with the need for a new roof looming in the next year, we are starting to feel that maybe home ownership is more than we can handle. The house is 20 years old, and we could probably sell it and come away with a few thousand dollars, but not much more. Are we jumping the gun and letting the frustrations of these repairs blind us to the financially prudent things about home ownership? Or might we be better suited to renting a home and leaving the ownership worries to a landlord?
Do Financial Comparison
I am a professional real estate appraiser and I also own a home. From your comments, it sounds like you are having difficulty meeting the house payments as well as the maintenance and repair bills. -- So, should you sell or hold the house?
If the cost of repairs/maintenance plus the house payments are too much for you, that is certainly a very sound reason to consider selling, in favor of a cheaper home or renting. The financial rewards that come from home ownership are the income tax deduction, which I would assume you are totally aware of. The other benefit would be its increase in value. The appreciation in value is not any help to your cash flow financially before you sell it. Another benefit over renting might be that rents rise significantly in your area. Say an equivalent apartment rents for $1,000 this year, but in five years it rents for say $1,200 monthly (a 3% to 4% average annual increase in rents). If this happens, your home payments and other expenses presumably increase by much smaller amounts, and your home becomes cheaper to live in over time than the rental.
In the US, I would expect typical home values to increase by between 1% and 3% annually over the next five to ten years, assuming that no major capital improvements are performed like redoing kitchens or bathrooms. In the late 1990's, US homes values are probably increasing at a somewhat greater rate, maybe 3% to 6% annually, but this should not continue indefinitely. Remember a house only lasts about 60 years or so (if major costly renovations are not performed). If enough money is invested in periodic renovations, most houses could last indefinitely.
So, the benefits of home ownership may not nearly compensate you if the expenses are currently too high for you. The thing about selling your home and moving is the cost to switch homes. Below is a brief summary of the cost to move to a new home assuming you sell a $100,000 home.
Sales commission ($100,000 home): $6,000
Other closing sales costs: $1,500
Cost of moving (you pack the boxes and hire movers): $1,500
Buying new furnishings/disposing of old: $2,000
These costs do not include the time or expense to purchase/rent a new place, and your time spent doing these things. The cost to move could easily be more than the annual cost for this home of say $10,000 including mortgage, taxes, maintenance.
Prioritize and Conquer
Don't give up!! Sure it looks like a mammoth task and everything needs to be done at once. But take a pencil and a piece of paper and go through the house noting EVERYTHING that you would like fixed (gulp!). Then rearrange your list in to big job / little job and list in order of urgency. Now go to the library and get yourself a good handyman book (something like the Readers Digest one, or ask the librarian to help).
Then do what YOU can - something's are really easy once you know how - starting with the little jobs. Who knows, after successfully tackling a few of these you might even try one of the "big" jobs. Then think laterally. If you are no handy person what CAN you do? (Type, cook, sew, clean house, wash dogs, babysat, write advertising copy - the list is endless) then put an ad up in the local shopping center, the library or in the local rag offering to swap your services for handyman services for the big jobs. This might not address the new roof issue, but it should help with everything else that is going wrong. Then once again think laterally about the roof. Are you any good at keeping accounts? Perhaps your local roof guy would be willing to swap your time and expertise for a new roof. You might get some flat "no's" but you never know until you try. Just be sure to put a value on your services (i.e. dollar per hour) so that you have a solid base to negotiate from (i.e. I will do $X worth of book keeping for a new roof worth $X). Also get it written down so that both parties know where they stand (and you have proof of y.juno.com/dynoget/tagj.
A Single Parent's Advice
Thirty-two years ago I purchased a home. I was a single parent, with three children, no child support, and no fix-it skills. Today I am still the proud owner of the same home, except it now has an additional room, which is the new kitchen, second bathroom, replacement windows, deck, vinyl siding on the trim, carport, fireplace, and swimming pool.
During my years here I learned to do simple electrical wiring, paint the exterior and interior, replace plumbing, sand and refinish floors, work on riding mowers, and how to grow vegetable and flower gardens. Many of the tasks, such as replacing the roof I was physically unable to do. For those types of repairs I saved, or borrowed. I am now disabled, but comfortable in my own home, in a safe neighborhood.
Was it hard? Yes. Would I do it again? Yes. How did I do it? Anyone who can read can learn. Somewhere in the library there is a book that will explain, in detail, how to do simple repairs around your home. Home ownership is a privilege many do not have, however, if you choose to live somewhere you can be given notice to move, where walls are thin, and neighbors constantly moving, go ahead. As for me, I love having my own roof over my head - even if I never learned how to recover it.
Learn as You Go
My advice to this couple is to never say never, and leave can't out of your vocabulary. If you want to just throw money down the toilet become a renter. You won't have the pleasure of someday having a return on your investment, you probably won't find an affordable rental home in pristine condition (you are at the mercy of a landlord), and you'll never experience the feeling of satisfaction when you fix and repair things yourself.
My husband and I are definitely not the handyman type, but we both can read and we do know where to go for resources. There are plenty of step by step guides available, designed for beginners. Use the internet (Housenet.com is one I like), go to the public library, chain stores like Lowes and HQ have free do it yourself pamphlets, I've even borrowed books from my neighbors. Many local and chain hardware stores offer free how to clinics on a variety of topics several times a month. We've also cornered plumbing, electrical, cable, building experts in the store who just love to share their expertise with others and are a godsend to the do it yourselfer.
My husband and I once built a 14 x 16' deck with a 4' catwalk and two sets of long stairs. Neither of us had ever built anything, but we talked to county inspectors, got do it yourself books and built it ourselves. A carpenter friend came by after we were finished and was very impressed so I know we did a decent job, besides it passed inspection!
Bottom line is that you would be surprised what you can do if you don't put up a mental block. Secondly, repairs that are truly beyond your ability can often be exchanged or bartered for with another whose skills lack in what you possess.
Help Is Available
In regards to" jumping the gun" there are several options out there for low-income homeowners. Rural Development Housing "the old USDA FMHA", may still have some grant or low income money(could be as low as 1%) to repair their home.
Many State Housing Authorities have low-income loans to help out. (Maine has a loan through MSHA (Maine State Housing Authority) that is between 1-4%, called Fix-Me. Other states may have similar programs.
Most states have local CAP Agencies, (non-profits) community action programs to run state and federal programs. There is CDBG money. "Community Development Block Grant". The numbers of their Senate and House representatives are in the front telephone book. They would be privy to the different programs out there.
I myself work for a Community Action Program (CAP) and these are several of the solutions that we know of tell "Jumping the Gun" to check around before signing on the dotted line.
A Variety of Resources
20 year old houses need a lot of TLC. Take your time and do the repairs needed. Even if you try to sell now, the roof will probably have to be discounted off the sales price. FHA will not lend on a house that needs extensive repairs, roof included, and home inspectors for conventional loans point out deficiencies to prospective buyers.
Home ownership is a rewarding but sometimes taxing endeavor. With today's interest rates, I cannot think of any reason not to own other than being non-financable.
You said you could learn, that means you may have an aptitude for home repair; although some things should be left to the professional. I heard it best from my cousin (not very mechanically inclined) who quoted a friend of his - "do that part yourself, it will be a good character builder". I couldn't agree more, and I was the one heading up the project for him. The phase of the job his friend was referring to had little downside for a mistake and was merely sweat equity for the home. Look at the many resources for do-it yourself home repair, tackle the things you feel you can, and find someone who can do the rest for reasonable rates. If you can find top notch home repair specialist who works on an job too small" premise, you may find the rate to be in the $50 per hour range with no minimum or at most a three hour minimum charge. The good thing is these people can and will give you advise on non related projects to the call for no extra charge. I am constantly and happily giving this type of advise to my clients since they trust me for the tough stuff.
Why do you think there are so many Landlords out there? They hardly ever do the work themselves, but know the value of Real Estate. Be sensible in your choices for upgrades. Do not build the house out of the neighbors' home values. Repair every system as needed to keep them operable. Replace dangerous systems if that is needed. If you don't have a direct referral or someone you already use or know the industry - get three bids and listen to everything they have to say about quality. Price isn't everything; the lowest bidder will burn you eight times out of ten.
Hang tough! The things you learn during this time will be with you forever. Smile and remember this is for equity!
Consider It a Savings Plan
Don't sell your house if you can help it! Homeownership is sort of like a savings plan. The more you put in it, the more you get out of it. Yes it can be tough when you have to make repairs and it sometimes you may want to throw in the towel. But remember, when you rent the only one benefiting is the landlord!
Have you thought about refinancing or an equity loan to get the money for repairs? If you have a higher interest rate, you might want to refinance and get cash out of the equity in the home. That way you could end up with about the same payment you currently have and get your house fixed to boot! Investigate all avenues before selling.
Look at Both Sides of Issue
Yes, home ownership has it's downside. Real estate people, builders, and the banks NEVER, EVER mention this. Most people buy for emotional reasons without considering the time and money necessary to maintain the home in good condition. We have a new house and are both handy -- but we still have to spend time and some funds on an ongoing basis with the yard, doing caulking, touching up paint, spotting the carpets, etc. etc. We've advised various relatives wanting to buy a home to make a list of what the landlord does and then consider the time and expense of doing those tasks or hiring them done. Budgeting for long-term expenses like a new roof or painting the exterior should be a habit along with the mortgage and insurance.
The alternative? The house declines and you ultimately lose money if you have to sell. Spend some as you go to maintain it, or lose it at closing. We know of a case where someone we know will probably make almost nothing even though the mortgage was paid off. Years of neglect and here they are. Depending on the market, "as-is" houses can be very hard to sell and some buyers will require completion of a list of renovations and repairs before closing that will eat up your profit.
That said, you can learn home maintenance. Libraries have books and magazines, home centers have free classes. When in doubt, go to the stores and ask questions. What caulk is best? What paint is most durable? Which tools are best? Even small hardware stores have someone who will help you select your purchases if you ask.
A Learning Experience
Think twice about abandoning the homestead. There are few things you (and I mean YOU, not hubby) can't learn to fix with a little help from the library. Reader's Digest, Time-Life Books, and a host of others have detailed instructions on how to fix most anything for pennies on the dollar. You can also attend free repair seminars at places like Home Depot and Lowes. If you need more money or would like another/better job, do this work yourself and pay yourself a handsome $35-75 per hour!
I wouldn't necessarily recommend doing a new roof, or a new furnace, but just about anything else you can do. And on a one story house, the roof is even possible.
For tools and supplies on the cheap, keep your eye out for live auctions in your area. Buy only what you need, but get started with an inventory list, plan your shopping and repairs, and start buying your stuff in anticipation of what you need.
If you are planning on selling, make your last investment a fresh coat of paint ($12-14 a can is plenty good enough) and brand new beige/neutral carpet, the same color in every room, over 1/2" pad. You can get this by shopping frugally for under $12/yard installed, complete with removal of old carpet and pad. You may have to help the installers by clearing out a room at a time to save money, but it is worth the effort.
Financially, if you have been paying on your home mortgage for a while, the amount you have been paying on repayment of the debt (principal) has gone up each month. The longer you pay, the more each payment goes towards building your equity in the house. In the early years you are paying mostly interest, but persistence does eventually pay off.
Another financial consideration is the dreaded word: TAXES. If you rent, you are going to lose your tax shelter. For many people in only a 28% federal tax bracket and 5% state income tax bracket, a $1200.00 per month house payment actually costs the owner less money than if the owner were renting at $800.00 a month. How cheaply can you live elsewhere?
And on repairs, if you leave that to the landlord, he's just going to pass the cost on to you anyway in the form of higher rent. Which means, really, he is paying someone else retail labor rates to do what you could be doing.
If your home repairs are overwhelming, try breaking them down into a list of manageable bite sizes. "Inch by inch anything is a cinch." Put water based problems at the top of the list (like the roof repair). Delaying roof, water, or termite problems will only accelerate the costs. Put everything else in a list that is related to how much damage the needed repair is causing by not being done now. Also watch for repairs that increase your utility bills (dripping faucets, leaky toilets, broken window glass, etc.)
The end result will be a more enjoyable home, a protected tax shelter, and a debt free roof over your head 30 years from when you moved in! On top of that, your feelings of satisfaction for what you have accomplished will be enormous!
It's the Equity
The ownership of a house and maintenance can seem overwhelming from time to time. But, in the end it's all worth it. I mean besides owning a "home" you also have equity in the home and that is worth WAY more than anything these days. Equity is basically your own little line of credit and you can take pride in the fact that you own the most important asset in your lifetime--your home!
My advice is to get some cheap estimates in your area (most are free). I live in Pennsylvania and the Amish community does things like that for relatively cheap and they are hard workers also. Or, you could get some friends together and get a someone who knows or has a "friend" that knows about roofing and make a day of it. You cook some picnic food and such and have like a "barn raising". Roofs can cost anywhere from 1500 and up.
Shop around and get the most cost effective plan for your household and go with it. I wouldn't let a roof stop me from owning my own home. I've lived in an apartment and also some rentals and let me tell you...owning your own home is DEFINITELY worth the maintenance especially when you have to put up with other people's demands and schedules in order to live your own lifestyle. Don't leave home ownership for that, hang in there and anything is possible with any kind of budget!!!!!
Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!
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