10 Things They Don’t Tell You About Home Ownership

When we found our current home, it was like putting on a pair of comfortable pants. The house felt right.

We had been looking for several months, with no luck, and were starting to think about what homes we could buy and “fix” to meet our needs.

Our realtor, who was also our good friend, looked up unsold homes from the prior three years and discovered a few gems. These were all homes that likely had trouble selling during the financial crisis, when getting a loan was difficult.

She got a few hits and we visited a few unlisted homes… including where we live now.

We weren’t trying to convince ourselves about the school district or the neighborhood or anything like that. It just felt right. The house’s layout fit our needs, the design was to our liking, and it didn’t feel forced.

My lovely wife and I had lived together for many years in an awesome townhouse, with fantastic neighbors, and so we were sad to leave but ready to start the next chapter. This house was it.

Oftentimes in life, we decide on emotion and then confirm with facts. We did the math, checked the schools, and made sure all the facts supported our gut feeling. They did. And so we purchased it.

We’ve now owned our “forever home” for close to ten years and we have learned a lot in that time.

Here are a few lessons I’d want to tell my younger self and hopefully they will be useful to you too:

1. Ownership Is Not Right For Everyone

I want to get this idea out of the way first – owning a home is not the right decision for everyone in every situation. Renting is not throwing your money away or paying your landlord’s mortgage payment. Owning and paying a mortgage is not always building equity.

Owning is not universally better than renting.

Anyone who claims that is either willing to lie to your face or a real estate agent with competing interests.

As a homeowner, I love it. I love our home and how it makes me feel. I also know that if I were to put everything in a spreadsheet, I would probably not love the result if I cared only about optimizing our finances and constantly increasing our net worth.

But as I’m in my forties, I’m looking to optimize life, not numbers.

If I were in my twenties, not certain about my career or my employer (or thinking I might move companies in a few years), buying a home does not make sense. I want the flexibility of being a renter and moving easily.

If I’m in my seventies, I might want to own a place but it would be a small condo and not a single family home. I might want to rent to force myself to downsize and get rid of many of the things I no longer need. It would give us the flexibility to travel more and not be tied down with maintenance and other headaches.

As long as you make your decisions knowing your goals, the question of home ownership will pretty much answer itself.

2. Your House is a Bad Investment

The old rule of thumb is that homes are a great investment.

Perhaps that was the case in the past but this is one of those money rules of thumb that you must forget. Houses are not great investments. They’re not horrible, better than many others, but it’s not always a slam dunk.

I’m in my early forties and we’ve owned two homes. I bought our first townhome in 2005, near the top of the housing bubble, and sold it for a small loss (not including maintenance and repairs) about eight years later. The S&P 500 had a pretty awful stretch in the financial crisis but otherwise it had great returns the other years (2022 has been rough but what do you expect after the last few years?).

The funny thing about housing advice is that we tend to ask people older than us.

And many of these people bought homes when it was possible on a single middle class income in nearly every major metro area. For many, they were lucky and thought they were good. 🙂

They didn’t have to deal with a dot com bubble that burst. Or a housing and financial crisis. Or Covid. Maybe they had the Cold War, but we had all the wars in the Middle East, 9/11, and even now there’s a war in Ukraine (and countless other areas).

The point is – if you are thinking strictly about investments – look elsewhere.

The stock market is a nice option. It doesn’t ever need maintenance or repairs. If you love real estate, invest in real estate that you aren’t living in. Even better? Invest in a real estate fund so you get (most of) the returns without the work.

And while you might be able to use your 401(k) to buy a house, it’s not always a good decision.

3. You Are in Control of Your Living Situation

The #1 reason we bought a home is to be in complete control of our living situation.

When you buy a home, you may finance it with a mortgage but the house is yours. Under nearly all scenarios, as long as you make payments, you can stay. No one will raise your rent. No one will decide not to rent it to you. You are in control.

There are very few areas where rent is controlled. At most, landlords must notify renters of increases but that’s it. They can increase it by however they like – 100% 200% 5000000000% – it’s their home. And you either pay or move.

It also gives you predictability in your housing costs. If your loan as a fixed interest rate, that’s the amount you pay each month towards the loan. Your monthly expenses may go up, as a result of an increase in property taxes or other fees, but the loan payment doesn’t change unless you have a variable rate mortgage.

A byproduct of this is that you’ll likely care more about your home, your neighborhood, your neighbors, and your community. This is not to say that renters don’t care about their home, their neighborhood, their neighbors or their community. It’s not one or the other (and plenty of homeowners treat their homes terribly), it’s that you, as a homeowner, will care more because you own your home.

As the old saying goes – no one washes a rental car.

Take the time to get to know your neighbors and your community. It’s worth it.

4. Your House is Very Complicated

We love our home but it’s complicated. You should take the time to learn every bit and don’t be afraid to label things, if just for folks who stay over.

Our HVAC system has two zones, upstairs and downstairs, but it doesn’t heat anything. I suppose it’s more like a VAC system.

Our heating system has three zones. One upstairs and two downstairs. The heating system runs off a boiler that burns heating oil (which I learned is just diesel without the dye). We also have a coal furnace too but I’ve only used that once because it’s hard to control the temperature (plus coal is a pain to deal with).

We also have electrical baseboard heating in a sunroom addition that serves as the room we spend the most time in. (which was added before we bought the house)

That’s just climate control!

We are on well water so we have a well pump, a bladder for water pressure control, an acid neutralizer, plus a softener system that uses solar salt. Put a reminder in your calendar to check all those systems on a regular basis buddy because you will forget.

There’s more to the house but you get the idea.

When we moved in, it was a lot to understand. I still didn’t fully understand it until various parts started breaking, or needing service, and I learned on the fly with the help of Youtube and by talking to the technicians that serviced the systems. Try to learn as much as you can as quickly as you can. Youtube is your friend on this.

Speaking of which…

5. Your Maintenance and Repairs are Very Costly

When things in your house fail, they tend to fail pretty catastrophically. It will cause you headache and big dollars.

Do not, under any circumstances, skimp out on home maintenance. Fortunately this has never hurt me but sometimes a small problem became slightly bigger one – and those scares have kept me in line!

Some of those failures won’t cause damage but most of the failures will cause major inconveniences.

In the ten-ish years we’ve lived here (these are just the few things I can recall off the top of my head):

• The hot water heater was leaking about six months into moving into the house (which means we should keep an eye on the one we put in!)
• We’ve had a pipe burst inside the house ($65,000 in repairs, thankfully covered by insurance).
• The pipe coming from the well into our house also burst, which flooded an unfinished crawlspace. We were able to clean that up ourselves after a water remediation company suggested we buy the equipment instead of hiring them.
• The pipe attached to the well itself had a rupture. It required us to remove the well pump and repair the pipe. (we ended up replacing the well pump itself because it was close to 20 years old)
• We’ve had numerous fixtures rust out because the previous owners didn’t service their acid neutralizer frequently enough so it corroded the pipes over many years. No flooding, thankfully.
• The outdoor HVAC compressors would fail because they didn’t have the properly rated capacitors installed, this was something I could replace. Also the outdoor units had super old fuses that needed to be replaced, likely original to the unit’s installation. Now we have spares for everything.

Everything in your house costs money. At least a few hundred, sometimes a few thousand, and even more if it requires some kind of repair or water remediation.

And even if it’s the little things, like a $8 capacitor, it still causes problems. And usually on 100° F days!

Lastly, maintenance packages from service providers are not the same. Some are mini-insurance plans, some are just pre-payment for annual tune ups with a little emergency help thrown in if you need it, and others are full service 100% hands off.

Research them thoroughly but when you find a good (responsive) company, stick with it. They’re usually local and not the cheapest.

6. Keep Accurate Improvement Records

When you make improvements to the house, those increase the cost basis. When it comes time to sell, all of these improvements can be included to reduce your tax burden.

Don’t make improvements for the tax benefits. Make improvements because they improve the quality of life, then keep the records so you don’t pay more tax than you need to at the sale.

From a tax perspective, there are two categories of spending:

• Improvements – These are expenses that add to the value of your home in a significant way. Any renovations or additions would be included as well as improvements of various systems or areas.
• Maintenance & Repairs – These are expenses that may be necessary but don’t substantially change the house or add value.

I think there is a general understanding of what is an improvement and what is considered maintenance and repairs, but keep records of everything happening so you can sort it out after the fact (if necessary).

7. Your House is an Asset, Use it

When most people think about their house as an asset, you immediately think about how you can refinance your loan and, if the house has appreciated, get out some cash.

That’s all fine and dandy but then it makes it no different than any other loan – except that your monthly payments to the bank are higher.

When people talk about the Buy Borrow Die strategy, which typically applies to stock portfolios and pledged asset lines, many Americans already do this with their homes.

But this isn’t what I mean – I want to suggest that you get a Home Equity Line of Credit before you need it. it’s like a mini-insurance policy. They’re typically easy to set up and have some minor costs associated it, but having the line of credit gives you financial flexibility in a pinch.

You don’t need to use the line, but having it is a good idea.

8. Your Home Increases Your Time Horizon

When you rent, you can move relatively easily. You know when your lease is up, you can just pack up your stuff and move.

When you own, moving is a little trickier. You have all the same work associated with moving but you also have to sell your home. That means cleaning it up, staging it a bit, and then the sale process and associated costs.

I’m always amazed whenever someone buys a house when they only intend to live in it for a few years. If I expected to move within the next five years, I wouldn’t buy a house. I’d just rent.

When we purchased this home, we planned to live here until all of our kids were grown up. And then some.

This lets us make decisions with a very long time horizon – nearly twenty+ years.

Any improvements we do to the home, we pay a premium because we want quality that will last decades. We may pay more up front but for systems and products that will save us money in the long run.

It’s like being forced to pass the marshmallow test. 🙂

9. Don’t Forget Outside the House

We have the great fortune of living on a wooded lot with over ten acres of land. It’s mostly heavily wooded land that butts up against a reservoir and so dense and thick we can’t do much with it (except get it characterized as protected woodland for tax purposes).

But it’s calm and serene and we love it. To be honest, it’s one of the nicest features of the home second only to the fact that we have this in the Washington DC metro area without having to pay a premium. Our home was cheaper than the new single family homes in the area with a fraction of the land but without the 1980 birthdate.

We get a secluded home that has access to all the amenities of new developments, in terms of commerce in the area.

But this also means that our super long driveway has to be cleared during snows (fortunately nothing a snowblower can’t handle) but something to consider if you aren’t super handy. Sometimes trees fall and you’ll have to cut them up with a chainsaw.

And the leaves. Trees produce a million leaves but you can just blow them into the woods.

Like in all areas of life, you take the good with the bad and hope the good is worth it or at least outweighs the bad.

10. Your House is Only the Canvas

While all of these lessons about the house may be true, don’t forget this idea – your house is just the canvas on which your life is being painted.

It’s an important part of your life, especially your financial life because it’s your largest monthly expense, but it’s nothing compared to what happens in your life.

This is where your children will remember growing up. This is where you will remember raising them, taking first steps and falling and escaping up the stairs when they can only crawl. Where you all quarantined for a few years and tried the travesty that is “virtual learning” for elementary school kids. Where they will get picked up for their first proms and have playdates with friends.

It’s where you will experience daily life with all its ups and downs and the adventure that we call life.

Don’t lose sight of that.

In the end, it’s just a house and what matters are the people inside it.