Let’s take a big step back: About a year ago, during the early house hunting phase, we began to research the potential total project cost at a very basic level. The equation is pretty simple: One part is the purchase price of the property. The other is the cost for rehabbing it into a zero-energy home. I ignore all the landscape work that is not directly related to the building structure for now, assuming I will do that work myself as I did at the 168 Elm Ave. pilot project.
The sum of the purchase price plus the cost of rehabbing should not exceed the potential (appraised) resale price. We admit that the latter is a rather difficult to determine in this current market.
At the time (one year ago) we assume a purchase price of $150,000 and a resale price of $250,000. That would leave us with a $100,000 rehab budget. What do we get for a $100,000 if I have around 3,000 square feet to rehab? To find out I developed a very basic laundry list of rehab items for an imaginary two flat. I talked to some colleagues, material suppliers and tradesmen and came up with the following:
- $10,000 for roof replacement
- $30,000 for plumbing
- $10,000 for electrical
- $25,000 for windows
- $15,000 for insulation
- $50,000 for radiant floor heating
- $10,000 for framing work
- $20,000 for drywall
- $25,000 for bathroom and kitchen (two flat)
- $195,000 total estimated project cost!
We have a problem – a $95,000 problem. Even if we assume a rock bottom purchase price of $100,000, we would still be $45,000 over budget – unless we feel that we could sell the house eventually for $295,000. That would just cover the cost but not account for any payback for our time we will have invested into the project. Furthermore, there is the curse of the ‘preliminary budget,’ which – no matter how conservatively you set them up – never seem to cover the actual project cost.
Needless to say that we were cost-shocked! Who can afford this? If we would like this to become another pilot project that demonstrates the applicability of rehabbing an existing structure into a zero-energy home, we have figure out how to get the cost down to an affordable level.