Happy Monday to everyone!! Yesterday’s
Superbowl was awesome to watch, hope you enjoyed it too!! One of my friends and I got into a debate yesterday over owning and renting, and which one actually saves you more money or costs you the least. He feels like there are other costs when you own.
Is renting in Costa Mesa costing you more than you think?
His contention was there were lots of hidden costs when you own, so here they are:
Top 5 Hidden Costs of Buying a Home:
1. Special assessments. HOA dues to maintain the complex come as no surprise to condo owners, but hefty special assessments to make unexpected (and unbudgeted) repairs to the roof, windows, facilities or foundations can come as big surprises. Even if your home doesn’t belong to an HOA, don’t be surprised to see special assessments tacked on top of your property tax bill, covering public services including things like street lighting, tree trimming, pest control, libraries, and even schools.
2. Utilities and services you didn’t need while renting. Many renters have never had to pay for gas, or water while renting. It can be surprising to know how much it really costs to maintain a huge yard after a hot August and daily watering of Costa Mesa real estate.
3. Private mortgage insurance. Most homebuyers are well aware that they’ll have to have money to put down towards a down payment, but if you don’t have the 20% most lenders like to see, then you will have to pony up for PMI. Private mortgage insurance, or
PMI, is there to insure a lender in case you should default on your mortgage. But the cost of PMI can be expensive, adding as much as 10% to the bottom line of a mortgage.
4. Penalties and fines. HOA rule violations, like parking in the wrong spot, installing heavy travertien tile floors in an upstairs unit, or painting your home a forbidden hue can result in surprising fines. Even single-family homeowners of Costa Mesa real estate can get ticketed and/or fined by their city or town for violations like having overgrown lawns, unsightly old cars in front of their homes or other building code violations – especially those which create fire and safety hazards.
5. Items you didn’t need while renting, but you do as a homeowner. Homeowners insurance for Costa Mesa real estate is the big one, and it costs about 3 times as much as a renters insurance policy. But you also might need to consider lawn mowers and other things you don’s need when renting.
OK, so those are the downside on owning. Are there hidden costs when you rent?
Top 5 Hidden Costs of Renting
1. Opportunity Costs. When you rent, you lose out on the chance of building equity – this is the biggest value in owning a piece of Costa Mesa real estate. Ultimately, most people want to own the place you live in free and clear.
2. Income taxes. If you earn above a certain level of income, the income taxes you’re paying as a renter will be substantially higher than they would be if you owned a home and could deduct your property taxes and mortgage interest. The
income tax deduction is the #2 biggest reason to own
Costa Mesa real estate.
3. Storage. Have a boat? Perhaps an extra motorcycle? Or just a lot of Aunt Mildred’s collectibles? Storage can be very expensive month over month if you are renting.
4. Costs of improving the property. Have you ever “fixed up” a place you rented for a while? Perhaps painted or put in flooring? You just helped the owner re-rent the place. That is a major financial drain you won’t see returned to you.
5. Lost deposits. They seldom come back as whole deposits do they? I’ve see renters trash places and lose their entire deposits. If you move year over year, this is a major loss of money as a renter.