Whether you live in a home you own or rent it out for income, you're no doubt aware that your out-of-pocket costs can well surpass the amount you pay in a monthly mortgage and property taxes. Maintenance is a huge expense for property owners, and when things go wrong and you cross into "repairs" territory, the costs can be downright astronomical. Here are a few painfully expensive repairs -- along with their estimated costs, as per HomeAdvisor -- that could wreak havoc on your finances if you're not careful.
1. Foundation damage
The average cost for foundation repairs is $1,841 to $6,599. That's a pretty wide gap, so the amount you might pay will depend on the extent of the damage at hand. Unfortunately, a cracked foundation could compromise the structure of your entire home, so it's not a repair you can put off.
2. Roof replacement
The amount it costs to replace a roof will depend on its size and the materials used. Replacing a roof constructed of asphalt shingles costs between $2,000 and $10,000, with an average of $7,114. The upside? Those shingles tend to last 15 to 30 years, so ideally, it's not the sort of repair you'll have to deal with too often.
3. Mold remediation
Mold damage doesn't happen overnight, but if left unaddressed, it can result in huge health problems for the inhabitants of your home. And as a landlord, it's your obligation to remediate mold that could be impacting your tenants' health. Mold remediation costs an average of $2,229, but in reality, the extent of your damage and the size of your home will play a large role in determining what it costs you.
4. Central air replacement
Central air conditioning is a much-desired home feature. The problem, however, is that when your system goes, the entire property suffers. The price to install a new central air system typically falls between $3,758 and $7,263, but the capacity and efficiency of your system will dictate how much you spend, as will the complexity of the ductwork in your home.
5. Grading and ponding issues
If large amounts of water tend to pool in your yard or driveway every time it rains, it could be that you have a grading issue on your hands that needs to be resolved. The average cost of resloping or regrading a lawn costs between $974 and $2,950, but if you're dealing with a larger property and a more extensive slope, your costs could easily be five times that amount. And if retaining walls become necessary, your costs could be 10 times that estimate.
6. Septic system replacement
If your property doesn't run on a public sewer line, you'll be reliant on a septic system -- a system with the potential to break down over time. Replacing a septic system costs between $3,100 and $9,392, on average, but again, much of that will depend on the capacity of the system at play.
7. Water line replacement
If you're on a public water system, tree roots and wear and tear can result in breaks in your water line or backups that leave you with one unsanitary mess on your hands. Replacing a water line that runs from the street into your home could cost as much as $2,468, but that number doesn't include the cost of dealing with the damage to your home that often results when a water line fails.
Be prepared for home repairs
Major home repairs can be hard to predict, especially if it's been years since you bought your property and had it inspected by a professional for lurking problems. And generally, your homeowners insurance policy won’t pay for repairs resulting from wear and tear, which many of the above circumstances entail.
That's why it's crucial to have emergency savings on hand. You may have heard that a solid emergency fund is one with enough money to cover three to six months of essential bills, but those figures better align with a scenario where you've been laid off from a job and need money to pay your living expenses while you look for work. As a homeowner, it's a smart idea to have a dedicated savings account earmarked for unforeseen home repairs -- and a healthy one at that. And if you own multiple properties, you'll want even more money in savings.
As a general rule, you can expect to spend the equivalent of 1% to 4% of your home’s value on annual maintenance. For a $300,000 property, you’re therefore looking at $3,000 to $12,000 per year. A newer home will usually lean toward the lower end of that range while an older home will skew toward the top. If your home is between 10 and 20 years old, you’ll probably fall somewhere in the middle.
If you don't have emergency savings and are hit with a sudden home repair, your next best option could be to borrow against the equity you have in your property to cover your costs, whether via a home equity loan or a home equity line of credit. A personal loan is also an option, though you'll generally pay more in interest than you will on a home equity loan. And you really don't want to fall back on credit cards, since they tend to charge loads of interest.
One final thing: While some home repairs are unavoidable, sometimes, you can get ahead of them with proper maintenance and vigilance. Maintaining your air conditioning system and septic tank, for example, could help you avoid a scenario where you're suddenly dealing with a full-fledged replacement. And if you own income properties, encourage your tenants to report problems right away so they don't escalate into larger, costlier ones.