The Hidden Cost of Home Ownership

The following is a guest post from MD of Studenomics. He is releasing a brand new eBook today on making the decision if you should buy or rent a home in your 20s. This quick read is the best investment that you can make when it comes to helping you decide if right now is the right time to buy or rent.

When it comes to buying a home we’re all well informed of the costs that go along with this purchase. We understand that you need to pay taxes, pay for moving costs, deal with loading your place up with furniture, pay the lawyer, and deal with many other expenses. There’s one more expense that we don’t really factor in.

What’s this hidden cost of home ownership? It’s TIME. Time is a ownership cost that most of us rarely factor in when we decide if we should rent or buy a home in our 20s. We run all of the financial calculations and crunch all of the numbers. What we don’t do is think about the time that we’ll now have to invest as a new home owner.

Why is time such a hidden cost when it comes to home ownership?

  • You’re going to have to wake up an hour earlier in the winter to shovel your driveway.
  • You’re going to have to spend a Friday night raking leaves in your backyard.
  • You’re going to spend time on fixing up rooms and customizing them to your expectations.
  • You’re going to have to spend an afternoon waiting for the cable guy to show up to fix your internet connection.

Simply put you’re going to have to spend lots more time on your new home than you ever did with your rental. When you rent a place you don’t really have to deal with anything at all. As a renter you just deal with your own basic household chores. The rest of the work or anything that breaks down gets delegated to the landlord of the unit. The renter simply calls the landlord to deal with most issues around the place.

What if you don’t want to invest all of this time into your new property? Well then you have two clear options for how you can avoid this heavy capital investment:

  1. Outsource the work. You can always pay someone else to do the work. You can hire a landscaping company shovel your snow in the winter and mow your lawn in the summer. You can also outsource all other household related tasks. The obvious benefit here is that you can save yourself lots of down. The downfall is that it’s going to cost you
    even more money.
  2. Avoid the work. You can also attempted to avoid the household work. We all have that one home in the neighborhood that always looks like a complete mess. The benefit here is that you don’t have to worry about investing time or money into tasks around the task. The obvious setback is that your home won’t be attractive at all.

As you can see there’s going to be a heavy time requirement when you decide to buy a new home. Once the euphoria of owning a home fades away, you’re going to be stuck with all of these new tasks on your plate.

Is there any other solutions to the time investment required with your property? You can either enjoy the work or think of it as an investment. Enjoying the work can become really easy because after a while, mowing your lawn on a summer morning can be a great feeling. The investment part comes into play when you start to perform upgrades on your house. In the process of upgrading your home, you can improve its market value when you plan on selling it eventually.

As a young professional are you ready to invest all that time into your new home? Would you rather outsource these tasks?

If you want to learn more about deciding if you should rent or buy a home in your 20s, please check out my new eBook on the topic.

Comments

  1. My landlord has never waited for my cable guy, raked my leaves or shoveled my driveway. Odd choices as examples.

    • That’s about the same as I was going to say. I rent out houses…my tenants have to deal with their own internet guys, rake their own leaves, mow the grass, and shovel the driveway if needed.

      Consider all the “Chores” of home maintenance as exercise… You won’t spend as much time on them as you would going to the gym – and you won’t have to pay gym membership nor travel/gas time to get there, and you’ll be getting all the exercise you need at home, for free :) All depends on how you look at it.

      Of course, most of this applies to renting a house vs buying a house, and not about being stuck in an apartment with folks breathing down your neck all the time :)

      • Thanks for sharing this guys. I was going off a few personal examples. I was at my friends rental a few weeks ago and I saw someone cutting his grass. He told me that the landlord covers this.

        Another friend of mine worked for his father during college. He would spend many winter mornings on shoveling the snow for their rental properties. I guess it`s different in every case. My bad.

    • I agree with you. What a ridiculous article. Owning your own place and spending time making it the way you like it is enjoyable, not work. I don’t get what the guy was trying to say. Really a weak artice and a waste of time.

  2. We cut down on raking leaves by using the lawnmower (that shot grass clippings out the side) to blow the leaves in one direction. As long as we stayed in a rectangle, the leaves would pile up in the middle of the yard, and we’d bag them there.

  3. From the financial end of things…those costs of raking and shoveling and other sundry maintenance are already built into the rent…chances are your payments, taxes, and insurance are already factored in by the landlord. It is doubtful you are renting some unit that the landlord is losing money on.
    Chances are your taxes, insurance and mortgage payment are a lot less then rent would be on some similar unit. Budget wise…you can outsource these services…but as a savings you do them yourself.
    Customizing some space to suit yourself is not a mandatory cost…don’t buy a house so unsuitable for your needs. And…some rental was also probably not exactly what you wanted. When you buy you also buy the right to change things.
    And you will wait for the cable guy anyway…and any repairmen/women that if you rent you also wait for…the landlord just (theoretically) picks up the tab.
    Maintenance and upkeep are not exactly hidden expenses…I look at that time investment as a savings vehicle, not some hidden cost.
    Terry in Tennessee

  4. You list a lot of things a person should know before they buy a home. There is definitely more maintenance, property taxes and repairs that you just can’t call the apt. manager about. It is good for people to ponder. Out kids helped with many of our home projects growing up and learned first hand about the work involved.

    • Thanks for stopping by Annie. I was speaking to the 20-something that is blindly walking in a home purchase because it feels like the next logical step in growing up. Many people my age put in very little thought into this major investment. I just wanted to shed some reality.

  5. I also disagree that there is a heavy time investment…. in the winter here I have NO time investment – the grass doesn’t grow, but neither does it snow… so that is several months of NO outside chores. In the summer, an hour a week for mowing the lawn – again, that’s “exercise” that I am not paying a gym for. Raking leaves? Nope – the get mulched with the lawn mower, what few there are…..

    So no, don’t think the above are valid arguments for house renting vs house buying….

    Flexibility to move quickly in your younger years – now THAT would be a valid argument.

    • Flexibility is a major point that I stressed in my manual. The flexibility to get up and move whenever you want to is an amazing feeling. This will allow you to take some unique risks in your 20s.

  6. Complainer is totally right about the leaves, snow, and cable.
    Time? 30 yrs? How likely will you stay?
    Don’t stay long. Not worth it.
    Each time move or refinance. 30yrs all over again.
    I’m really just a HIGH PRICED RENTER for the bank.
    Only an emotional good feeling – Home Owner.

    Home Equity loan mistitled. It’s really Home Lose Equity loan.

    • Never gone 30 on a mortgage and why would one?
      Never lost money on a home sale. Total plus so far for me.
      Pay Cash and there is no need for the refinance.

  7. This is all true but PALES in comparison to the hard cost that most homeowners must absorb. We’ve all heard R/E Agents make claims over the years like, “My parents bought ther home in 1973 for 30K and now its worth TEN times that, and we had a place to live in as well…BLAH BLAH BLAH” What the never mention is the amount of INTEREST PAID, TAXES PAID and most of all Repair and Maintainance PLUS upgrading required to keep the house saleable. Bottom line – Most economist will tell you a house only appreiciates slightly more than inflation.

  8. My DH and I do spend a lot of time working on our house. But then again we have a garden and do a lot of DIY repairs. We also have renters in the other unit of our duplex. I think it would be too much work if it was just my DH or myself but together the time is not too much of an issue.

    • The duplex idea is really interesting Ginger. Time varies from person to person. I personally enjoy mowing the lawn. I have friends that utterly despite it.

  9. Agree with the top comments. I would also add that home ownership provides a great sense of personal satisfaction for me. And time spent fixing up and maintaining my home is something I really enjoy. It just adds to my satisfaction of being a home owner.

  10. It all depends where you live. I know folks who just drive over the snow. However, what about painting the trim, gutters and maybe a new roof, water heater, air conditioning? Only buy a home if you need it for children or you simply want the space. Remember, you don’t OWN your home unless it’s paid for. The bank really OWNS your home. Look at the interest you pay for most of the loan term.

  11. I disagree with all 4 of your points. Unless you live in an apartment complex that includes yard maintenance you will still had to do all those thing yourself. Anyone that rents a house, townhouse, etc still has to take care of the yard work and wait for the cable guy to show up. There may be more time and money spent on home repairs, sure, but as long as you have a mortgage you also get a tax deduction that should more than cover the difference general household repairs. The only benefit that I can see to renting is not paying property taxes, but that is built into your rent and you get nothing in return for rent other than a place to live for one month at a time.

    • You bring up some fair points on renting. However, there is a whole other side to this debate that I cover in the manual. A few quick points:

      Shelter is needed.
      Renting gives you flexibility that you might really need in your 20s.
      Home ownership is not always the greatest investment.

  12. Houses right now can be had for $40,000 to $100,000 if you find the right foreclosures. Taxes of $400 – $1000 per year. Taking all costs into consideration, it is cheaper HERE to buy than rent. Even if I take into consideration the interest the money could be making, it is still costing me under $300/month to live there and I could not rent for that.
    Yes, I paid cash for the home.

    If you are going to be moving a lot, I would agree not to buy right now. But if you are settled and plan to stay put, there’s no better feeling than knowing the roof over your head is costing basically the property taxes over renting…. good feeling :) And if you are renting,(as my renters are)… you are paying someone else’s property taxes, so that’s not even a good cost to throw out there – at least property taxes are deductible, whereas rent rarely is.

  13. The ultimate flexibility is to live in your vehicle which carries it’s own unique risks. Most decent rentals are not month to month, but are leased. The balance of a lease can be as long as it takes a house to sell that is priced right. Priced right is based on buying it at the right price. Breaking a lease can cost big bucks.
    Terry in Tennessee

  14. Anyone at any age walking blindly into buying a house is about to get the most expensive lesson of a lifetime.

  15. You need shelter…true. Expecting that shelter to also be an investment is asking a lot of it. That expectation is what crashed and burned in this real estate bubble burst. If you are looking for investment, then buy rental property. If you are looking for shelter, then look for shelter.

  16. Regardless of the type of property, the maintenance required is going to be the same whether the property is rented or owned. Renters are already ‘outsourcing’ maintenance and paying property taxes. Owners must pay the same costs, but have the flexibility of spending either time or money. There is no hidden cost.

  17. Love hearing from you folks. Unfortunatly, we all have been fooled into the theory that a house will ALWAYS INCRASE IN VALUE. Not any more. My Mom and Dad bought a house for $10,000 after WW II and It sold for about $50,000 40 years later. Wait 40 years? Yes, we did. Now your house is worth less then the bank who really owens it. You only waited 5 years or less. Wake up and smell the roses. Keep on paying your interest and think you own your home. Life isn’t like it used to be during the last 60 years.

    WAIT

    • Do your homework. Make sure it is a GOOD deal. Get your inspections done. Don’t pay more than you should – 25% of take home tops for payments, then pay it off fast. Or better yet pay cash.
      Buying anything is a gamble – be sure you can afford it :)

      If you make the right deal, a good down payment, and double up payments, it will be all paid off in 5-7 years.

      Once it is paid for , it IS yours…
      So you go to sell it and you get half value? You still get money out of the deal…. Try that with renting… You get NOTHING back from renting when you move on.

      For 20 year olds – listen to your elders, do your homework, always spend less than you can afford to, before you buy anything – even a car. If you are uncertain about the future, wait and rent.

  18. Good points MD. I agree that time is one thing most people don’t consider. I frequently work 50 + hours a week, and there are times I don’t feel like mowing the lawn, or cleaning, or painting, or whatever but I force myself to do it and it’s almost like therapy. It gets my mind off of work. Plus, if you sit in front of a PC all day like I do, housework can be a form of exercise – something that a lot of us don’t get enough of. Sure, I could go to the mall or vegitate in front of the TV to relax but there’s no sense of accomplishment in that. I rented for 10+ years – I simply can’t imagine going back to being a renter. I paid my house off in 5 years and 3 months and let me tell ya, that gives me a peace of mind that I could never have had as a renter.

  19. Get off the author’s back, folks. Lots of rental properties come with free grounds maintenance, but have you ever heard of a purchased house that did? While many people extol the virtues of home ownership, we tend to gloss over the pitfalls. Repairs are expensive and perpetual. Even if you have a smattering of carpentry skills (which I don’t), the materials can set you back hundreds or thousands of dollars per year. I wouldn’t give up my little house without a fight, but my eyes have certainly been pried wide open to some daunting responsibilities that renters never face. Right now there’s a huge crack in my bedroom ceiling that I’m really not sure what to do about. Big cracks in the carport floor that will probably cost a pretty penny to patch too. Basically I’m living in a crack house, but at least I can turn up my stereo as loud as I want. Unless it causes more cracks, of course.

    • The author spoke to a very specific point: that time was a hidden cost of home ownership. It’s just not true. Regardless of whether a property is rented or owned, the same maintenance will have to be done. Landlords pass those costs on to renters. Owners can spend time in lieu of money, but the *cost* doesn’t change, just the method of payment.

      I rent a house. It’s a house just like any other on my block. It has the same problems. It needs the same maintenance. Yes, it has a groundskeeper, but my landlord is hardly a philanthropist; it’s included in the rent. Yes, if there is a problem, I can call my landlord and say ‘fix this’, but I’m paying for that service through my rent.

      Any problem you have in your house I can also have in this rental. Anything that costs you time or money also costs me. To say otherwise is to say that if I bought this house from my landlord, the maintenance costs on the *same house* would increase.

  20. Time? I find a lot of that time is well spent, keeps me in shape and I actually enjoy gardening. I even like to paint walls. What I don’t like is the fact that my house price is falling while my taxes are going up. It hard to justify home ownership when the governments (city, county, state and federal) have their hands in your pockets. If I didn’t already own my home, I would be renting, that’s for sure. It’s not cost effective to pay $4785 per year in taxes on a house that this week is worth $335,000 and next week will be worth even less.

  21. The entire point of owning a home is that you own it.
    If you own it then it’s much harder for you to loose it.
    It’s why our founding fathers found owning land so important. In Europe people were thrown out in the the street by their land lords frequently. Also, if you own it you can use it to grow food.

    Yes, if you take out a mortgage then the bank owns it till you pay it off but once it’s paid off, it’s all yours. No more monthly rent! When I ran the numbers, for my region, it is cheaper to have a 20yr mortgage+upkeep+taxes then to rent all your life. But only if you stay there forever (actually I can number on 35 years which for me is forever).

    One other plus to owning is you will know when things get fixed. Our last rental had major plumbing issues the landlord would never fix…
    I do know better now & realize I should have documented more & been more aggressive about resolution. I was just worried/scared he would kick us out in the street (he’d done it to another renter he had a few blocks over). I love that I know exactly what payday i can expect an issue resolved.
    If your in a position to move around then I would definitely rent. As it is I regret buying as soon as I did & wish I’d kept my freedom longer. I think one good rule of thumb would be to not buy a house till your 30 – by that age you’ll know where your life is headed and where you want to go. It’s hard to grow a career by moving to where the work is if your saddled with a house you can’t sell.

    On a side note for those wanting to lecture me on rental law – my city now has laws regarding rental properties, mainly because of what they saw me go through for over a year. The inspectors that came through were disgusted by what they saw at our house but they had no legal right to intervene. So, with the new law no one has to endure that any longer. 3 rentals in my area have actually been condemned & bull dozed because of what the inspections have found. Any citizen can call about concerns on any rental now and the city keeps it anonymous to protect renters from vengeful land lords.

  22. Split the difference. Buy a small house. You will spend less time cleaning, and there will be fewer things to break.

    • Exactly! My old one was 1035 sq ft – it’s now a rental.
      I downsized :) This one is 864 sq ft!
      Why buy more than you need :)

  23. Everything mentioned is a chore that almost any home renter will deal with. You can only get out of some of these by renting an apartment. If you want to throw your money away, rent an apartment, and then you don’t have to cut the grass.

    There are few exceptions, if you’re renting…you’re paying someone else to live. Live free.

  24. Take it from a landlord of over 20 years; all costs are added into the rent,plus a profit margin.

    There is no one single answer for everyone, but buying a home you can afford (if you plan on being there more than a couple years) will work in your favor over time. Rent rises with inflation, your payment should not. If you are young and/or not ready to take on the efforts of owning a home,you should rent.

  25. I live in a condo. I don’t recommend it unless you really know the neighborhood association before you move in. You could end up paying in property taxes and monthly maintenance fee something close to what you would pay to rent a small to large apartment. If the association, for one reason or another, doesn’t have the cash to pay for a big ticket repair (and it does happen, such as when the roofs need replacing), you will be “assessed” a one-time charge for the repair. Plus you’ll still be on the hook for the cost of replacing appliances, HVAC, etc., which would be covered under a rental agreement.

    • On e other thign too on condo’s/town homes…
      A friend had one that had a HOA or something similar to that. My friend went to replace the windows on his town home due to rot in the old ones. His paperwork said he had the legal right to. While the installers were working there was a stop put in by the HOA and a big stick made about the possibility his windows wouldn’t match other’s in the complex ad that he should have come to the last meeting with pictures pamphlets of what he was looking at. It was weird. Judge ruled the contract or whatever superseded the desires of the HOA. It’s one stink I hope to avoid – I know when I get older I’ll probably want to get a condo or something where the outside work is done for me…

      My buddy ended up moving because of that association.

  26. Plus some people who live in condos, even if they own their units, act like apartment dwellers. They don’t care about neighborhood rules, neighbors’ safety, etc. And then there are the renters, who almost always act like apartment dwellers. Really, owning a condo is the worst of both worlds. In most condo complexes, it’s like you own an apartment. It isn’t like you own a house.

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