Owning a home in San Diego can be very expensive. Most folks underestimate what their monthly responsibilities will be, only focusing on the mortgage. This video shares some insights into what you might be forgetting.
(Click video below to listen)
Transcript
This video is about understanding your holding costs for San Diego residential Real Estate. Mostly everyone will underestimate what it costs to have a house in San Diego and some of these may actually surprise you, so stick around.
My name is Brian and I own a real estate solutions company in San Diego County called Trusted House Buyers. We buy homes for cash, but for now, let’s jump into the topic.
There’s really no debate: owning a house in California is expensive. CNBC lists California as America’s 2nd most expensive state, and well that isn’t a surprise really. More expensive than New York if you can believe that.
One interesting fact is that San Diego has double the amount of hidden costs to own a home relative to the national average. This adds up to tens of thousands of dollar and lucky for us, Thumbtack ranks us as the 3rd highest area of hidden home ownership costs. So know your numbers.
Let’s start first with the most basic one- probably the biggest chunk of the expense is wrapped up in your home mortgage. Now if you don’t have any mortgage on the property, you’re probably in pretty decent shape. At least in terms of not worrying about monthly payments to a bank and you’re likely to have a good amount of equity in your home that is there if/when you need to cash it out. But that’s not the case with most folks. They are not only paying their principal down, but they are paying interest on the loaned money. Rates are at historical lows right now, but you’d probably be shocked if you were to look at an amortization table showing the amount of interest you pay over 30 years. But point is, this is what the industry refers to as P + I, principal and interest.
Now that you’re paying your mortgage and can actually live there, let’s talk about something a lender will require. Home insurance. They want to protect the property that they have an interest in, right? Make sense, so that will be a requirement to funding the loan. Here in California it’s a bit costlier than other regions because we have the dubious honor of living with natural disasters like fires, floods, and even a few earthquakes.
Speaking of a costly additional monthly expenses, the government will want a piece of your success, so please don’t forget about property taxes. According to the San Diego tax collector, these run anywhere from 1%-1.5% and are split into two due dates per calendar year. Some homeowners will have these payments escrowed or taken each month with your mortgage payments. But if you don’t you will have to pay them in two large chunks due November 1st, and February 1st.
So in a quick review up to this point, we’re trying to get a list together of all holding costs associated with being a homeowner in San Diego. We’ve gone through some basic ones, like Mortgage principal and interest, property insurance, and property taxes.
But it doesn’t end there. That’s just to own the home. What if you actually want to live there, right? You’ll need power for your lights, that’s where electricity usually helps. Rising power costs have pushed a lot of property owners to utilize solar energy, but either way, this is a basic need that will need to be budgeted for each and every month.
Now that you’ve got all your electrical item on and working when, there’s a good chance you want water. You know, clean things, maybe even take a shower. Water plants, grass. So the next utility to think about is who will be your local water utility. There are a few providers located in San Diego County, so check to see which one will be responsible for your supply and open your account there to start getting water to your home.
Two other basic utilities that we’ll touch on are sewer and gas. There’s no avoiding those. You might be able to get away with limited gas use with a wood fireplace, an electric range and clothes dryer. But there’s a good chance you’ll need the gas for heat and for your water heater. We can agree, cold showers are not really fun. Sewer, goes without saying, almost. If you’re trying to skip on that, then well, it’s not recommended to live in those conditions from a health perspective. Not that we haven’t seen it before and purchased the house as-is.
But those are some pretty good basics to start with, and now let’s chat a little about maintenance. Your house is going to likely be your biggest asset so now that you can live there, you’ll want to maintain it. Now a lot of these things are of course optional, so keep this in mind as upgrades to your basic monthly expenses.
If your home is vacant, or even when you are living there and if you can afford it a security system will be an additional costs. Some insurance companies actually give you a discount if you have a security system so that’s a little bonus to offset the costs. If you have any grass, and with our climate it will grow fast. Hopefully you have the time resources and energy to maintain your lawn and landscape, but if you don’t you’ll need a professional landscaper or gardener. Now if you go with just hardscape there might be a larger upfront cost, but you can save on a professional gardener and water, so that’s double savings there.
So in closing, the reality is most people just think about mortgage payments when purchasing a home. And all of these other expenses add up very quickly and can add significantly to how much money you will need each month to live. Mortgage principal and interest, property insurance, property taxes, utilities like water, power, gas, sewer, and all the optional costs. There is an endless list of those, but the ones we mentioned today were landscaping and security to protect yourself and your property.
Don’t underestimate these costs and make sure you budget properly for them, or account for the in your monthly costs. And of course, account for those hidden costs of owning that will inevitably pop up: broken machine, clogged toilet… its’ bound to happen.
Now, often times, when someone hits a financial rough patch, these expenses can become overwhelming. It’s not easy to choose between heat and food. No one wants to be caught in that situation, and it’s not a way to live. Now, our business is to simply help people when these costs get to that point, too burdensome and stressful. We have the ability to come in and buy quick for cash, while taking the home as-is, no matter the condition. I’ve heard some of our clients refer to it as a reset, and that’s how it can be viewed; getting out from under a tough spot and starting over again, with less stress, money in your bank, and no more sleepless nights. If we can be of help in your particular situation, let us know how we might be of assistance. We’d be honored to help your needs. Thanks for watching.
