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Owning a home is more than just paying the mortgage. Are you ready for the real costs?
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You're listening to the Bo Knows Real Estate Podcast.
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Tips and advice for homebuyers, sellers, and owners with award-winning REMAX agent, Bo Kaufman.
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Welcome back to the Winnipeg Real Estate Podcast, where we uncover everything
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you need to know about buying, selling, and owning a home in our beautiful city.
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I'm Beau Kaufman, your local real estate expert with over 20 years of experience.
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Today, we're diving into a topic that catches many new homeowners off guard,
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the hidden costs of homeownership.
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Your mortgage might feel like the most significant piece of the puzzle,
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but it's far from the whole picture.
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Property taxes, home insurance, utility bills, and even a maintenance fund all
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add up to the actual cost of owning your dream home.
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Stick around as we break it all down so you can prepare and avoid any financial surprises.
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Let's dive into one of the most significant expenses beyond your mortgage, property taxes.
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If you're buying a home in Winnipeg, property taxes are something you need to budget for.
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They're based on your home's assessed value, determined by the City of Winnipeg.
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For residential properties, the city taxes 45% of the assessed value.
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For example, if you own a $350,000 house, 45% is $157,500, and that's the portion
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value used to calculate your tax bill.
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The city then applies a mill rate, a tax rate per $1,000 of that portioned value.
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Using the current mill rate, homeowners with a $350,000 house can expect an
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annual property tax bill of around $3,000.
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Now, here's how payments work. Property taxes in Winnipeg are due on June 30th
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each year, and they cover the entire calendar year from January to December.
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That means you're paying halfway through the year for the previous six months
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and the remainder of the calendar year.
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Planning for this is essential because that lump sum can feel pretty significant if you're not prepared.
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But there's good news if you'd rather not pay it all at once.
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The city offers the tax installment payment plan, or TIP for short.
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This program lets you spread your property tax payments out over 12 equal monthly
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installments, so you don't have to worry about coming up with a large sum in June.
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It's an excellent option for budgeting, but remember one thing,
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you need to register for TIP by October of the previous year if you want to use this plan.
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Whether you pay the full amount in June or go on the monthly plan,
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it's crucial to factor property taxes into your homeownership budget.
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It's one of those costs that can sneak up on you if you're not ready,
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but with a bit of planning, it's completely manageable.
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Now that we've covered property taxes, let's move on to another important piece
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of the puzzle, home insurance. Stick around, you'll want to know what to expect.
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Let's talk about another crucial cost of home ownership, property insurance.
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If you're getting a mortgage, this isn't optional.
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Your lender will require you to have home insurance in place before they finalize the deal.
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No home insurance, no mortgage. It's as simple as that.
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Now what exactly does home insurance cover? At its core, it's designed to protect
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your biggest investment, your home, from risks like fire, theft,
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or damage caused by severe weather.
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Most policies also cover your belongings inside the house and provide liability
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protection in case someone gets injured on your property.
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In Winnipeg, the cost of home insurance can vary depending on a few factors
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like the age of the house, its location, the type of construction,
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and even how close you are to a fire hydrant or fire station.
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On average, you're looking at about $1,200 per year, although this can be higher
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or lower depending on the specifics of your home and the coverage you choose.
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When you're shopping for insurance, make sure to compare quotes from different
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providers. Don't just look at the price.
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You'll also want to understand what's covered and what isn't.
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For example, water damage from a burst pipe might be included,
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but overland flooding often requires additional coverage.
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Take the time to ask questions and make sure the policy fits your needs.
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It's also worth mentioning that your lender will want to be named as a loss
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payee on your policy if there's a significant claim, like if your home is destroyed
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in a fire, the insurance payout will go toward paying off the mortgage first
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before you receive any remaining funds.
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So the bottom line is this, home insurance isn't just a good idea,
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it's a requirement if you're financing your home.
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And beyond that, it's peace of mind knowing you're protected from the unexpected.
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Next up, we're diving into the everyday costs of running a home,
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like utility bills. Stay tuned. You might be surprised at how much these can add up.
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Now let's dive into utility bills, one of the most consistent and sometimes
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surprising costs of homeownership.
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These are the day-to-day expenses of keeping your home running.
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If you're not prepared, they can quickly add up. Let's break it down.
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First up, electricity. In Winnipeg, electricity is provided by Manitoba Hydro,
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and the average monthly cost is around $113 for a typical household using about 1,000 kilowatt hours.
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Of course, this can vary depending on your home size, energy efficiency,
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and how much electricity you use for things like lighting, appliances, and electronics.
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Next, we have natural gas, also supplied by Manitoba Hydro.
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Natural gas is primarily used for heating during our cold Winnipeg winters,
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and the average monthly cost is about $98.
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Remember though that this number can spike in winter when your furnace is running more frequently.
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Then there's your water and sewer bill. The average monthly cost for water in
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Winnipeg is roughly $66.40, which covers your household's water usage and the
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cost of treating and managing wastewater.
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If you're into gardening or have a lawn to water in the summer,
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this cost could be higher during those months.
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Altogether, you're looking at a baseline of around $277 a month for utilities,
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before factoring in extras like internet, cable, or phone services,
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which can easily add another $100 or more to your monthly expenses.
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One way to manage these costs is to focus on energy efficiency.
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Simple things like sealing drafts, upgrading to energy-efficient appliances,
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and using a programmable thermostat can help keep your bills under control.
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Manitoba Hydro also offers rebates and programs to encourage energy savings,
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so it's worth checking those out.
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So, utility bills are a cost you'll want to plan for as part of your monthly budget.
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They're unavoidable, but you can keep them manageable with a little effort.
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Next, let's talk about one more key expense you need to consider.
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Saving for maintenance and repairs. Don't skip this one. It's a game changer
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for long-term homeowners.
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You're listening to Bo Kaufman of Remax Performance Realty call Bo if you're
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buying or selling a house or a condo in Winnipeg Bo knows real estate,
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Let's wrap up with one of homeownership's most critical yet often overlooked
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aspects, saving for future maintenance and repairs.
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Owning a home isn't just about covering your mortgage or paying your monthly bills.
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It's also about keeping your property in good shape and being prepared for the inevitable.
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No matter how new or well-maintained, every home will eventually need repairs or replacements.
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These costs can range from minor fixes to significant expenses.
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For example, replacing a roof can cost you around $7,000.
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Installing a new furnace might cost approximately $6,000, and replacing a hot
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water tank could set you back about $1,500.
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And don't forget appliances. Eventually, your fridge, stove,
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or washer and dryer will need replacing too.
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These are just the kinds of costs you need to plan for.
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A solid rule of thumb is to save about 1% of your home's value each year for
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maintenance and repairs.
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For a $350,000 home, that's $3,500 annually, or just under $300 a month.
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You might not need to touch that money for some years, but in other years,
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you could face a big-ticket repair that wipes out your savings.
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Having this fund ready means you're not scrambling to come
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up with cash or relying on high-interest credit when
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something goes wrong to make saving easier
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consider setting up a dedicated home maintenance fund automate monthly transfers
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into this account so it grows consistently over time think of it as your home's
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rainy day fund except instead of saving for a metaphorical storm you're preparing
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for the real world wear and tear every homeowner faces let's put it all together and see
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what the total cost of owning a $350,000 home in Winnipeg really looks like.
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Beyond your mortgage payment, we've covered some essential expenses,
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so let's break them down and tally it all up.
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First, property taxes. On average, they cost $3,000 per year,
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which is $250 a month if you're on the tax installment payment plan.
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Next, home insurance. The typical cost in Winnipeg is about $1,200 annually, or $100 a month.
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Now, let's add your utility bills. The average monthly electricity,
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natural gas, and water cost is about $277. dollars.
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Finally, we have your maintenance and repair savings plan.
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Setting aside 1% of your home's value each year for future repairs adds another
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$3,500 annually, or roughly $292 a month.
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So, adding it all up, $250 for property taxes, $100 for insurance,
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$277 for utilities, and $292 for your maintenance fund.
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That brings your total monthly cost to $919.
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And remember, that's on top of your mortgage payment.
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These numbers are critical to consider when budgeting for a home.
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While owning a home is incredibly rewarding, it comes with responsibilities.
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And understanding these costs up front can make all the difference in how smoothly
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you transition into home ownership.
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Here is a little food for thought. Many people complain about the cost of condo
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fees, but they forget that many previously listed expenses are built into those condo fees.
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Water is usually included, home insurance is significantly cheaper,
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heating costs are lower, and a home maintenance savings plan is built in.
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But that's a subject for another episode, so we'll tackle that in the future.
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Thanks for joining me on this episode of the Winnipeg Real Estate Podcast.
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If you found this information helpful, share it with someone you know who's planning to buy a home.
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And don't forget to subscribe so you never miss an episode full of insights
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and tips for navigating the Winnipeg real estate market.
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Until next time, I'm Beau Kaufman, and I'll talk to you soon.
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You've been listening to Beau Kaufman of Remax Performance Realty.
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Are you thinking of buying or selling a house or a condo in Winnipeg?
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Call Bo at 204-333-2202.
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Remember, Bo knows real estate.
