Wednesday, June 03, 2015

Home Ownership

We are in process of what will hopefully be our last main home repair expenditure this year. However, we do have two other large expenses that we probably should get done relatively soon, but we hope that we can wait until we have the funds saved up. Our break even point on the house is approximately 6 years from purchase.

What does "break even" mean on a home purchase?

In my opinion, it will be the time when we'll have built up enough equity in the home (without relying on home price "increases") to recover any realtor fees or expenditures associated with selling a house. So, in other words, we would be able to recover our entire investment.

Many people will factor other expenses into their purchase (such as those large initial repairs if a home hasn't been kept up with). Others will factor other "income" into their break-even point, such as the mortgage interest tax deduction, or an estimated increase in home prices.

In our case, I factored in an estimated home repair budget that matches the rental price for a similar home in our neighborhood. So, if we can save up that extra money every month, it should cover the initial repairs needed and ongoing future maintenance without being an "additional" cost compared to renting.

A few friends have been sad that I haven't been able to post many pictures yet. Well, that's because the first house project we did was to replace the old Quest poly pipes that were in the house (and were recalled back in the 90s). Because it doesn't matter how nice your house is if there is a chance of a major flood due to pipe rupture. Which also means that right now we are waiting on our expert drywall guy to finish up. I'm sure he'll do a great job and it will look like new or almost new when he's finished, but it is definitely a process and our walls and ceilings aren't quite back to normal yet.



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