10 Year Cost of Ownership for My Home Now With Paid Off Mortgage

Some close friends and family think I may have OCD. Who cares! I have been tracking my cost of ownership for my primary home for quite a while now. I have owned the home for about 10 years so let’s take a look at some data shall we?

How I Calculate Cost of Ownership (COO) (LBF Style!)

I’m sure everyone has their own way of tracking this, but this is my way. Here is how I determine my costs.

I add up the following for each year:

• Mortgage payment
• Additional Principal payment (Just a personal preference) 😊
• Property tax
• Insurance
• Closing Costs for purchase and refi
• All costs related to remodeling, repairs, and home improvements/modifications

What I don’t add:

• Furniture
• Minor repairs
• Landscaping maintenance (Maybe I should add this someday…)
• Not factored for tax benefits

I add them all up and divide by 12 to get my monthly cost of ownership figure for each year. The numbers are not completely accurate primary due to the tax write off benefits not being factored in. That would bring my COO down much lower but I like looking at these numbers because they motivate me. 😏

 

10 Year Cost of Ownership for Primary Home

Here are the numbers!

You can see a sharp drop in 2016 after going FIRE back in 2015. After paying off my mortgage on the primary home in 2017, my COO per month for 2018 dropped to $626.95! Hard to believe sometimes but it only costed me $626.95 per month to live in a 4 bedroom 3 bath house!

I’m really looking forward to seeing how fast my long term average COO numbers fall! It does look promising so far with 2018 average falling 6.7% to $2,201.09.

Owning a home just feels better when you know you get more than what you get in comparison to the rental market for the same amount of money. To rent a 4 bedroom 3 bath today in my area would cost about $3,000 to $3,500 per month. What does $2,201.09 get you in Los Angeles today? You would be lucky to find a decent 2 bedroom apartment in the area.

 

Looking at the after FIRE(Financial Independence Retired Early) decline in the long term COO numbers, things are looking promising. Hopefully that chart shows a drop like what we witnessed during the 2008 financial crisis!😅 We will have to see how these numbers play out over the longer term.

Owning homes can be expensive if purchased with too much debt! I don’t like the idea of paying more for a home when you can rent something similar for less. Just bothers me. Having a game plan on how you will lower your COO over the long term is important to me.

Costs can easily start climbing quickly, if you love fixing them up and doing renovations like I do. As you can see in the chart above, costs for the first 3 years were climbing quick. Why? Installing new garage doors, new furnace/AC, wood flooring, bathroom remodel, Paint, etc.

A little here, a little there and next thing you know total improvement costs that went into this home since purchasing is currently at $29,853.67! That would definitely be much higher if I had hired contractors for most jobs. Most of that is actually material costs.

Renting out this house will provide a nice income anywhere between $2,380.09 and $2,880.09 after accounting for all expenses. Investing that extra cash flow into dividend stocks should really turbo charge my investments! Hmm… options.

 

Conclusion

Overall, the home has served me well. It became my subject property to learn how to remodel homes. It’s where I learned how to do wood flooring installation and much more. The knowledge gained from owning this home has saved me thousands of dollars from labor costs during other renovation projects. The way I see it, it was simply cost of learning.

Any thoughts on how low the COO may get in the future? $1,500?! Well… a new roof will throw a monkey wrench into those numbers. We will see what happens. Thanks for reading.