The 6 Major Costs of Owning a Home

These six components alone can determine whether the house is a good investment or a bad one. Always be sure to inspect these parts thoroughly when

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purchasing (or selling).  Other than the mortgage and property taxes, these are the six major costs related to owning a house:  the Roof, Foundation, Windows, Furnace, Electrical, and Plumbing.   Your home is most likely the biggest investment you own (or soon will own).  If you are planning to invest in some property, pay attention to these components in order to avoid costly repairs later on.

1. Roof:  A properly installed roof will last 15-25 years, depending on the type of shingle.  I recommend a good 25 year shingle since the return on investment is much greater considering the cost of replacing the roof.  For a 1500-1800 square foot, two-storey home, a good rule of thumb is to allocate $5,000 towards a roof replacement, if needed.  I show my clients how to tell if the roof needs replacing just by looking at it from the road.  Upon closer inspection we can determine when the roof was installed and how many years are left in it’s life.

2. Foundation:  There are two kinds of foundations, poured concrete (modern) and block foundation.  The biggest and most common problems with the foundation of a house is basement leaks.  The best way to avoid this problem from ever occurring is to maintain the grade of the land on an angle away from the house, so water will run away from the foundation.  If water is able to pool near the house it will eventually soak into the ground and find its way into the basement, as the concrete foundation is very porous even though it may look solid.  90% of water leak problems are caused from the eaves-troughs not doing their job properly.  A heavy snowfall in the winter or leaves that have not been cleared can bend or clog the eaves-troughs, letting water drip down beside the house instead of draining properly as they were designed.  There are a few easy ways to tell if a basement has ever been flooded.  Efflorescence is a big clue.  Horizontal cracks in the foundation could be signs of a structural problem and in that case, avoid that house.  If the crack is vertical it is not a big problem.  It can be fixed by digging on the exterior of the foundation to the weeping tile (Weeping tile is like an underground eaves-trough and sends water out to the sewer system), installing a water proof seal, and re-filling with limestone.  The average price of this repair is $125 per linear foot, along the base of the foundation.  With a poured concrete foundation, cracks can be sealed by injection from the interior of the basement walls.  This is a much cheaper alternative, costing about $450-500.

3. Furnace:  There are three types of furnaces available today.  Older low efficiency models, more modern mid efficiency models, and the high efficiency models that get a lot of attention.  The common misconception with homeowners and property investors is that a high efficiency furnace is the best choice because it is “high efficiency”.  Here are the facts, (and I will go into further detail when we inspect the house together on our property tour).  A mid efficiency furnace will last 20-25 years and costs an average of $3,000.  A high efficiency furnace only lasts 12-17 years and costs an average of $5,000.  In most situations, the lower heating price of a high efficiency furnace still does not justify the shorter life-span and higher initial price.  My recommendation, as always, is to get the best return on your hard-earned money, which is in most cases the mid efficiency furnace.

4. Windows:  This can be a very expensive repair to any house, especially houses with many windows or very large windows.  An average replacement price of the windows of a house larger than 1800 square feet is around $10,000-15,000 including installation.  For a home under 1800 square feet the average price will be closer to $8,000-10,000 including installation.  When showing houses with my buyer clients I show tricks to find out exactly how old the windows are and if they will need replacement or not.

5. Electrical System:  The most expensive repair to an electrical system in a house is the replacement of an outdated system called knob and tube.  Many older homes in Toronto contain knob and tube wiring, but it is rarely seen in homes built after 1940.  Another bad wiring system to watch out for is aluminum wiring, which was popular for about 6 years in the 1970’s.  99% of insurance companies won’t even insure a house with knob and tube or aluminum wiring, but some insurance companies, including State Farm and ING, will allow 60 days grace period for their replacement.  Now on to electrical panels:  panels are either on a breaker or fuse system.  Breakers are more modern and thought to be safer, but this is a controversial issue.  Insurance companies prefer the more modern breaker system and replacing a fused electrical panel with a breaker system is on average about $1,000-2,000 dollars depending on the condition of existing wiring.  It is wise to take a quick look at the electrical panel when house shopping and to take note of the panel.  90% of houses will have a 100 amp electrical service, which is sufficient.  Anything less will need an upgrade to a 100 or 200 amp service.  Your appliances, a/c, furnace, etc. uses a certain number of amps (amount of electricity) and older 50 amp services will not provide enough electricity for modern appliances.  This may require the Hydro company to replace wires from the street to the house and would be coordinated by any licensed master electrician.  A service upgrade is, on average, between $5,000-7,000 and takes a day or two to complete.

6. Plumbing System:  Lastly, the plumbing system is a very important part of any house.  Basically when it comes to plumbing, plastic and copper pipes are definitely okay, but older galvanized pipes are not so great.  Once again, insurance companies prefer plastic and copper pipes over galvanized and would most likely charge a premium for coverage on houses with galvanized piping.  The most common plumbing problems are in the shower stalls and under the bathroom and kitchen sinks.  A quick look under the sink with the taps on will show bad leaks immediately, as well as taking a look at the basement ceilings for water stains revealing possible plumbing or roof leaks.

Those are the 6 major components of a house and a description of their function and costs for repair.  Everything else is cosmetic.  Please feel free to contact me if you have any questions or concerns on this or anything else real estate related.  My job is to get you the best return on your real estate investment.

Kyle Bouchard
Sales Representative
Century 21 Percy Fulton Ltd.

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