The ideal ERE house

[Pointedstick]

To go along with the "how much to put down on a house?" thread, I thought I'd start one on maintenance, durability, and repairability. Avoiding monthly expenses is a big part of ERE, but even with a paid-off house, if you're paying hundreds a month to utility companies, HOAs, or local governments, or constantly having to hire contractors to fix this or that, I imagine it can really add up.

For homeowners, what are some of your biggest sources of unavoidable costs, and how have you addressed them, or how would you if you could?

And if you could build a new house from scratch, how would you do it to avoid these kinds of expenses from the get-go, and make it as owner-repairable as possible? I'm thinking about things like small size, a masonry exterior, highly-insulated building envelope, some interior thermal mass, a steel roof, PEX plumbing, and building in an area with no HOA and low property taxes. What about the foundation? How do you save money on windows and doors? Craigslist? Would you consider installing solar panels or wind turbines? And how do you keep insurance costs low?

[hoost]

My biggest monthly housing expenses, aside from the current mortgage, are taxes (including HOA fees) and insurance.  Buying a smaller house will definitely help drive these costs down, as well as considering where you'd like to live (state, county, city, neighborhood, etc.).  Sometimes the "where" is much less flexible than the "how big", so I think it's important to spend a lot of time thinking about what size of house will be "enough".  Size will also dictate utility bills to a large degree.

[Coffee]

Have you looked into the Tiny House movement?

Also-- if building (and your building codes would allow it) I think the earthbag homes are pretty cool.

[Pointedstick]

Coffee: yes, I am very interested in building an earthbag house, and while a 120 sqft tiny house is a bit too small for me, my wife, and our baby, we definitely want a very small house. My general philosophy is to keep it as simple as possible, because everything you add--especially anything mechanical or electrical--is something that can and will break. And if you didn't put it in yourself, you probably won't be fixing it yourself either.

Building codes are a huge problem, sadly, unless you're in New Mexico or maybe Arizona. I hear strawbale construction is gaining acceptance in more areas, which is nice. Take a look at this beautiful home! http://www.houseofstraw.com/

[Coffee]

Unless you already have a lot of experience working in the trades, I'd just buckle up and pay someone to do it right, the first time.  You don't want to end up like this guy:

http://www.youtube.com/watch?v=qG7QJg2vWYU

[One day at a time]

I seriously considered a First Day for the combination
Of quality, philosophy, and sweat equity opportunity.
It's worth a look as part of the real life options
Out there beyond tiny homes, earth bag/straw bale, etc.
Recommend the interview with the architect/creator as well.

http://www.firstdaycottage.com/

[KevinW]

The default ERE recipe involves being within walking distance of your grocery supply. That almost always implies falling under the jurisdiction of building codes. Which almost always rules out tiny houses and any sort of alternative building method.

It's boring, but I think the most economical thing is a small condominium, centrally located, with other units on as many sides as possible, in a complex with no pool. Facing units cooperate at HVAC which is even better than fancy insulation. In a complex you share things like roofs, sewer pipes, and driveways, which is fundamentally cheaper than maintaining them yourself in a freestanding house. The HOA is supposed to amortize major renovations into a stable monthly bill which is particularly helpful to people living on investment income.

Condos involve some delegation which is contrary to the ERE DIY ethos. I think the most hardcore ERE dwelling that you could implement in city limits is
- small (< 1000 sq ft)
- stone or brick
- one story
- metal roof
- basement w/ root cellar, under-floor access
- almost off grid: PV solar, solar water heater, solar oven, wood stove, water catchment and windmill well
- passive cooling - eaves, window treatments, and trees
- graywater recycling, city sewer, PEX piping
- satellite or 4G internet
- huge garden
- chickens if legal
- garage converted to workshop and dry food storage
- no furnace, A/C, laundry service, stove, refrigerator, tank water heater, natural gas, oil, grid power

[MachineGhost]

http://www.firstdaycottage.com/

Looks like a pretty interesting alternative to manufactured or mobile homes for being in the same price range.

The only issue I see is they have a NorthEast Coastal seafood processing flavor, i.e. cannery row.

[Pointedstick]

All good ideas, KevinW. Unfortunately, leaving city limits doesn't lift the hassle of building codes in most areas. I used to be very down on codes, but the more I read about it, the more it seems like it's possible, you just need to be prepared for hassles and modifying your original plans. Walking distance to food includes the garden in my book, so I'd be okay with having the grocery store a bit farther away since I'm planning to keep the car.

I'm not a big fan of condos and HOAs for other reasons besides ERE. HOAs simply send chills up my spine, and I know myself well enough to understand how unhappy I'd be with a collectivist, pseudo-government body inevitable staffed by old conservative guardians able to impose non-negotiable costs on me in exchange for dictating aspects of my behavior. I'll take the benevolent dictatorship of my current apartment situation over an HOA any day.

[KevinW]

I share your principled objections to HOAs, but I took your question to be "what is the optimal house for a generic ERE practitioner," not "what is the cheapest house that caters to Pointedstick's preferences." I do think that condos are most economical. A hypothetical hardcore EREr is going to be doing things like going car free, making their own soap, and taking navy showers, so I don't think it's out of line to expect such a person to obey CC&Rs and tolerate shared walls in the name of thrift.

Where I live there is a $200k+ premium on freestanding houses vs. HOA-encumbered townhouses, so I bought a townhouse. I take dealing with the HOA as a Renaissance man challenge. I am currently on the board and it has been a good exercise in developing my political and interpersonal skills. I've had some success at maintaining fiscal conservatism and pushing rule enforcement to be "socially tolerant" so to speak. These things can be changed at the stroke of a pen if you have the right people on the board.

[TripleB]

The more I run numbers and look at the big picture, the more I like the idea of renting a 600 sq foot one bedroom apartment for $500 to $700 in most parts of the country where ERE is possible. You can't do that in downtown Manhattan but you can't do ERE there either.

For $7k per year all your housing expenses are covered minus utilities which you'd have to pay for anyway if you owned a house so that's a wash.

No HOA, no Insurance, no Repairs, the flexibility to leave anytime you want and move elsewhere.

Most importantly, the $50k to $200k you would have used to buy a house/condo is now able to sit in the PP earning 3% to 4% above inflation.

So while your apartment rents will rise over time with inflation, your investment portfolio is rising even more.

Suppose inflation is 3%. Your rent this year is $7k per year. That's only $200 more that your rent goes up next year for inflation. Suppose you were able to get a $50k house/condo that is suitable. By putting that $50k into the PP you earned $3500 assuming 4% real return and 3% inflation (7% total return).

Even if you did buy a $50k condo in Las Vegas at a short sale, you'd be paying maintenance, HOA, insurance, etc. And $50k is still on the low end of the spectrum.

More realistically, let's say $100k was the cost of the home/condo. That's double $50k so you'd be making $7k per year in the PP.

Well look at that! You can get an apartment for $7k per year. So in essence, your $100k PP is better off in the PP than tied up in equity of a house/condo. Of course, if your portfolio was exactly $100k and you earned exactly 4% real return above inflation, then you'd eventually run out of money if your rent was exactly $7k per year... but if your portfolio is a little bigger, then it covers rent in perpetuity without touching the principal. Throw some Apartment REITs in your VP if you're concerned rent inflation will exceed the PPs ability to combat it.

These are rough estimates that highlight buying a small home for ERE purposes may not be the best use of your capital. If you planned on having a garden out back that was growing vegetables than perhaps living in apartment won't work for you. Then again, perhaps the cost of the garden exceeds the value of food you can grow. It's only "free" to grow vegetables in your backyard if you negate the opportunity cost of buying a backyard. I'd guess property taxes on the value of land the backyard takes up will exceed any vegetables you can grow for 4 months out of the year, several times over. We're not in feudal Europe where the King is only going to seize a portion of your harvest. The local municipal government will be happy to tax you $1k per year on the value of your backyard even if all you can grow is $500 worth of vegetables.

[KevinW]

I think this analysis is correct when viewing housing in isolation from other parts of a lifestyle. However the ERE philosophy, at least as espoused in the ERE book, is to analyze the entire web of goals as one holistic system rather than separate constituent parts.

E.g. don't just look at housing options through the lens of housing/dollar but rather look for a DIY shelter/transport/exercise/entertainment/education solution. A small house, or condo with garage and patio, make it possible to
- have a kitchen garden which provides food, and exercise/entertainment/education
- have a maintenance workshop which makes bicycles, appliances, computers, etc. cheaper and provides exercise/entertainment/education
- maintain the property yourself (paint, plumbing, etc.) which is exercise/entertainment/education
- allow things like pull up bars, power tools, solar cookers, or water catchment that might be disallowed by landlords

That said, I think a small apartment is the cheapest housing (only) solution when analyzed through the lens of the money economy. This follows from division of labor. It's cheaper for 100 households in an apartment building to all share one roof, one furnace, one water meter, one external lighting system, the labor and workshop of one superintendent, etc. There are a few embedded assumptions there: that it is OK to depend on the superintendent, landlord, and utility companies, and that the DIY skills of maintaining your own property have no value. IMO these assumptions contradict the ERE ethos, but they aren't necessarily wrong.

So yeah, I think cheap apartments are the cheapest solution and probably the fastest path to early retirement, they just aren't exactly compatible with the Renaissance man ideal put forth in the ERE book.

Also I gotta say I don't understand the position of being OK living under a landlord's jurisdiction but not OK living with an HOA. Landlords control every aspect of the property inside and out, and HOAs only control the outside. I'd prefer to have neither but the landlord seems strictly more invasive. Some of my landlords were tyrants that actively invaded my privacy and forbade me from doing things I wanted, and so far I haven't had that experience with an HOA. Am I missing something?

[MachineGhost]

San Francisco’s Board of Supervisors tentatively approved Tuesday a trial run of 220-square-foot “micro-apartments”? — carefully designed compact living spaces that have become all the rage in urban development. Pending ratification and mayoral approval next month, the plan beats, in smallness, Vancouver’s 226-square-foot “micro-lofts,”? and make the 275-square-foot units under trial in New York look like airplane hangars.

http://www.wired.com/design/2012/11/san ... ments/all/

[Pointedstick]

San Francisco’s Board of Supervisors tentatively approved Tuesday a trial run of 220-square-foot “micro-apartments”? — carefully designed compact living spaces that have become all the rage in urban development. Pending ratification and mayoral approval next month, the plan beats, in smallness, Vancouver’s 226-square-foot “micro-lofts,”? and make the 275-square-foot units under trial in New York look like airplane hangars.

http://www.wired.com/design/2012/11/san ... ments/all/

In San Francisco, huh? They'll only cost $700,000 each! 

[TripleB]

Also I gotta say I don't understand the position of being OK living under a landlord's jurisdiction but not OK living with an HOA. Landlords control every aspect of the property inside and out, and HOAs only control the outside. I'd prefer to have neither but the landlord seems strictly more invasive. Some of my landlords were tyrants that actively invaded my privacy and forbade me from doing things I wanted, and so far I haven't had that experience with an HOA. Am I missing something?

With a landlord, they own the property, not you. Thus, I'd expect them to put in place stricter rules than an HOA, because in an HOA, you own the property.

If you have a tyrannical landlord, you can just move. Easy peasy. Lease a new apartment somewhere else. Now the landlord is out a tenant, and they have to clean your unit and go through the hassle of re-leasing it, at their expense. Thus, a landlord is incentivized to not be tyrannical.

If you have a tyrannical HOA, you can't just move. You have to try to sell the condo/house. There's closing costs involved. There's realtor fees involved. If a large percentage of units in your condo are being rented out (i.e. non-owner occupied) then a bank won't issue a mortgage to any prospective buyer of your condo. You're basically screwed. The HOA couldn't give two craps whether you do decide to leave or not, because if you do sell, the new buyer is responsible for paying HOA fees immediately. If you stay or if you go, the HOA is revenue neutral.

Compare these two situations:

1) The landlord is financial hurt if he's an asshole and causes you to leave. The HOA is not financially impacted.

2) You can easily move to a new apartment if your landlord is an asshole. You have a hell of a time and lots of expense getting away from an HOA.

3) You lease an apartment, the landlord owns the whole thing. The landlord restricts you from doing X number of things. You buy a home/condo. The HOA restricts you from doing Y number of things, which is a smaller number than X. However, you go from 0% ownership to 100% ownership and yet the restrictions on what you can do will only drop by [(Y-X)/X]%. Thus, you spend money for significantly greater ownership with only moderately less restrictions.

All of this said, it's just "theorycraft." I've never lived under an HOA. However, I've never been with a man sexually but I'm pretty sure I wouldn't enjoy it, so I avoid those situations (not that there's anything wrong with that). I don't feel the need to make out with a dude or buy a condo in an HOA to see if they are unpleasant for me as I believe they will be.

On to the other topics in your post, I agree with you that there is value to be had for owning a small home. In fact, the value might be to buy a small fixer-upper. Do the repairs yourself while living there. Perhaps even bartering skills with others. i.e. if you're good with website design, offer to barter design services to a local electrician to help wire your fixer-upper house for free. Do it with him and learn from the experience. Then after the house is all fixed up, sell it and do it again. I've thought of that as a strategy.

[doodle]

I don't know if it's been mentioned yet but I really like the idea of a large airstream trailer. Big enough for a small family and totally mobile.

[gizmo_rat]

I don't know if it's been mentioned yet but I really like the idea of a large airstream trailer. Big enough for a small family and totally mobile.

Love the look of those things, but read this a while ago that made them seem less than the ideal choice.

http://livingstingy.blogspot.co.uk/2012 ... reams.html

[Storm]

These look very cool.  I like how they combine the floor to ceiling glass with the outside patio area, making a modular home appear to be much larger and combining indoor and outdoor space.

http://www.nomadhome.com/en/

Concept diagram: 

http://www.nomadhome.com/en/concept/

Edit: added english link to main site.

[MachineGhost]

Love the look of those things, but read this a while ago that made them seem less than the ideal choice.

http://livingstingy.blogspot.co.uk/2012 ... reams.html

It sure sounds like a government boondoggle long past its prime.

[KevinW]

All of this said, it's just "theorycraft." I've never lived under an HOA. However, I've never been with a man sexually but I'm pretty sure I wouldn't enjoy it, so I avoid those situations (not that there's anything wrong with that). I don't feel the need to make out with a dude or buy a condo in an HOA to see if they are unpleasant for me as I believe they will be.

If the idea of HOAs bothers you this much then avoiding them is very sensible.

Honestly I haven't had these kinds of problems. I think what's maybe missing from your analysis is the fact that HOAs are organized under democratic principles and serve a very small constituency. So there are checks and balances against the worst tyranny. The board is like 5 guys with day jobs and if you can get 3 neighbors to agree with you, you just formed a powerful lobby. The scope and scale is very different from something like the US federal government.

Usually in libertarian-minded circles like this board, people advocate turning government functions over to small private organizations. HOAs are an example of that, so it's always puzzling to me when small government types rail against them. Yes it would be ideal for no one to regulate landscaping, but if someone's going to do it, it seems like a private opt-in organization is better than the city government.

These look very cool.  I like how they combine the floor to ceiling glass with the outside patio area, making a modular home appear to be much larger and combining indoor and outdoor space.

http://www.nomadhome.com/en/

Concept diagram: 

http://www.nomadhome.com/en/concept/

Edit: added english link to main site.

Sometimes I daydream about things like Airstreams and nomadhomes. But if you move around a lot, you have huge fuel bills, and it seems like fuel is only going to get more and more expensive over time. Doesn't seem sustainable. If I'm going to park in one place, I'd like it to be a neighborhood centrally located near a downtown. And places that allow trailers and mobile homes to be parked, are rarely in locations like that. So I end up coming back to a freestanding cottage or small house.

[smurff]

Or a condo, coop, or condop, complete with HOA and or Board of directors.