The home, along with its contents, tends to be the most significant asset for most individuals. Yet, the management of this asset is often overlooked, leading to a range of financial challenges. Neglecting home management can increase the annual expenses for upkeep and improvement, gradually decrease the potential resale value, and pose potential risks. Let’s explore some of these scenarios.
Maintenance of the Home
The annual budget for home maintenance typically falls between 1% and 4% of the total property value. With older homes, the costs tend to be on the higher end. Many homeowners, however, forget about simple tasks like draining the hot water heater, changing the air filters, or cleaning the gutters. Failing to carry out these maintenance tasks can lead to early equipment breakage and potential collateral damage, which in turn increase repair costs and can also make the home unsafe and unhealthy. Establishing a regular maintenance calendar to keep track of these tasks and their associated costs can be extremely beneficial.
Taking Stock of Home Inventory
Homeowners often don’t have an accurate understanding of the cumulative value of their possessions, which often results in inadequate insurance coverage. The limit issued by their insurance policy for the home contents might be less than the actual value of the items within the house. Some items may even need special insurance riders for coverage. A recommended action is to maintain a digital inventory of items with their associated values, ideally backed up to a secure online storage space.
Remodeling and Improvement of the Home
House improvement projects are also an area where homeowners often fail to properly manage costs. Undertaking projects such as kitchen or bathroom remodeling, roof repair, or landscaping usually means navigating unknown territory for many. This often leads to exceeding the intended budget due to a lack of knowledge about the required items and procedures, and failing to track these costs for future tax purposes. It’s always advisable to maintain a budget and save all related documents and photos for future tax and resale purposes.
Holding a Grasp on Home Value
Homeowners often struggle to keep track of their property’s varying values. Purchase price, tax-assessed value, appraised value, and insured value – all these figures differ significantly and require careful tracking. Understanding the financial and risk implications of these different values is critical to successful home management.
Financial Solutions for Homes
A new market is emerging which offers personal finance solutions specifically tailored for managing these multifaceted aspects of home ownership. HomeZada, for example, keeps everything related to your home management in one place, accessible via your desktop, tablet, or mobile device. It brings together industry best practices, a property calendar, dashboard analytics, a recommendation engine, and data storage all under one roof. It even allows managing multiple homes and shared account access for couples to aid in estate planning.
In essence, managing a home is not unlike managing an investment portfolio; you need to monitor where your money is being spent. So, how are you managing your home?
