Real estate is maintenance intensive– “as opposed to a rental.” Well of course that is true, but many people hire competent vendors to care for their homes. For example, yard and lawn, pest spraying, AC quarterly checks, alarm monitoring and so on. Once you have this all quantified and ongoing you can plan for these expenses and keep them steady. For twenty years I had the same lawn man and he never raised his prices. Let’s take the alternative, renting. Rentals can be deceiving by their relative ease of lifestyle. Just pay your rent, utilities and rental insurance.
No sweat, no worries. Not so fast. A rental is like a variable rate mortgage. Try getting more than a two-year rent contract. Let’s say you succeed, then what happens 24 months later. Actually, a lot of things out of your control. First, your rent is going up, and depending on the neighborhood and your property’s desirability it could be a tidy sum. Second, new ownership may come in and the quality of your project can deteriorate. Next, amenities may get run down and are not promptly repaired.
So, what is your alternative? Pay more, complain or move. All of these can be stressful. Not to mention that you are not building equity and have no tax savings. In the end, I say having control of your own destiny is the best. Own that real estate.
My home will wear out over time. Again, what is the alternative? It’s better to ask what is the strategy. In Florida a good well installed roof should last 20+ years. Further assume the new roof costs about $30,000 and will last 20 years. Let’s also say in 20 years the roof replacement will be $40,000. Write yourself a check every month for $84 and put it in a savings account- forgetting any interest in 20 years you will have the money to pay cash for that repair, and if you see inflation taking that roof up by 5% just adjust.
This can be accomplished on any other items that are recurring – paint, pool and flooring (carpet). Owning real estate has a few solid principles you need to aspire to and stay disciplined with. Once you establish this rhythm it will become second nature and further solidifies the control of your own homeowner destiny.
Don’t be intimidated thereby continuing to procrastinate– The longer you wait the more you stand to lose. Jump on the equity tax saving home ownership train and start adding to your future financial security. The benefits far outweigh the inconvenience. There are billions of homeowners worldwide that have taken the plunge. In the USA there are hundreds of millions of successful homeowners. Join the crowd, take the leap and become part of this group. You won’t be sorry.
Stephen Gravett has been a real estate developer for over 45 years and was most recently CEO of Kennedy Homes for the past 11 years and is still CEO of Kennedy Development Partners (KDP). He is also full time Director of Operations for 5 Star Developers. He is a state licensed broker and since 1980 a State licensed General Contractor Unlimited. He flew B-52’s in the US Air Force during the Vietnam war.