For Home Maintenance, it is suggested to budget ~1% of the purchase price per year. Is there also a percentage for home improvement/remodeling? This would cover new paint, furnishings, as well as bath and kitchen remodeling. How do you handle this?
Hi Magenta Ink (b04bb2cef5c4) !
I keep furnishings, decor, deck treatments and other upkeep options under Home Maintenance. For renovations, or things that go above just maintaining the way I prefer living in my home, I think there are a lot more factors to consider - what would you like to change about your home? How much is the home worth and what would the renovations add to that? How soon do you want to complete the renovations?
I think the 1% rule is a good starting point (anything is better than nothing), but if you know you want to renovate a bathroom in six months that might not cut it.
When we first purchased our home we knew we wanted to add a second-story deck and replace the fencing - huge project. We got an amazing deal on bundling them together and took advantage of 12-months same as cash financing (which came out to a little over $1k a month set aside). However, now that that's done, we have no future reno projects in mind and I'm putting just $100 aside each month. By the time we think of our next project, it should be enough to at least get started.
This would be really subjective depending on the home.
For our 1960's house that has no upgrades at all in it, 1% is a drop in the bucket, and hardly covers the replacement cost of one door... We are looking at probably needing between 50k and 90k to really do the things we want to do, and that includes doing the majority of the work ourselves.
But if you buy a house that was built only a few years ago, and was built with upgrades, then there's probably very little renovations you would need to do, other than fairly basic cosmetic stuff, possibly.
So it's really a case by case basis depending upon the house. If you're trying to budget future projections for wanting to purchase a house, all I can say is set aside as much as possible, and then when you start looking you can figure out how much of that should be your down payment vs withholding some to cover the 'moving' expenses (including the paint/quick upgrades before moving in) or if it is better to put the whole chunk into the down payment and then get some credit out of the loan to cover additional things.
Hi there, we do ours slightly different as well. We have a category group of property. It includes the mortgage, property taxes, home maintenance, insurance, the utilities and security. These are the costs that we need to keep the home in the appropriate shape. Home maintenance includes interior and exterior costs.
Decor and furnishings including appliances go under "home furnishing" because they are separate from the home.
Renovations would start as a wish farm item and then eventually move into the property category group. haven't decided if they will remain as a separate item or roll into property maintenance.
We are still figuring out our costs but eventually we want to properly fund home maintenance and any future renovations. For home maintenance, as farfromtheusual points out, it will be driven by personal circumstances. We did some reading and the figures of 3-5% of the home value can be misleading. It is better to do a review of your home, see what needs to be done and plan off of that. Ideas include looking at the big ones first: Furnace, hot water tank, roof, siding/stucco/exterior maintenance. Those are big ticket and have a fairly easy to establish timeline for each. Are there any unique items to your home that you need to look at? Septic tank or field? Water feature (indoor waterfalls I am looking at you)? Any unique or special feature that if it went kaput, you must put $ into fixing it? Yard maintenance. Do you buy flowers, mulch, need to sod etc?
So, if you need a new roof in 5 years because the current roof is 15 years old (average roof is 20-25 years for asphalt shingles), and the cost to replace is $5000 (again, dependant on location and type of material), you would need to save $1000 per year or $83.33 per month to get the amount needed. Repeat for all the categories you want to cover. If they are not all coming due at the same time, you can work some averaging magic to ensure build up over time. It can get a bit messy but at least you would know that you have it based on what your particular circumstances require.