As a real estate agent, I have a responsibility to help you make good real estate investments. 

This means that if I don’t think a particular property is right for you, I’ll let you know, even when it means that I’ll make less money!

To make smart homebuying decisions, it's critical to understand the total cost of owning and maintaining a property. Proceeding without knowing your numbers is gambling with your financial future!

You may have plans to:

• Sell the home in 6-8 years and use the sales proceeds to purchase your next home
• Turn a home into a rental property after you move out
• "House hack" by renting out a portion of the home to tenants and using that income to help cover your mortgage payment
• Pay for private school tuition for your kids while still affording your mortgage payment
• Budget for your for your hobbies and vacations (i.e. fun!)
  
  

Whatever your goals are, you’ll need to have a complete picture of all of the expenses related to home ownership in order to make an informed decision. If you overlook this step, a property that looks appealing because of the list price could end up being a money pit!

Here are some of the primary expenses to account for:

1) Property Taxes

Property taxes are typically included as part of your mortgage payment, but they are subject to increase from year to year depending on legislative changes and assessment values.

Be aware that if you are purchasing a property from an owner that had a property tax exemption, your tax liability may increase substantially.(Check Property tax exemptions in Montgomery County)

Property taxes can also vary greatly from one jurisdiction to another, even within the same county.
Montgomery County’s property tax rates 

2) Condo & HOA Special Assessments

"Special assessment" is a friendly-sounding term, but it means more money out of your pocket!

It is a fee charged to owners to fund repairs or improvements to common areas in a condominium building or homeowners association. Condo special assessments are typically higher than HOA special assessments due to having more common space and amenities on average.

These can amount to thousands of dollars in additional expenses per unit, and may be required to be paid over a period of time or as one lump sum. 

A well-managed condo building or HOA with a large reserve fund will be less likely to instate a special assessment, so be sure to investigate their finances before making a decision to purchase.

3) Utility bills

Heating and cooling bills can catch you off guard, especially if you are moving into a larger home than what you are used to. If a home is lacking proper insulation or air sealing, this will escalate energy costs even higher.

To help minimize your utility costs, schedule an energy audit so that you can identify and remediate any money-wasting energy leaks.

4) HVAC Maintenance

HVAC systems require regular maintenance to maintain efficient operation, and this will usually cost no more than a couple hundred dollars per year for most systems. If components, like a compressor, fails and needs to be replaced, parts and labor can amount to a few thousand. If it makes more sense to replace the entire HVAC system (minus ductwork), the cost could be $10,000+.

5) Appliance repairs

If you moved into a home with older appliances (10+ years old), expect that you will have to repair or replace them during your time in the home. If you are lucky, the previous owners only lightly used the washer & dryer or electric range, but if they were a family of 5 that was constantly washing clothes and preparing meals in the oven, the appliances are probably living on borrowed time!

Do a bit of research on what your replacement costs would be for your appliances , so you can have the funds ready when you need them.

6) Landscaping costs

Having a large lot with a lush lawn is great, but it takes work to maintain! If you intend to hire a landscaping service, get quotes from companies that serve the neighborhood and account for this in your budget. If you are planning to do the work yourself, do you need to budget for a lawn mower, shed, or other landscaping equipment?

Heavily forested areas require less lawn maintenance, but you may have to contend will fallen trees or tree branches after storms, some of which will require professionals to remove.

7) Front foot benefit fees

Fees for your benefit? That sounds like an oxymoron!

Front foot benefit fees cover the cost of the installation of water and sewer lines to a home. If you purchase a home that has not paid the fees in full, they will transfer to you as the new homeowner. In most cases, sellers are required to disclose the presence of front foot benefit fees to prospective purchasers.

These are typically assessed over a period of 30 years, but this can vary depending on the year they were instated.

The bottom line, is that there are many home ownership expenses you need to account for in order to make a smart investment, and they can vary greatly from one area and property type to the next.

Do you due diligence so you can be confident that you are making the best decision for your goals!