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House in Calgary. (RAW photography)

House in Calgary.

(RAW photography)

Book excerpt

When it comes to home buying, smaller is better Add to ...

From Wealthing Like Rabbits – An Original Introduction to Personal Finance by Robert R. Brown. Copyright © Robert R. Brown, 2014. Reprinted with permission of Redford Enterprises. www.wealthinglikerabbits.com

When you buy a house, you’re going to be facing a lot of expenses, most of which you haven’t faced before, above and beyond your new mortgage payments. Heating, electricity, insurance, and property taxes are just some of the additional bills that come with owning a house. All other factors being equal, the bigger the house, the bigger those expenses will be.

Regardless of how your house is heated, it would seem reasonable to assume that it would cost twice as much to heat (or air condition) a 3,200 square foot home than it would one that is 1,600 square feet. But, as reasonable as this seems, it’s incorrect; it actually costs more than twice as much. Yes, the larger home has double the space to keep warm or cool, but it also has more doors and windows that will allow drafts in during winter and cool air out during the summer.

On top of that, the larger home will have more exterior wall surface exposed to the outside during the winter months, which will make the house harder to heat. Circumstances vary, but it can cost up to three times as much or more to heat and cool a home that is only twice as big.

You can help keep these costs down by installing good quality doors and windows, but just wait until you see the price for installing good quality doors and windows. As noted above, a larger home would have more doors and windows to replace and these are often larger and more complex than those found in more modest homes. This will drive their price and the cost of installing them up even more.

Big houses hold more “stuff” than smaller ones. As self-evident as this would seem, people are often surprised by how much money they find themselves spending to fill up that extra space. Your property taxes are determined by multiplying your municipal tax rate (which varies from area to area) by your home’s appraised value, which is largely determined by the size of your house and its lot.

A bigger house means a bigger property tax bill. Do you even need to contact your insurance company to know that a bigger, more expensive house will cost you more to insure?

We’re going to talk more about home renovations later, but for now, suffice it to say that since hardwood flooring is sold by the square metre it is going to cost you more to install new flooring in a big room than in a cozy one. Ditto for any other renovations.

Not only that, but if you do decide to upgrade your smaller house you will inevitably find it’s easier to afford the (less expensive) renovation with all the extra money you will have in your pocket from saving on things like heating, electricity, property taxes, and insurance.

Have I mentioned that I like small houses?

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