Buying a home is a very exciting and rewarding moment. There’s nothing quite like the feeling of being the master of your own domain. Unfortunately though for some, due to poor planning, it can quickly lead to unforeseen regret.
There are basically two types of homes you can buy: one that is part of and managed by a condo corporation and one that is a stand-alone referred to as a freehold home. A freehold home doesn’t have a condo corporation to manage the upkeep and repairs of a property and therefore no condo fees. The owner of a freehold home has the sole responsibility for any repairs, upgrades or maintenance of their home and property.
44% of freehold homeowners say they regret some part of buying a home, according to a survey of nearly 1,500 homeowners released by personal finance site Bankrate. The number one thing they regret is not understanding how expensive the maintenance, repairs and other hidden costs would be.
The number one thing they regret is not understanding how expensive the maintenance, repairs and other hidden costs would be.
Nearly half of freehold homeowners were hit with an unexpected expense in the previous year. One of the top three unexpected costs was home-related expenses. A survey released last year from personal-finance site Nerdwallet found that 44% of people who had purchased a home experienced their first unexpected repair within a year of closing.
“This can be a rude awakening — people don’t always have that kind of savings,” says Bankrate analyst Deborah Kearns.
Condos fees when managed wisely, often provides many beneficial long-term savings and valuable returns that protect you in the short and long term
Freehold homeowners say the number one thing they regret is not understanding how expensive the maintenance, repairs and other hidden costs would be
Nerdwallet found that nearly one in three homeowners say they don’t have any money set aside for home repairs and improvements. Many other people have some but not enough: Of those that have a savings account, the median balance is $5,200. Many repairs will cost far more than that.
So if you decide to move forward with a freehold home what should you be saving for home repairs and maintenance?
If the home is less than five years old, then 1% is a good number because the home’s equipment, appliance, and building materials are still relatively new. If a home is 20 years or older, then 4% is more realistic because more of the home’s equipment, appliances and building materials have reached the end of their useful life, and you likely will need to replace them. So on a $400,000 freehold home, it is recommended to save $4,000 to $16,000 depending on the age of the property. For some people being disciplined enough to put aside this amount of money to protect their home and often biggest investment isn’t an issue.
On a $400,000 freehold home, it is recommended to save $4,000 to $16,000 depending on the age of the property
Others though start to see the value and peace of mind of a condo board and putting aside a bit of money each month. Condos fees at first glance can feel unnecessary, but this incremental amount of money, when managed wisely, often provides many beneficial long-term savings and valuable returns that protect you in the short and long term. Whichever route you choose to there are two final very important things to remember. Don’t skip the home inspection and enjoy the excitement and rewards of your new home!
