_{Presented by Astra Properties LLC}
Beyond the Sale Price: Hidden Costs in Cash Home Purchases

_{By Nicholas Burrus · 01/19/24
Thanks for tuning in to today’s read! Read time for today is roughly 5 mins.}

Top of the morning 🫡🌅 

Welcome back and thank you for tuning in!

Today we’re diving into expenses.

Not hidden expenses, but expenses that can be overlooked and can effect the cashflow of your deal.

Especially if you’re buying cash.

Don’t go in the negative 🔻 

Let’s dive and maximize that positive cash flow 🟢 

Extra Expenses Every Cash Buyer Needs to Know Before Buying a House in Full 🤑 

^{There's more to the deal than the purchase price}

Planning to buy a house with cash? 

Paying in full means never bothering with mortgage payments, never paying interest on a loan, and enjoying a much quicker closing process. 

Sellers also love cash buyers because they get the money upfront. No more waiting for mortgage lenders to approve the funding!

But before you hand your $$$ to the seller to seal the deal, there's more to the process than paying the purchase price. 

There are extra charges to settle!

What expenses will you cover to finalize the deal? 

Closing costs 💥 

Closing costs are the fees and expenses you pay when buying a house. These extra expenses include: 

• Real estate transfer taxes charged by the county and/or city

• Title insurance fee

• Processing and filing fees for forms being submitted to the County Recorder

• Appraisal fee

• Home inspection fee

Some common examples include fees for checking the property's value and ensuring no issues with the title.

There are also taxes, insurance costs, and fees for services like home inspections and legal help. 

The closing cost could be as much as 3% to 6% of the purchase price.

That's why it pays to check with the seller to know the total price - closing costs included - because the extra charges will affect the price of a property.

Property Taxes

Paying Uncle Sam is part of the deal!

Even when paid in full, you'll still need to write that monthly check to the IRS.

Property tax will vary from state to state and at local levels. To know how much to pay in property tax, consult a real estate agent for the current owner's tax bill or do your own digging online by checking the city and county websites for details.

Don’t forget, property taxes are usually roped into a mortgage, but when you don’t have a mortgage, you’re responsible for paying the tax every quarter.

Don’t let your free and clear asset rack up past due tax liens!

Homeowners Insurance 👍️ 

Don't forget about insurance - it's very important. The insurance cost will depend on:

• The size and value of the property

• The property's age and condition

• Credit score

• The location

• The deductibles

• Coverage type and policy limits

• Claim History

The quickest way to know how much insurance you'll pay is to talk to a local insurer. Take this opportunity to update the policy in case natural disasters like earthquakes, storms, and flash floods are a threat in the neighborhood.

Homeowner's Association Fees

Being a part of the Homeowner's Association means paying monthly or annual HOA fees. The average HOA fees cost between $200 to $300 a month. 

These charges are used to maintain the neighborhood's common areas and support the community.

HOA fees will vary between neighborhoods but usually depend on the size of the property and the amenities needed by the community. 

Utility Bills

Bills go like clockwork, even to a house with changing owners. These charges include:

• Electric bills

• Gas bills

• Water bills

• Sewer maintenance

• Garbage collection

The rates will change from season to season, so check with a local agent to find out how much the seller pays for a year's worth of utility bills.

Home Maintenance

Setting a monthly budget for home maintenance and repairs is a must.

The budget should be enough to cover electrical, plumbing, or heating repairs and replace broken or old appliances.

You can also buy a home warranty to cover maintenance and repair costs.

How to Save on Home Maintenance Costs

^{Maintenance expenses do add up!}

Nothing is as fulfilling as buying a property and watching your equity grow 😉 

But just like anything in life, there are expenses that come with owning a house - or any property, for that matter.

We're talking about maintenance costs!

Annual home maintenance costs an average of 1% to 4% of a property's value.

Thing is, maintenance expenses are not created equally. Some of these charges are more expensive than others.

Combined with mortgage payments, HOA fees, and utility bills, maintenance costs will definitely cost a pretty penny, so be smart and set aside a monthly budget for these expenses.

For example, the average maintenance cost of a $500,000 house would be $12,000, more or less. 

The good news is, there are ways to keep maintenance expenses super low. 

Here are some ideas to cut down your monthly home maintenance costs:

Give your electric appliances TLC

It's not rocket science: well-maintained appliances do not need repairs. 

Giving your appliances all the TLC they need will save you money on repairs.

Appliance repairs can balloon to $500, depending on the average cost per job in your area and the extent of the repair. 

Investing in maintenance checks is also one way to save money on repairs. Regular checks can extend the life of an appliance and avoid costly repairs.

Check your HVAC 👏 

HVAC systems are often forgotten but expensive to repair once they break.

On average, a simple repair would set you back $350, but extensive repairs can cost as much as $3000.

To avoid paying this much for repairs, monitor your HVAC system regularly. Don't forget to:

• Clean and repair filters

• Clean and replace condenser coils

• Keep the area around the HVAC unit clean

• Check the seals for gaps

• Keep the ducts properly insulated

• Check for refrigerant leaks 

• Clean the vents for proper airflow

• Lubricate the small moving parts

Look out for minor issues and solve them before they affect the entire system. 

Check the deck for damage and repairs

Another often-overlooked part of the house is the deck. And repairs can be eye-wateringly expensive at $1000 +++ on average.

So go ahead, do monthly checks on the deck, and see if the boards need a fresh coat of paint. Treat the deck with waterproofing, stains, or seals to protect the material from the elements. 

Check for damaged boards that need refinishing, replacing, or upgrading. These projects can be totally DIY-ed on a weekend to keep the cost down even more. 

DIY lawn maintenance 💪 

Don't sleep on lawn care - keep the grass green and the trees and bushes trimmed for that enviable curb appeal!

A full lawn care service can set you back $400, depending on the size of the lot. Tree trimming can cost $400 to $1000 per tree. 

Thankfully, these tasks can be DIY-ed on a weekend.

Yes, it takes a little elbow grease to maintain the yard, but you are saving thousands of dollars on lawn and yard maintenance, so all that hard work is worth it.

💫 What Else is Poppin? 💫 

Tesla lost $94 billion in market value 😲 

^{It could cost Elon Musk the crown as the world’s richest}

Seems like Tesla Inc., is having a rough start in 2024 as the carmaker lost a staggering $94 billion in market value. 

At the start of this year, Tesla stocks saw a 12% drop, and cutting prices on its cars since early last year led to a decline in ex-regulatory credit to 16.3% from 2023's 27.9%.

According to reports, the loss resulted from a barrage of bad press, and stiff competition with Chinese EV makers, leading to more price cuts and rising labor costs. 

The low demand for EVs in the US did not help matters for Tesla.

The carmaker first warned about the slowdown in EV demand in its October earnings report.

Many carmakers have since confirmed the curtailing demand with their own forecasts and dialed back on expansion plans.

With a 13% stake in Tesla, Elon Musk's $206 billion fortune shrunk by $23 billion two weeks into 2024. 

Tesla’s latest market devaluation could cost Musk the crown as the world's richest person to Amazon founder and fellow multi-billionaire, Jeff Bezos.

Still, Tesla remains a market leader in smart cars and EVs with technology that's a cut above the competition.

There is still a lot of time to recoup the loss. 

Catch the latest episode of the AstraCAST podcast!

Have you subbed to our podcast yet?

You can catch me and Marcos on YouTube, and Spotify! Catch up with us as we bring on guests from all parts of the industry covering everything from real estate, personal development, to growing a business through acquisitions, rentals, and renovations.

Don’t be shy, check us out here!

🌟 Refer a Friend to The Prosperity Blueprint! 🌟

Expand Your Network, Enrich Our Community

At Astra Properties, we believe in the power of community. Our newsletter, The Prosperity Blueprint, is more than just a source of insights on real estate and business strategies—it's a platform for shared growth and inspiration.

Why Refer a Friend?

Shared Knowledge: Help friends and colleagues gain valuable insights into real estate dynamics and business acumen.

Exclusive Content: Both you and your referred friends get access to special content, insider ideas, and events.

Community Strength: Each new member enriches our network with fresh perspectives and opportunities.