Do you think you are ready to purchase your own land or property? Ready to make the move from renter to landowner? If so, you may want to first consider some of the additional costs you will be taking on. Overall, in the long run it is often cheaper to own a place rather than rent; however, you will have additional monthly costs as you embark on your endeavor. Weighing your budget and these added expenses will help you stay above water. Included here are a few of the additional costs you will experience when purchasing property.
Property Taxes
Every property will need to have taxes paid on it for the entire time you live there. Taxes are not something you can pay-off early, like a mortgage, and avoid monthly payments. As a property owner you must pay property tax on any land you own.
Keep in mind, that not all properties are paying the same amount of tax. Your location, land size and structure value all come into play when your dollar amount of taxes are decided. You may believe your land is being overvalued and you are being overcharged in taxes. If this is the case, it is advisable to hire a tax consultant who can do a comprehensive exam of the property and determine its true worth.
Insurance
Property insurance is an additional added cost you will experience when buying land. While renters insurance can be a nearly insignificant amount per year, homeowner’s insurance takes about 5 times as much. Depending on your area, your costs could be more or less expensive.
After paying off your mortgage, you may consider terminating your homeowner’s insurance to save on monthly bills. This is a highly inadvisable course of action. While you may deal with slightly fewer funds on hand on a monthly basis, if you do experience property damage, your losses are likely to be too high to ever recoup.
Utilities
Another sneaky bill that sometimes surprises renters moving into their first home are the higher costs of utilities. Most landlords usually pay the water, sewer and garbage for them. It is usually not a huge added expense, but again, it is something to budget for before committing to a new home. You can try to reduce the cost by using a smaller garbage can, but overall this bill will not vary largely from month-to-month.
Another thing to keep in mind is that your power bills and gas bills may increase when you move into a larger home. Your heating and cooling is in your hands as well. If you run on electric, you may be accustomed to this, but home buying may make you dependent on gas or oil heat. Often if you call your local power company, they will be able to supply the last few winter’s average costs of heating provided the house was occupied.
Maintenance Costs
As a new homeowner, you will come to realize that there is no landlord to call when something breaks. You will be completely responsible for fixing anything broken or for arranging for someone else to come fix it. This means you will need to set aside a much larger emergency fund for instances when the hot water heater breaks, etc.
As a property owner, you are in charge of the maintenance on your land. If you choose to rent out parts of the land to other tenants, you will need to be available to remedy any situations they experience on your property. Hiring a maintenance manager can be highly beneficial, you will not be at the beck and call of tenants and still be able to have income from the leased out areas.