There was this idea gnawing at me for a couple of years. Why can’t you find a sustainable, affordable net-zero home, basically anywhere? The tech is here, the renewable and efficiency prices have come down, smart home products are advertised all over, and yet you just can’t seem to find anything.
It just seemed to make sense all around that this would exist. You save on monthly bills and are sustainable, fun, and modern. A more comfortable home and lower ownership costs ultimately create a more valuable home as well, along with the opportunity for wealth building over time.
Aside from a few homes here and there, this doesn’t really exist yet. And the ones that do exist are mostly priced out of reach for the average working family or first-time millennial buyer.
Enter our first net-zero solar home renovation project.
So what if the above goals were possible? I didn’t know what would happen when I set out a year ago to make this a reality. While I have experience as a real estate investor with some solar design and energy efficiency, I had never renovated a house before. I was coming at it from a non-expert starting point.
Nearly a year later, now, I’m writing this from inside a fully renovated, net-zero, and hurricane-proof home under the area median average home price. It was definitely a roller coaster start to finish, but ultimately very rewarding.
This article will be mainly a summary of the project. But there will be many more after it covering all the details.
Why do a net-zero home renovation?
There has been all this talk about net-zero, carbon neutrality, Teslas and EV’s, and sustainability. And by now, we all know about climate change and sea-level rise.
We also know about the housing affordability problem and widening the wealth gap, which is now totally amplified by the pandemic.
And you can see awesome renewable and efficiency projects on a country-wide scale going up around the world. Still, it seems like individual homes themselves have been left behind.
Millions of Inefficient Homes
There are something like 82+ million single-family homes in the United States, and hundreds of millions across the world. Nearly every single one of them is inefficient by today’s standards and technology. This also means wasted energy and ongoing costs.
Tens of millions of millennials and younger buyers are also now looking to buy a house for the first time. We love Tesla, we love smart home tech and renewable energy. And most of us have an interest in making a difference and caring for the environment if at all possible.
We love more mid-century modern or farmhouse-style homes, with Ikea products and Amazon boxes all over the house. But when we’re looking on Zillow or at houses for sale, the reality is that this doesn’t exist yet, especially in our price range.
Hard to Do But Totally Doable
The truth is, and as I found out over this 9-month renovation project, it’s near impossible to bring all this together. Don’t get me wrong – people are doing it, and there are many cool projects out there. But how are we going to tackle each of these existing homes one by one? That’s what I wanted to go for. To create something that can be used to intertwine personal finance, wealth building, and sustainable living. I wanted to prove that it was possible.
While there were a lot of ideas in play, the actual, functional goals of the project were very concrete:
1) Keep the total cost under the median average home price of the area.
The first goal really covers the traditional wealth-building aspect. If you have a home under or at the median average home value of your area, even with all these bells and whistles, you will have a really good chance of being sheltered from recessions and temporary market declines (as compared to the owner of a more expensive home). You also benefit from riding the home price appreciation wave up over the long run as well.
2) Ensure that it can rent out for 10-15% above all ownership costs, including long-term maintenance.
Goal #2 is really the first and most important traditional real estate investing rule when buying rental homes, in my opinion. This is most likely going to be your own home. But unexpected things happen in life. A new job or a family member becoming ill could force an unexpected move. The market could decline over the next 5-10 years. But if something like that does happen, you’re able to rent it out and cover all costs to own it. This allows you to ride out any temporary setbacks or market cycles. It also allows you to benefit from long-term homeownership and wealth-building.
3) Be fully net-zero, with efficiency and renewable energy (solar) powering the entire house.
The third goal has to do with sustainability and cool technology. Costs have come down now, to the point where it can make financial and environmental sense to have homes save and produce their own power. To the point even where it’s making homes more valuable and you get a better risk-free return on your investment. Better than the stock market, bonds, or other traditional measures, even. While it’s not all about the money, the money has to make sense.
4) Bonus – Have enough budget and power production potential to also power an electric car fully.
The last goal of powering an electric car is really where the world is going next within 10-15 years. So why not do it now? It wasn’t initially on the radar, but after the planning and crunching the numbers, it ended up being a possibility.
This wasn’t going to happen without meeting the other three goals first. But I was elated when the numbers showed that I would be able to reach my personal goal of selling the gas car to get a Tesla Model 3. The system was designed to power the Tesla for 10,000 miles per year. But the solar production now shows that it can actually go much further than that.
Finding The Home
It took a long time to find the house itself due to the criteria needed. Options were limited because real estate has already been red hot for years, even before the pandemic. In addition to that, you want to look for some specific things when going for full net-zero.
A big south-facing roof, which ideally has recently been redone (new shingles), is high on the list. If you’re not a wholesaler or a full-time real estate professional doing flips all the time, good luck finding a good deal in a hot market.
This roof was largely the reason for buying this home. It was just redone six months earlier, and faces 180 degrees perfectly south, at a near-perfect angle for optimal solar energy production. The total area is about 800 sq ft, allowing for a 10+ Kilowatt system if needed.
Choose A Solid, Fast Growing Market
I also wanted to do the project in an affordable, growing real estate market. Someplace where, if a recession hit and I screwed up royally on my budgeting (being a first-time fix-n-flipper), I might be able to get out of it alive.
After scouring the MLS in many cities, the best option ended up being in the Cape Coral/Fort Myers area in Florida, for this project anyway. It was a combo of the overall real estate market and the house itself, having a near-perfect roof for solar. It was also my hometown, so I knew it reasonably well.
As long as you catch the wave in a growing city, and the bottom doesn’t drop out of the economy, you should be good.
It was a pretty crazy full-time nine-month project, especially being my first one. For the first three months, I was actually stuck in planning (and admittedly perhaps panic mode). The pandemic had just hit, and the world was seemingly ending in March/April. There will be many more write-ups, but here is a rundown of some of the progress:
Some Before Pictures:
I had just driven across the country from Denver, CO to Cape Coral, FL. The idea was to move into the home and run the project as my primary residence. (More on the tax benefits of that later). Certainly, I did not anticipate a full pandemic lockdown when first trying to get started. It was pretty hard to think about tackling a home renovation at the time, but ultimately we all have to plow forward.
The house itself is a near-original, 1984 built, wood-frame home. Being a typical three-bedroom two-bathroom home, it was a good candidate for a full fix-and-flip update.
The idea was to combine typical updates with efficiency, hurricane-proofing and solar energy, then add lots of smart home tech.
The project included everything. New paint inside and out, flooring, plumbing, electrical, a new kitchen down to the studs, busting walls down, drywall repairs, new showers, and all the rest.
Hurricane Impact Windows & Doors
I’ll be doing a deep dive into every single improvement over the next weeks and months. In short, as I look back on it now – it was incredibly fulfilling.
Living in a Project House is Insane
I’m not going to sugarcoat it, though, as I feel it’s essential for people to know what they’re getting into. Living in a project house is insane. The stress of living in a dust bowl, without a kitchen, for weeks, all while a pandemic was going on outside, was too much to handle sometimes.
Having contractors and people in and out, material delays, and working twelve-hour days gets to you. While it’s rewarding in its own right to have it done, just know what you’re in for.
Would I do it again? Yes, for sure, especially given the numbers (see below).
As they say – Will it be easy? Nope. Is it worth it? Absolutely.
Living here during the project was beneficial in many ways, though. It allowed for more hands-on management, learning, and saving on rent and vs. living somewhere else. Other advantages included tax benefits of being a primary residence, security (materials not getting stolen), being on site all the time, getting to know the house, and more.
I’ll probably take a more experienced and business-like approach to the next house. And I would anticipate easily shaving off a couple of months and $10,000+ using what I learned on this one.
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Sustainability – Energy Efficiency and Solar
All of the energy efficient and solar elements were added costs onto the project. But the goal was to achieve full net-zero while still making financial sense for the average home buyer.
It was a real challenge given that there’s not much out there yet in terms of organized resources or examples of it being done. Though I have a background in solar, energy efficiency, finance, and real estate, the combination was a new one.
Even the appraiser actually had no homes to compare it to when I went for the cash-out refinance at the end of the project. This was literally the first home in town going for this. This led to many nervous discussions between the lender and the appraiser. It also led to a slightly suppressed home value vs. what I spent (on paper) for the new mortgage. This is something that you all might run into in your area as well.
Pick the Lowest Hanging Fruit First
Nonetheless, there was a good way to tackle it. When you’re doing efficiency or renewable projects and trying to make the financing work, start with the lowest hanging fruit. Chip away at all the items with the lowest payback on your money and highest return on investment first. This will, in turn, bring down the overall costs for the complete project.
To compare energy to personal finance – the more you’re able to save, the less you need to produce.
I tried to tackle all of it. But a quick list includes energy modeling, blower door tests, air sealing, insulation, water heater, HVAC calculations, and appliances. Correct solar design and system sizing were the final pieces.
All The Data
The home is outfitted with monitoring systems and apps (either affordable or totally free) that show electricity production and usage. Every electrical circuit and every individual solar panel is monitored, allowing you to see exactly what the house is doing!
There’s a lot there, but don’t worry–I’ll be writing up each part of the project separately. I also plan to make calculators and systems available so you can do this yourself as well. Stay tuned!
I went into this thinking that I would probably lose money on it after everything was said and done. At some point, you have to be willing to do this just to get the idea jump-started. That’s true not just with homes but with anything you go after.
So Here’s How Our First Net-Zero Home Renovation Turned Out:
3 bed / 3 bathroom / 2.5 car garage 1,836sq ft home in Cape Coral, FL built 1984
Purchase price: $199,900
Total project cost: $84,357.14
Total spent: $284,257.14
Per Zillow the average area home for this zip code is $318,301, meeting goal #1.
Yearly home electricity savings: $1,800 ($150 per month)
Yearly Tesla/EV savings from not buying gas anymore: $592 ($49 per month)
Total yearly electric and gas savings: $2,392 per year
Total on-paper appraised value for the loan: $275,000 (there were no comps in town)
Value if I were to list the house on the market per the appraiser’s opinion: $305,000-$310,000
Mortgage payment with 20% at 2.99%: $926.34 per month
Property tax payment per month: $95.98
Homeowner’s insurance per month: $147.17
Water bill per month: $85 (ridiculous)
Monthly utility solar net-metering hookup fee (they still want your money) even if net-zero: $21.69
Assume $1,000 per year in ongoing maintenance (to be safe): $83/mo
Total monthly cost to own: $1,359.18
A house like this rents out for $1,750+ per month unfurnished, and over $1,900+ per month furnished/AirBnB type of thing in this area. This number, again, is to cover goal #2.
The monthly cost to own vs. the rental value is really the key to long-term wealth building. Even with all the extra net-zero home expenses of $35-40,000, the numbers work.
It meets all the goals described above. Whew!
I don’t include any home price appreciation into my calculations because this number can go north or south quickly, and nothing is guaranteed. If houses go up in value over time, that’s an added bonus.
At the moment, though, we are in an inflationary economic environment, with single-family homes flying off the shelves. Things are good now, but that can change. The average home value increase usually follows inflation over time, though, which is 3% or so. So I’ll stick to that, which would be about $8,000 this year.
This is now a full net-zero asset and home. The home, and my lifestyle, produce zero-emissions net-net (after a short period to recoup the building costs and emissions). It’s also set up as a great home to either live in or rent out. And beyond that, it checks all the boxes of using real estate for long-term wealth building and asset ownership.
There’s a lot more to share! And again, I’ll be writing up every piece of the project individually for more of a deep dive.
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