Whenever I’m ‘pitching’ RASTRA it usually takes about 2 minutes before someone asks “the price question”. So let’s just get it out of the way. A wall built from RASTRA can cost slightly more upfront than a wood frame wall. How much more, or how much less, depends on your project. Now don’t be discouraged, there’s good news if you stay with me.
Unfortunately people often make buying decisions based solely on what something costs without a clear understanding of what it costs to own. RASTRA may – again I said may - cost slightly more upfront than a wood frame wall, but it provides a much lower cost-of-ownership. Regardless of whether RASTRA costs slightly more or slightly less than a wood frame wall, I believe a RASTRA wall system is the best financial decision you can make when building a home or office.
So for this exercise let’s just assume that building with RASTRA does add cost to your project.
First, while RASTRA may cost slightly more upfront, it reduces construction costs in other areas such as downsizing your HVAC unit; and eliminates materials like insulation, vapor barrier, membrane and wire mesh on stucco applications. You can also expect to save on labor costs and realize tax savings. So when you combine these savings to the additional cost, an upgraded RASTRA wall is pretty close in price to a wood frame wall. But let's take a look at an example of what it may cost per month to upgrade to RASTRA.
If we assume your $250,000 project costs 2% more with RASTRA, the new purchase price becomes $255,000. This difference in price represents $31 per month pre-tax on a 6.5% fixed 30-year mortgage. Depending on where you live, lower insurance premiums alone resulting from resistance to fire, tornados, earthquakes and hurricanes could more than make up this difference. Some lenders now even offer better interest rates for energy-efficient homes that can offset this small increase.
Now let's assume that building with RASTRA lowers your utility bill by only $65 per month. Right away your $65 savings per month more than offsets the $31 increase in mortgage expense. But lets see what this savings means over time. Saving $65 a month means its going to take roughly 6½ years to save enough to offset the $5,000 increase in price for the upgraded wall - but remember, its costing you $24 less per month. Once you've saved enough to pay for the upgrade, you still have 23½ years left on your 30-year mortgage.
Over the next 23½ years, if you only save the same $65 a month, that represents additional savings of $18,330 – and that’s assuming energy prices don’t increase. If we assume energy prices only increase 3% each year over 23+ years, your savings will exceed $25,000. Add this savings in energy costs to lower maintenance costs and lower insurance premiums over 30 years, along with a higher resale value when you sell, and your original $5,000 upgrade turns out to be a great investment.
You don’t have to live in Minnesota to realize these savings. One RASTRA homeowner from Arizona informed us that his A/C cost in July was only $20! So it’s very possible that by upgrading to RASTRA you will experience positive cash flow from the first month you own your home. And the more energy prices increase, the more savings you will realize. While you can get a fixed rate loan to cap your mortgage payment, energy costs are likely to increase. RASTRA protects you from these higher energy costs by up to 50%.
Other than being cheap, wood frame walls are hard to justify. Wood rots, it burns, attracts termites, promotes mold, shrinks and warps which cracks your stucco, and by cutting down trees we reduce the earth’s ability to absorb carbon dioxide. RASTRA eliminates these problems and as a result, RASTRA reduces maintenance costs. Even your HVAC system lasts longer because it doesn’t work nearly as hard or as often.
Now let’s talk about resale value and appreciation. Two identical homes were built in the same neighborhood, one with traditional wood frame walls and the other using RASTRA and both are for sale. If you're like most buyers you'll be more attracted to the concrete home that’s safer, less expensive to heat & cool, costs less to insure, quieter, resists termites, provides cleaner indoor air quality and has lower maintenance costs. A survey by The Shelton Group found that 85.4% of homeowners surveyed said they would chose one home over another based on energy savings. So its logical to expect a RASTRA home to sell faster and at a premium.
To support the suggestion that energy-efficient homes have higher resale values, a study by the National Association of Realtors concluded that home values increase about $20 for every $1 in annual energy savings. Based on our same $65/month savings example, that represents nearly $21,000 in 10 years and $38,000 in 30 years in increased value if energy prices only increase 3% each year.
If the first year's $65 monthly energy savings, compounded at 3% over the life of a 30-year mortgage, is added to the increased value of the home, you will realize nearly $74,000 in additional value.
Another consideration is the potential challenge of reselling your less energy-efficient wood frame home and competing against new energy-efficient homes. Buyers will recognize they can purchase a new and larger home for the same or even less monthly cash outlay. Building the most energy-efficient home possible today improves your competitive position when it’s time to sell. Once emission restrictions are placed on new construction, homes built before restrictions were put in-place will be labeled as less-efficient and could be less appealing to homebuyers on the resale market, unless the home was built beyond present day standards. Building with RASTRA means you will exceed these standards.
Real estate is like any other investment, and for many of us its the single biggest investment we will ever make. Building with RASTRA provides the best opportunity for a maximized return-on-investment.
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