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Home Cents

“I love my new place, but the maintenance fees are killing me,” said a friend over coffee the other day.

The maintenance fee gripe is a common refrain among urban condo dwellers, and a part of me can sympathize. While you may never have to worry about mowing the lawn or re-shingling your roof, there's something soul-crushing about having to shell out \$300 to \$500 each month for a glass shoebox in the sky, on top of your regular mortgage and utility payments.

But as the owner of a 1940s bungalow in Toronto, I couldn’t help but ask myself: Is spending a few hundred bucks each month really so bad? Depending on its age and condition, maintaining a home can be painfully expensive, especially when the repair work (i.e. cracked foundation? leaky roof? broken air conditioner? you name it) is unexpected.

There are a number of ways to estimate annual home maintenance costs; a common shorthand calculation being to spend about 2 to 4 per cent of the value per year. For example, if you’re living in a \$400,000 home, expect to pay between \$8,000 and \$16,000 each year.

While this method may save you time, there are inherent flaws in its logic, says Mike Holman, author of the Money Smarts blog. Not only does this calculation fail to take into account the fact that land value is the majority of your house value, but also the one-size-fits-all calculation is unable to discern between older, poorly-maintained homes and new, well-maintained homes that will obviously cost less to update, Mr. Holman explains. Instead he suggests looking at the major components of your house that will need replacing at some point and doing the steps for each component:

• Estimate the replacement cost
• Determine the life expectancy
• Determine the current age of each item
• Calculate the estimated remaining life expectancy
• Rank the house components in order of increasing estimated remaining life expectancy and then plan for any expenses expected in the next five years.
• Watch for any upcoming “expense clusters” – a high amount of maintenance costs in a short time period

For some, this process may be too complicated and time-consuming (after all, estimating remaining life expectancy and even current age can be challenging), there's an easier way. In the Ultimate Home Maintenance Guide, MoneySense reporter Romana King offers a handy breakdown of costs . To come to these figures, she divided a typical 2,000-square-foot detached Canadian home into seven major components, and estiminated the costs for both large and small jobs over 25 years. She also distinguished between regular (R) annual maintenance that every homeowner should do to keep the home running smoothly, and the once-a-decade 'big stuff' (BS) expenses.

The following is a list of her findings, annualizing the amount "so you can make sure that you're contributing enough to your household maintenance budget every year ." Note: these figures do not include the hours and hours of labour that may be involved in these repairs.

Plumbing: Regular: \$20 Big Stuff: \$250 to \$875

Roof: Regular: \$240 to \$375 Big Stuff: \$515 to \$815

Outside structure: Regular: \$165 to \$400 Big Stuff: \$1,400 to \$2,650

Foundation: Regular: \$170 to \$1,020 Big Stuff: \$930 to \$1,300

Electrical: Regular: \$25 Big Stuff: \$640

Heating, ventilation and A/C: Regular: \$250 to \$390 Big Stuff: \$160 to \$480

Drainage and landscaping: Regular: \$60 to \$370 Big Stuff: \$190 to \$550

Final tally: Regular: \$930 to \$2,600 Big Stuff: \$3,500 to \$7,300

Ms. King estimates that the total amount you should budget is \$4,500 to \$10,000 per year. (An interesting aside: if you're paying a \$400 condo fee each month, you're looking to spend about \$4,800 per year, which approximates the regular annual maintenance of a home).

No matter which method you choose, when it comes to budgeting for home maintenance, the idiom “an ounce of prevention is worth a pound of cure” is quite apt. To stay on top of things, the Canadian Mortgage and Housing Corporation offers a handy checklist on its website, and recommends establishing “a regular schedule of seasonal maintenance [because it can]put a stop to the most common — and costly — problems, before they occur.”