Solar Electricity – Retirement Investment

Downsizing to a smaller new house for your retirement?  Don’t forget to think about solar power.

Last week I revised a post ‘Solar Power is it Worth It?‘  but if you are approaching retirement, like me, there can be an even bigger financial advantage in having solar installed.

Differing Lifestyle

Because we are both out at work during the weeks I calculated that with a 1.5kw system costing around $3,000 panels we will save:

      • Weekdays $1.09
      • Weekends $1.40

See the original post to see how I arrived at these figures

After retirement its likely that our weekday usage patterns will be more like the weekends so our annual savings are expected to be 365 x $1.40 = $511.

Effect on Pension

I am assuming that you will have some money from superannuation, but not enough to mean you won’t be eligible for a state pension.

If you have more assets then the Government limits your pension. It will be reduced by $39 per annum for every extra thousand dollars. (Basically the government takes the interest)

Invest $3,000 in a solar power system and that becomes part of your house, which is excluded from the governments asset test. You will therefore be eligible for an extra $117 a year pension.

Summary

The expected benefit for your $3,000 investment is:

$511 + $117 = $628.

20.9% Return with a Payback of Under 5 years

I don’t know about you but i’m hoping to live a lot longer than 5 years beyond retirement!

For more about solar panels see Sustainability, Solar Power

To see an updated review see Cost / Benefits

 

Brick ‘Bulldust’


I hear a lot of people agonise over the choice of bricks for their new house.

That’s probably because they are:

  1. Looking Too Closely. At the builders display centre you may be handed individual bricks or see a board with about 8 bricks on it. When you have been in the house a month you probably won’t notice the individual bricks. You only see the overall effect.
  2. Taken In By The ‘Hype’. Brochures use words like Premium, Valued, Crafted and other ‘Bulldust’. (see ‘Brochure Bulldust’ below)

 

Brochure Bulldust

These premium bricks are derived from the uniquely textured and blended heritage of the original “hand made” English bricks. It is these timeless characteristics that have been applied by highly skilled craftsmen to a range of clay colours.

The palette now includes subtle grey blends, warm, earthy reds & tans, bold coffee browns and deep black tones.

This premium range of genuine clay bricks are unique and highly valued by building professionals. The range is a statement of luxury befitting premium homes, residential developments and commercial applications.

Translation

In the old days when all work was done by hand it wasn’t practical to mix clay to get a consistent colour, so you got what came from the raw clay.

These  bricks are machine made with a mix of clay colours, but we think we can charge a lot more for them.

 

HINT

When choosing bricks go to a Brick Suppliers Display Centre and only look at bricks panels from at least 3m away. It much easier to see if a cheaper brick gives the effect you want.

 

‘Premium Bricks’ will add thousands when ‘Choosing a House’

See Bricks for more posts

 

Solar Electricity – Is It Worthwhile? (2014)

There is a lot of marketing information around about Grid Connected Solar Panels but not many independant facts. Here’s an example of an evaluation of a basic system for a house.

  • We use around 16kw hours (kwhr) of electricity per day which is fairly typical;
  • For each 1kw of solar panels we can expect to generate around 1300kw hours per year that’s an average around 3.5 kw hours per day;
  • For a basic 1.5kw system we should generate on average about 5.2kwhrs;
  • Our current tariff for power is $0.3152 /kwhr regardless of time of day;
  • I have done the evaluation assuming that any surplus power is sold back at$0.08/kwhour.

How Much Will Be Saved?

Weekdays (as we both work and the house is empty during the day) we should be able to put at least 2.5 kwhrs into the grid and use a maximum of 2.7kwhrs running fridges etc)

Income 2.5kwhr @ $0.08 = $0.24

Saving 2.7kwhr @ $0.3152 = $0.85

Benefit = ($0.24 + $0.85) x 260 days = $283

Weekends we probably will only put 1kwhr into the grid as we may well be at home using power for TVs, heating or cooling, etc.

Income 1kwhr @ $0.08 = $0.08

Saving 4.2kwhr @ $0.3152= $1.32

Benefit = ($0.08 + $1.32) x 104 days = $145

Total annual benefit is $428.4

Is it worth it?

Well there are some 1.5kw systems being advertised now with various rebates which cost less than $3000.

If you had $3000 on term deposit returning 4% that’s $120 a year, which would then be taxed. Alternatively if you put the cost on your mortgage that will mean that you are borrowing $3000 at a rate of around 6%. That’s costing around $180.

From these figures it looks like for the basic system you will be around $250-$310/year better off.

NB. I first did a Cost Review in 2011. Since then the cost of panels, and the government subsidies, have gone down. The cost of power from the grid has gone up. The overall financial advantage is around the same.

 

To see an updated review see Cost / Benefits

 

For similar posts see Solar Electricity in the Sustainability Tab

 

Ghost House 2

Here is another Ghost House where nothing seems to have moved for a long time.

As you can see it was going to be a big house.

After being exposed to the elements for years it’s probably only fit for demolition.

I have heard people say you should aim for the biggest you can afford . . . . That’s fine as long as things go well . . . . . . . . Hit a problem and this can be the result.

‘Choosing a New House‘ explains building costs to help you avoid finishing up with a ‘Ghost House’  like this.

6 Reasons To Have A Pool

I recently posted on 6 Reasons Why I Won’t Have a Pool and got some comments back. . . . . . so here are some Alternative Views.

  1. Heat Relief – Dive in to cool off on a sweltering day. One suggestion I received was have a TV installed so you can watch it from the pool.
  2. Keeping Children Occupied  – Playing in the pool can keep children occupied for hours, and gets them away from the computer games.
  3. Relaxing –  The  resort effect can put you in a holiday mood.
  4. Exercise –  Even if the pool is not big enough to swim lengths there are  resistance exercises such as  Water Aerobics.
  5. Parties – Great location for family pool party.
  6. Emergencies – The pool water can be used to fight a bush fires. Pool water should only be used as a last resort as it can contaminate tank water, kill plants, and cause corrosion on unprotected steel.

I’m still not convinced, but if you think you might want a pool it should be considered before you buy a block and plan your home.

Delaying Progress Payments


So your builder has just made a claim for a Progress Payment . . . . . but you are not happy with the workmanship, or don’t agree that the Construction Stage is finished.

What can you do?

A lot of people would say “Don’t make the payment!”  but it’s not quite as simple as that!

What The Contract Says

Here are some of the relevant sections from the HIA contract used in my last build.

  • A time limit for payment in days (Schedule 1.7* Will typically range from 7 to 10 days).
  • A rate for penalty interest if the payment is not made by the due date. (Schedule 1.8* Typically minimum of 15% per annum, calculated daily, but can be up to 25%)
  • The Builder has the right to Suspend the Works if not paid. (Clause 35*)

* In your contract documents the numbers may be different but you should find similar sections.

As you can see just not paying the payment could have considerable consequences.

Suggested Action

In my opinion it is better to try and avoid, or minimise, the above consequences.

Also in the event of future legal issues it is also best to be seen to be ‘Reasonable’.

My suggested actions would be to write to the builder (Not phone) as soon as possible stating:

  1. That you do not believe that all the works comprising the stage had been satisfactorily completed.
  2. Why you believe the works had not been completed.
  3. Offering to pay 80-90% of the amount by the due date.

In effect you are only paying for the work that has been satisfactorily completed, rather than the whole claim.

This approach is more likely to maintain a cordial approach to your relationship with the builder while making sure they are aware that they need to ‘Lift their Game’.

 

See Payments for more posts

 

Kitchen Drawer Fail

Have you ever wondered why kitchens with all the unit along a wall are so popular with builders?. . . . . and island units?

Why are drawers without a large handle common?

Well it stops mistakes like this happening!

I would have thought most kitchen installers would have made this mistake once, but only once!

One thing to think about though if planning a kitchen space with corners is the storage volume in those corners is very hard to access.

The picture is from Furafuwa.com 

For more Fails and unusual houses go to What the………….?

 

Building for Investment

“What make a new house a better rental property?” . . . . A quick answers is probably along the lines of  “Would I be happy living in it.”

Do you want capital growth or regular rent income is something you need to also consider.

Here are a few things to think about when considering building a new house for investment:

Inner Or Outer Suburb?

Inner suburbs will be more expensive so units, or town houses will probably the way to go. With few new houses capital growth should be reasonable.

Outer suburbs and you are probably looking at 3/4 bedroom houses. The problem I’ve found with new developments  is capital growth can be slow until well after the last house is built.

What’s the Local Market?

Spend some time talking with local agents about occupancy rates for various house sizes and properties in demand. No use building a 300m2  double storey house surrounded by single storey 150m2 houses.

Area Demographics

Spend a little time walking round the suburb. Is it singles, young families or empty nesters? Are there lots of professionals or is it a more ‘Blue collar’ area?  

Aim for the middle of the demographic to capture the most tenant demand. Not just with the house, but the standard of fit out.

Aspects Of Location Attractive to Tenants

Proximity to workplaces, transport links and amenities such as schools, restaurants, parks and shops are all aspect that are valued.

Easy Maintenance

As a frequent renter, and landlord over the years I can tell you that property maintenance has never been as high on my agenda as when I have been an owner occupier. Make sure  front and back yards are low maintenance.

 

Bathroom Fashion 2

There are a lot of expensive bathroom fittings on the home shows and showrooms, but are they really practical?

I saw this wash basin the other day. . . . . .But how do you clean under and behind it?

Perhaps all the people who design these fittings employ cleaners so they don’t care about how practical it is!

As well as making cleaning difficult this free standing bath provides a great hiding space for spiders.

How would you feel relaxing in the bath if a big huntsman came walking up the wall!

I wouldn’t have a freestanding bath unless I could have 1m of clear space all round the bath. At current house building costs the extra space needed would be adding an extra $3-$4,000 to your build on top of the cost of the bath.

Here is a wash basin in our current rental property which has two issues:

  • The dirt trap between the basin and the wall.
  • Square section taps (The issue is water doesn’t run off the horizontal surfaces so there are always stains on the chrome)

For lots more about choosing what goes in your new house see : anewhouse Guide to Selection/Pre-Start

 

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