Author Topic: Building a house for $0 utility bills  (Read 2177 times)

BAMxi

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Building a house for $0 utility bills
« on: March 23, 2017, 11:48:14 AM »
In the Midwest market I live in, everything usually follows the "bigger is better" mantra. My wife and I have been looking for a smallish house (1200-1300 sq ft) on a little bit of land (a half acre or more for gardening and privacy) for the past couple years. We have quickly come to realize that as you go up in price, the overall quality of houses/land doesn't particularly increase as much as the size of the house does. We started looking in the $150,000 price range (about average for the area) and those all seem to be houses that look fine, but the materials used are mostly builder grade and almost certainly have skimped on insulation, windows and doors, etc (our building code is fairly lax to non-existent depending on the area) all on small lots crammed into neighborhoods. When bumping up to look in the $200,000-$230,000 range, it seems the houses just get huge but follow that same general low quality. Many houses in this range are over 3,000 sq ft, with a few even exceeding 4,000! INSANE! The few houses we have found that were more "our size" on a lot that would work for us have been very old with single pane windows, questionable insulation, and in one case, knob and tube wiring and a 40 year old HVAC system. yikes.

So, we have been in early talks with a local architect who only does ultra green/eco friendly builds for net zero homes. I really like this idea, as part of our Mustachian plan is always to minimize ongoing expenses, so once a house is paid off, having no ongoing utilities really appeals to me. That being said, my area of the midwest is not really all that forward-thinking, so i'm concerned that investing additional cost into things you can't "see" like insulation, expensive windows, etc may not lead to a return if we ever ended up deciding to sell the house. I'm also concerned about being overpriced for the locations we're looking in. A house like we're wanting to build would likely exceed $150/sq ft. I want to be in a somewhat rural area and would ideally have a couple acres so that we can grow food, maybe have a couple goats, etc. Houses in areas like that in the $200k+ price range are usually well over 2500 sq ft., so I'm concerned about building about a house about half that size and potentially needing to ask a similar price. I realize that green and energy efficient building are fairly new ideas, but wondering any thoughts or experience you might have in this area. I've been advised by a realtor that costs to build in general are very high right now, but he also would benefit much more from selling me a $200k house versus a $30k plot of land, so I'd like some impartial feedback as well. Thanks!

Prairie Stash

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Re: Building a house for $0 utility bills
« Reply #1 on: March 23, 2017, 12:17:01 PM »
What's the cost difference building net-zero and regular? How much to bring gas lines to the house site for example, there's some savings offsetting the build cost.

Resale isn't the reason to do it. It should either align with values or pay for itself.

BAMxi

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Re: Building a house for $0 utility bills
« Reply #2 on: March 23, 2017, 01:27:47 PM »
What's the cost difference building net-zero and regular? How much to bring gas lines to the house site for example, there's some savings offsetting the build cost.

Resale isn't the reason to do it. It should either align with values or pay for itself.

By my quite rough calculations, we'd add at least $10-$20 per sq ft (or more realistically try to skip some fancier finishes to try to make the cost difference minimal) going net zero versus not. Most properties we're considering have utilities onsite, and that is a cost either way, as we haven't really talked about going truly "off grid" and would prefer to have city water/sewer versus the extra cost of digging a well and having to deal with a septic tank (i have a horror story about septic tanks that i will not get into here). If we were truly net zero we would sell generated electricity back to the city.

And yes, I agree that we'd be doing it because of our values versus trying to turn a buck if the time to sell ever came. The goal would be to have the house designed in a way that we like and to plan to live there for a very long time, if not indefinitely. Historically, however, I've been pretty terrible at predicting my own future and sometimes I seem to find myself being presented with opportunities I didn't even know about in years prior, so i don't think it's unreasonable to at least be considering comps and resale when looking into this endeavor.

bacchi

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Re: Building a house for $0 utility bills
« Reply #3 on: March 23, 2017, 02:59:44 PM »
Selling a net-zero house is probably hard anywhere in the country. I know a builder who built a spec net-zero house in Dallas and it took a year to sell and that was in a hot market.

Can you do some green upgrades instead of going full-on passivhaus? Put 6" of rigid foam on the top of the roof deck, extra insulate the slab, etc.

gardeningandgreen

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Re: Building a house for $0 utility bills
« Reply #4 on: March 23, 2017, 03:32:04 PM »
As a person who lives in the upper upper Midwest in a 100 year old house with single pane windows and nearly nonexistent insulation, I would love to have a net-zero house! However we got an amazing deal on this house and are working to do upgrades to make the house greener. For example right now we have started to do new windows, siding and doors. We are also doing quite a bit of insulation. These things may not increase the value of our home too much but they are needed to keep the value as it is. It will also lower our utility bills. It wont eliminate them entirely but it will make it much better. What I'm saying is that it may be worth it to buy one of those old houses and remodel if you get it for the right price! However, I do want to build my own house one day on some land and make it extremely energy efficient maybe not net-zero but close.

Cadman

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Re: Building a house for $0 utility bills
« Reply #5 on: March 23, 2017, 05:05:45 PM »
Selling such a thing for a premium will be tough, but if I were doing it for me, my approach would be the following:

Buy enough land that you can enroll a number of acres in a CRP program in addition to your gardening needs. Those payments could cover your property taxes.

A 5-6kW grid-tie solar array should cover your power use and you might even get cut a check each month from the PoCo.

Septic and Well mean no monthly utility fees.

2x6 walls with closed cell foam and quality windows will help with the heating/cooling. 9' ceilings or less. For heating, I'd recommend radiant in-floor heat that could be either LP fired or heated from a wood burner away from the house. An attic-mount 'whole house fan' or clerestory window setup will make cooling much easier without resorting to A/C. Go for deep overhangs and site the structure to block the sun in summer, but to admit the solar gain during winter.

It'll probably cost as much as a 2000-2500 sq ft house to build something like this in the 1500 sq ft range and do it right, but the long term payoff is worth it IMHO.

Blindsquirrel

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Re: Building a house for $0 utility bills
« Reply #6 on: March 23, 2017, 06:44:38 PM »
  It is almost always cheaper to buy existing and fix up. Even if you spend a ton to make it energy efficient (you will not get to zero) you will be better off cash wise to buy an existing house and fix it up. If you are not going to be working for long, the semi-rural areas in most of the midwest are dirt cheap for an older house.

thunderball

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Re: Building a house for $0 utility bills
« Reply #7 on: March 23, 2017, 07:09:23 PM »

OP, you're describing what my wife and I would love to do.  I'm huge fan of net-zero because we live in New England and the utility cost of wood, oil, and electric combined add up to ~$3500/year.  Plus power can go out with huge storms.  The idea of being self-sufficient is a huge plus in my opinion, even if the cost is slightly higher.

BAMxi

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Re: Building a house for $0 utility bills
« Reply #8 on: March 24, 2017, 09:07:14 AM »

OP, you're describing what my wife and I would love to do.  I'm huge fan of net-zero because we live in New England and the utility cost of wood, oil, and electric combined add up to ~$3500/year.  Plus power can go out with huge storms.  The idea of being self-sufficient is a huge plus in my opinion, even if the cost is slightly higher.

Yeah I agree. Net zero aligns with my beliefs on a number of levels. In addition to the eco friendly part of it, it allows us to be more in control of what we're spending each month as well as not have to worry about rising or fluctuating costs of electricity and fuel. In Missouri, the winters aren't as extreme as your NE winters, but heating costs are still a considerable expense in the winter. Many people i know in rural areas use a wood powered external furnace to heat their homes. They like and recommend this, however again you're at the mercy of finding/buying wood and also polluting a lot.

YttriumNitrate

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Re: Building a house for $0 utility bills
« Reply #9 on: March 24, 2017, 03:26:33 PM »
Houses in areas like that in the $200k+ price range are usually well over 2500 sq ft., so I'm concerned about building about a house about half that size and potentially needing to ask a similar price. I realize that green and energy efficient building are fairly new ideas, but wondering any thoughts or experience you might have in this area.

Remember, that the price of solar/green tech has been dropping for the last 20 something years, and will probably continue to do so. That means when you eventually sell your competition might have a better system that cost a fraction of what you paid. For example, if ~7 years ago, someone paid $2,000 to completely replace their bulbs with LED bulbs, that improvement adds about $40 in value these days.
« Last Edit: March 24, 2017, 03:32:19 PM by YttriumNitrate »

electriceagle

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Re: Building a house for $0 utility bills
« Reply #10 on: March 25, 2017, 12:46:49 AM »
Houses in areas like that in the $200k+ price range are usually well over 2500 sq ft., so I'm concerned about building about a house about half that size and potentially needing to ask a similar price. I realize that green and energy efficient building are fairly new ideas, but wondering any thoughts or experience you might have in this area.

Remember, that the price of solar/green tech has been dropping for the last 20 something years, and will probably continue to do so. That means when you eventually sell your competition might have a better system that cost a fraction of what you paid. For example, if ~7 years ago, someone paid $2,000 to completely replace their bulbs with LED bulbs, that improvement adds about $40 in value these days.

But, solar is getting to the point where (depending on your location and type of equipment installed) half of your cost is parts and the other half is installation. The cost of installation should move up with inflation, even as the cost of equipment decreases due to advances in manufacturing.

In short, that curve should start to level off soon.

YttriumNitrate

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Re: Building a house for $0 utility bills
« Reply #11 on: March 25, 2017, 06:56:54 AM »
But, solar is getting to the point where (depending on your location and type of equipment installed) half of your cost is parts and the other half is installation. The cost of installation should move up with inflation, even as the cost of equipment decreases due to advances in manufacturing.

In short, that curve should start to level off soon.
Perhaps...although I can imagine a point in the future where PV shingles cost only a fraction more to install than asphalt shingles.

BAMxi

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Re: Building a house for $0 utility bills
« Reply #12 on: March 27, 2017, 09:08:44 AM »
But, solar is getting to the point where (depending on your location and type of equipment installed) half of your cost is parts and the other half is installation. The cost of installation should move up with inflation, even as the cost of equipment decreases due to advances in manufacturing.

In short, that curve should start to level off soon.
Perhaps...although I can imagine a point in the future where PV shingles cost only a fraction more to install than asphalt shingles.

Elon Musk is already talking about us being at that point now. He's scheduled to start accepting orders for solar shingles starting April 1. I'd be very interested in that, as he claims the cost would be similar to a "normal" roof. I'm assuming he means a "normal" high-end slate or tile roof, certainly not asphalt shingle roof which is much cheaper. If we go the net zero route, I would definitely want to look into that as an option, even if there is a long wait time.

After further discussions with an architect and a realtor, I have a couple other considerations. One is that acreage and land in general is becoming fairly scarce in our area (college town with steady population growth, currently about 110k residents and low unemployment). So, while appreciation of additional energy efficiency components may not keep up with costs being driven down as the tech ages, I could make up at least some of that cost in the value of land if we bought in the right place and held onto it for 10-15 years at least. This would not necessarily be the case if we built in a neighborhood and there were many other "comps" on the same block with lower asking prices. If we truly had $0 electric bills, we would also be in a position to have saved money every month which would go toward recovering that cost as well. I would not have really any plans to sell the house unless a major life change happened with jobs or some other unforeseen crisis that left us in a really terrible financial situation.

By my current math, if we can keep this project at or near our budgeted numbers, we could have the house paid off in 2-3 years from move in, if we were very aggressive with that debt. I am not going to go into the "pay off the house vs invest" discussion here, but in our particular situation, paying off the house is going to be our primary target as it would enable us both to work less hours and still hit our investment targets. FIRE will take longer on this approach but our lives during this time should be substantially more enjoyable.