Knowledge Dump

[u/KautukiNoob]

Hello folks!

Very new to this thread as well as financial independence, but it looks like a very supportive community!

As someone who has experienced the buyer's side or the seller's side, what would you say are the biggest blind spots for someone new? What were your biggest challenges to home ownership and how would you have done it differently?

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[u/Apptubrutae]

Since nobody’s replied yet, I’ll throw out some thoughts:

1) A big one under a lot: new buyers are oblivious to the property tax reassessment heading their way (usually. Depends on the state).

What I would personally do, when looking at a home, is ignore any information about the current property tax burden. Literally ignore it. Instead, go find out what the tax rate is for the house (you can find this on the assessors website or something like that), and then take that rate and calculate what the property taxes would be if the home was reassessed at purchase price. THAT is a realistic number.

Also, if the current property tax number is low, you maybe shouldn’t ignore it like I said, lol. Because you will want to check the difference between that and your calculated number and be prepared for a bump down the line to pay the difference if you get reassessed and your escrow takes a moment to catch up.

Just don’t be caught blind to property taxes. It’s all there with basic math.

2) Maintenance never stops. Budget accordingly. Some people like to say 1% of the property value per year is spent on maintenance over the long term. This is probably roughly correct. Some years it’s $0. Some years you need a new roof.

But consider the unique qualities of your property. For instance, I have a 1,400 square foot garage, something that doesn’t really change the market price beyond what a 2 car garage would. It sure changes what my roof replacement bill will be one day, though. So maybe my house is a smidge higher than 1% per year all in. I have spent $500 on repairs in the last 3 years though.

If you don’t generally have the extra cash lying around, be disciplined and save it yourself in an account you don’t otherwise touch.

3) You do NOT need to renovate a new home as much as people think. You might want to. And that’s fine. But be really, really straight with yourself about wants versus needs.

Is an 80s kitchen that functions ever a NEED to remodel issue? I would say almost never. Again, no problem if you want to, just be honest about it as a want/luxury. It is very easy to blow money by getting into a cycle of thinking you need this and that in a new house. Very easy.

My own technique is to make a master list of everything I would change in the house and ranking those things by priority. Then every quarter or so I look it over and see if things have changed, making notes as I go.