# Real cost of realestate?



## chaudi (Sep 10, 2009)

Hi i was wondering what was the real cost of owning a home. For example if the MLS listed for 150k and sells for that much how is the tax and commission service fees etc? If you get a broker to find a house for you i guess there is another commission? 
Also beside the tax, what are the annual fee, how much is insurance? does everyone get insurance? i guess so. Gas, water, what are the other fees? How much does maintenance average?


----------



## GeniusBoy27 (Jun 11, 2010)

There isn't real a cost of finding a home (only selling a home).

But there are land transfer fees, title insurance, legal title searches, legal fees; if it's a new house, GST (or HST in some places), plus you generally should factor in moving costs, appliances, furniture, window fixture, etc ...


----------



## Addy (Mar 12, 2010)

Are you considering paying cash? If not you will need to include the cost of interest you are paying, plus, if you're so apt, the lost interest you would have gained on the amount you paid on the house (ie the interest you would have earned putting that 150K or whatever into a GIC or something).

You will get a lot of varying answers for water consumption, hydro, property taxes, etc etc. It depends where you live and how much you consume.


----------



## Cal (Jun 17, 2009)

I will try to answer your questions in order.

RE agents commission comes from the seller of the home. Typically the agents buying/selling will each get 2-2.5% (total 4-5%) of the sale of the home. If you buy a home for 150K as a resale that is what you will pay for the home. Not sure about the taxes on the sale of the home, but I would add about 1% as a rough estimate for your lawyers fees, land transfer taxes, title insurance and such.

If you are planning on having a mortgage, mortgage insurance will be required, and probably provided by your lender.

In regards to property taxes, the seller can normally provide you with that info, to give you a rough idea of what the city/municipality will charge you in taxes the next year. Same for heat, hydro, gas and such, just ask. If they want to sell, they will provide you withe their bills to give you a rough estimate.

In regards to home insurance, again if you have a mortgage, it will be required, also if you have a townhouse/semi, I believe it is required also. Simply call your ins company, give them the details, they also can provide you with an estimate.

Maintenance varies. Are you buying a new place in a rural area for 150K or a tear down near the GTA? (actually that would cost more than 150K, but you get thw picture) Just like a car, if you buy a lemon, you will pay more. Get a home inspection first if you aren't sure.


----------



## chaudi (Sep 10, 2009)

Well i'm paying $1300 rent here in Toronto and i'm thinking my dreams of owning a house here are never going to materialize. But i can move to a nice renovated house in Niagara Falls for 150k and the tax is just $1700, i'm guess less then $5000 a year to own and live down there. Cheap living really with cross border shopping. Even if the housing goes down in the short term, i'd be saving the rent and i think over time there be something like fair increase in property value. Problem is if i can adjust to living down there, is the big question. But it seems like it will save me at least 6k a year in rent.


----------



## the-royal-mail (Dec 11, 2009)

Where do you work???? You're not thinking of commuting to the GTA are you?


----------



## Cal (Jun 17, 2009)

Somethings missing....

You have 150K saved? And could either buy in Niagara Falls outright, or use as a downpayment in the GTA. Are you thinking of retiring in Niagara Falls and are close to retiring? Or are you thinking of moving your family, and finding new work in Niagara Falls?

I have heard of a few people who have retired, sold their home in the GTA, and moved outside of the GTA, to live/retire in a smaller/cheaper home, and extra cash from the sale of their home in the GTA.


----------



## chaudi (Sep 10, 2009)

No not commuting. I work from home, have had a business for years. Now it's internet based. Problem is i'm making less then 10k right now so i'm dipping into my saving. Also i'm out of the country for 4-5 months a year, what i've been doings is renting/storage/movers twice a year. Which cost money and stress. Even 6 months of rent is 10k. I would prefer to live in TO as i have most of my life, it's just i wonder how practical it is, and if i'll every reach the dream of owning a house in nice area. So yes i would be buying outright, now i'm getting less than 2% interest anyways.
Niagara area and the falls is so beautiful but there are lot of retires and townies, which isn't exactly appealing(i'm not so old so i think you what i mean), but would it be really any different in any other small town, Orillia, Ownsound, Barrie, Ajax, Scarborough etc.?


----------



## dagman1 (Mar 3, 2010)

If you are looking for real-estate deals, and your business is internet based, I'd seriously consider Windsor, ON.

Probably among the cheapest areas of Canada for a larger city (300,000), plus access to the U.S. and two lakes.

A really nice detached house can be had for $150,000.


----------



## the-royal-mail (Dec 11, 2009)

I agree with dagman1. In fact, I don't see why you would even need to stay in southern Ontario at all if you work from home. No need to stay anywhere near the GTA and all its bedroom communities such as those you mentioned. I would find a nice home in a small prairie town, far more peaceful, no constant wail of fire engines, very low crime rate, low stress lifestyle. And less chance of something happening while out of the country.


----------



## GeniusBoy27 (Jun 11, 2010)

If you're truly making less than 10000 per year, you probably can't afford a home unless you're willing to use all your savings to purchase a place. But I'm not sure how well, you could live on 10,000. 

There are a lot of costs associated with owning a house -- hydro, utilities, phone, maintenance, insurance, etc., and those are all considerations.


----------



## chaudi (Sep 10, 2009)

I was looking at Windsor initially but 4.5 hours away from TO is too far. I still like TO because i grew up here and plan to visit every 1-2 weeks, so 130km is maximum distance i'd like to be.

How volatile are the housing price in Niagara Falls, in the next 10 years?

Can anyone give me a ballpark figure of a cost of owning a house per year(tax, utilities, maintenance) in a town such as Niagara Falls?

I'm still not sure if the sale price is 150k, what are the add ons? The selling agent takes 2% if have my own agent they take another 2%? Do i need my own agent?


----------



## GeniusBoy27 (Jun 11, 2010)

*RE: Real Estate*

It's always worth having an agent when buying, since the seller pays for your agent (the price is always in the selling).

Can't comment about Niagara Falls, since I've never looked into it.


----------



## chaudi (Sep 10, 2009)

Here's a rough estimate on yearly expenses:

tax 1700
water 150 ?
heat 1000, force air, will be away part of the winter
hydro, 1000
insurance $500 ?
maintenance $1000 average

so, around 5.5k 

vs renting [email protected]=16800- interest on capital (in toronto)
Mind you i could rent a nice house there for $1000 pe month too, so [email protected]=$12000.

(6k lost in [email protected]% average, but house may [email protected]% per year over 20 years too)

So buying the house should save me around 7-11k a year. Would you agree?


----------



## Addy (Mar 12, 2010)

chaudi said:


> Here's a rough estimate on yearly expenses:
> 
> tax 1700
> water 150 ?
> ...


Your water sounds quite low, although if you're away a few months of the year that will lower it. Insurance, I would double that amount to be safe... it maybe 800/yr or so, but not 500/yr.

Mainenance of 1K/yr is too low.. if your furnace goes thats at least 4K right there, plus regular maintenance such as gutter cleaning, furnace servicing, minor plumbing repairs, etc etc. Plus you'll have to buy a lawn mower and possible snow blower or hire someone to do this for you.

I think, considering you work at home, buying in Niagra is a great idea, but your estimated expenses are a bit low in my opinion.


----------



## Addy (Mar 12, 2010)

Actually, regarding the insurance... if you're not at home, you may not be able to get insurance, and if you do it will be very expensive for unattended house insurance.

edit: Although you could get a roomate which would solve this problem (make sure your insurance knows you have a roomie) and would give you some $ back to help with expenses.


----------



## the-royal-mail (Dec 11, 2009)

>tax 1700

Could be as high as $3K depending on where you live. And don't forget that in the years ahead, cash-strapped gov'ts will be looking to dramatically increase taxes to get themselves out of deficits. Look to Greece as an example if you don't believe me.

>water 150 ?

You can get this info from the RE agent/municipality you want to buy in.

>heat 1000, force air, will be away part of the winter
>hydro, 1000

Yeah who knows. $2K a year is $167 per month. Seems about right.

>insurance $500 ?

Not sure. Shop around.

>maintenance $1000 average

Nowhere near sufficient. If the roof springs a leak, if you need a new driveway, bathroom renos, new windows, new a/c, lawn mower conks out, build a deck, buy a BBQ, new furniture, appliances, lawn weed spraying, snow removal etc etc etc.

>So buying the house should save me around 7-11k a year. Would you agree?

No. House prices rise and fall and you don't know when you'll want to sell. Plus when you sell you'll be shelling out 5% for RE fees plus lawyer fees and other taxes and fees. I think when you consider your COSTS (which you won't have when you rent) you find there is a significant difference in owning vs. renting. Home ownership is very expensive. I think you need to refine your figures a bit and create two columns on a sheet of paper (or in excel), one for own and one for rent and calculate the monthly outflow for both options. Forget about the emotional stuff, just look at the best figures for each. Those shown above don't seem right. But still, you'll never "save" money by buying a house vs renting. Apples and oranges, really.


----------



## GeniusBoy27 (Jun 11, 2010)

I think it's hard to evaluate ... because really, you should compare opportunity cost. 

If you invested your money, and taking that into account, is it worth it? I think in Toronto, renting in general is better from an "economic" perspective in general, but I sure like owning a house ...


----------



## the-royal-mail (Dec 11, 2009)

I also forgot to say that you need to consider the cost and time to sell the house when you no longer want/need it. It might not sell right away and you may need to pay for two residences at one. Not fun and can negate any perceived gains. That happened to me with my last place, which didn't sell for about 4 months after the tenant left. The money spent on mortgage, taxes and condo fees those 4 months was pure waste and can never be recovered. This can happen to anyone when they go to sell.

In an apartment, you give 60 days notice to the LL, spend a little time and money (less than $100) cleaning the place and you're outta there. WAY cheaper/simpler/faster.


----------



## Cal (Jun 17, 2009)

So buying the house should save me around 7-11k a year. Would you agree? 

No.

I figure 150K would earn me at 5% interest about $7500 per year.

To rent the same house in NF you said would be 12x$1000.

So if you rented similar house and invested the capital the it would cost you $4500 per year.

Vs. the approximately $5500 in annual expenses owning the same home in NF.

Don't hold me to the numbers. But think about the ROI you could have had if you didn't fork over $150,000.


----------



## chaudi (Sep 10, 2009)

Well Cal no one is giving 5% interest now, i think average over long term is 4%. Also a house in 20 years will likely appreciate 1-4% per year(according to some charts i found, this has been the average over the last 80 years.
I hope to stay for some time. Also it's not so easy to keep moving and renting. Rental are usually crappy and in some unknown area etc.
I also save the moving, storage and hotel fee's etc each year.
The house is already renovated so i don't see any major expenses in the next 10 years. So i think 7 k a year is a fair estimate which is still much less than even 6 months of rent in Toronto. So I starting to see as investment that will at least save the rent money each year. Which makes it an investment vs paying rent which is just a lose.


----------



## Cal (Jun 17, 2009)

chaudi said:


> Well Cal no one is giving 5% interest now, i think average over long term is 4%. Also a house in 20 years will likely appreciate 1-4% per year(according to some charts i found, this has been the average over the last 80 years.
> I hope to stay for some time. Also it's not so easy to keep moving and renting. Rental are usually crappy and in some unknown area etc.
> I also save the moving, storage and hotel fee's etc each year.
> The house is already renovated so i don't see any major expenses in the next 10 years. So i think 7 k a year is a fair estimate which is still much less than even 6 months of rent in Toronto. So I starting to see as investment that will at least save the rent money each year. Which makes it an investment vs paying rent which is just a lose.



The 5% wasn't in a savings account. You would actually have to invest it. There are several dividend paying equities and preferred shares that could achieve that return for you. I agree with you a GIC doesn't cut it.

Count on housing to stay pace with inflation.

You wouldn't have to move every year...but like I said don't hold me to the numbers. You definitely made some good points in relation to accounting for moving expenses.

I was trying to get you to see the potential of 150K invested as a factor in your consideration of the rent vs buy scenario.

All the Best in your decision.


----------



## Potato (Apr 3, 2009)

chaudi said:


> I also save the moving, storage and hotel fee's etc each year.



How's that work? You don't have to move every year with a rental, either. It may even be easier to keep empty, esp. in an apartment building, since you don't need to worry quite as much about break-ins and pipes bursting, and you don't need to hire someone to come mow the lawn and take in the mail and shovel the walk while you're gone for months at a time.

Do you have a car? Have you looked at the public transit in Niagara? What about Hamilton? If you want to get in to Toronto occasionally, they have GO service there, and you can get an apartment for like $800-900/mo.


----------



## the-royal-mail (Dec 11, 2009)

The word "fees" does not have an apostrophe.

But also remember to include the costs of driving to Toronto on a regular basis. Gas is expensive and it's quite a drive along the QEW, full of traffic moving at high speeds and changing lanes. Your accident risk is consequently higher.


----------



## GeniusBoy27 (Jun 11, 2010)

I agree with potato ... but if you want to move to Niagara, that's entirely up to you.

I think as an investment, it's not a great investment (but that's my opinion, and I have no crystal ball).


----------



## chaudi (Sep 10, 2009)

Hi guys, actually those things don't really apply to me. What i've done is broke the lease or sublet each year my apartment, so moving and storage for my car and stuff is around 1000 for 5-6 months plus when i come back i have to stay in hotel and look for an apartment. When you do it this way you have to come back at the end of the month and leave at then end of the month. Obviously you can see this is stressful over time, dealing with new apartments and landlords each year. 
*The important part is that it will cost 5-8k to own the house per year while rent for for just 8 months is is around 13k+1k (moving.)* Since i work from home i can compare apples and oranges as to my tastes. 
I hope to stay there for a long time, so the capital should appreciate some, though if it works out it shouldn't really matter anyways. Even if the value is still 150k in 10 years i'll come out ahead with the savings in rent. At least 5k a years 10 years= 50k. So if the realestate market really tanks, as some say, the house could be down to 100k and i would still break even. It is bargain i figure since i'll gain a better quality of life. 
So, i'm concluding that buying this house is a genuine investment, that should on paper at least 'save' or 'earn' me money compared to what i've been doing for the last 10 years.

Btw, i live at bathurst and eglinton now that has 18 hrs of traffic jams per day. I think it is far more dangerous driving around Toronto than say on the hwy to NF. Actually my auto insurance rates should be lower in a small town too. I find i have to drive all over the place now just to get to a green spot, again in NF green is everywhere so i plan to buy a bicycle again (you can actually ride a bike in NS without getting killed or having it stolen!)


----------

