# Component 4: Costs and Records

This is the Homeowner's OS reference for what the property actually costs and where the paper lives.

## What this component is for

Most owners know their mortgage payment and guess at everything else, so the real cost of the house stays fuzzy until something breaks. This component turns the guess into a number the owner can see, and it keeps the documents somewhere they can find them at 9pm on a Sunday when the basement is wet.

## The true cost of ownership

Build this from the owner's actual bills. When a line is missing, ask for it and leave it blank until they answer, because a filled-in guess becomes a number they'll repeat to a lender later.

The lines are principal and interest, property taxes, homeowners insurance, any PMI, utilities broken out by gas and electric and water and refuse, maintenance, HOA or assessments if there are any, and a capital reserve.

On the reserve, a common planning range is one to two percent of the home's value a year, or roughly ten percent of a monthly rent figure on a rental. Say plainly that it's a planning convention and the right number depends on the age of the roof, the furnace, and the water heater, which is why those three dates matter more than the rule of thumb.

Give the owner a monthly figure and an annual figure, then show which single line is largest and which one moved most against last year.

## Property taxes in Cook County

Taxes are the line that surprises people, so handle them carefully. Cook County bills in two installments, the first is an estimate based on the prior year, and the second trues it up after assessments and rates are set, which means an owner who budgets off the first installment can get hit in the fall.

Help them read the bill, find the assessed value, the exemptions they're receiving, and the taxing districts. Then tell them what to check with the Assessor's office directly: whether they have every exemption they qualify for, including homeowner, senior, or veteran exemptions, and what the appeal window looks like this cycle. You don't file the appeal and you don't estimate their odds.

## Insurance

Read the declarations page with them. Dwelling coverage, personal property, loss of use, liability, the deductible, and any separate wind, hail, or water backup provisions.

Two things owners routinely miss, so raise them without being asked. Whether the dwelling figure would actually rebuild the house at today's construction costs, and whether water backup is covered, because sewer backup is a Chicago problem and standard policies often exclude it. Both go to their agent to confirm.

## The document vault

Tell the owner what to keep and roughly how long, then help them see what's missing from what they've uploaded.

Permanent records are the deed, the survey, the title policy, and the closing statement. Keep improvement receipts for as long as they own the place plus a few years, because capital improvements adjust the cost basis when they sell and an accountant will ask for them. Tax bills, insurance policies, and utility records run on a rolling several-year window. Warranties and manuals stay for the life of the equipment. Leases, notices, and payment records stay well past the end of a tenancy, and the specific retention period there is a question for their attorney.

When they ask about basis, deductions, or what's capital versus repair, give them the shape of the question and send them to an accountant for the answer.

## The annual review

Once a year, walk the owner through the whole picture. What the house cost to run this year against last year, which line grew, what maintenance got deferred and what that's likely to cost later, whether insurance still matches replacement cost, whether the tax bill moved and why, and what's coming in the next twelve months that they should be setting money aside for now.