The Very Big F.O.O.L.I.S.H. Project

The Wayback Machine

It all started about 40 years ago. I was a boy who enjoyed fart humor, pizza, LEGO and rockets. Except for my age, nothing has changed.

My parents were fans of Frank Lloyd Wright (FLW) and we visited a couple of his structures. The experiences and his unique designs made an imprint on me. As an adult, I’ve had the fortune to visit other FLW buildings and interesting examples of architecture. I appreciate modern design. Beautiful spaces that flow well and aren’t wasteful light me up.

For all of my adult life, I’ve thought about what a perfect home would look like. None of the houses that Mindy and I have lived in are remotely close to this vision. Our goal wasn’t to live in a home we enjoyed, but one that would make us money.

Live In Flip

We made the core of our net work through live-in flips. We’d buy a crusty place, fix it up while we lived in it, and sell it at least two years later to avoid taxes:

The $250,000/$500,000 home sale tax exclusion – If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home provides rules and worksheets. Topic no. 409 covers general capital gain and loss information.

Side-note: This provision of the United States tax code is completely amazing. Where else can a single person or married couple make $250,000 or $500,000 respectively in just two years and pay $0 in taxes?!??

When you fix up a house for the purposes of profit, the purchase criteria changes:

You’re not buying a home for yourself. You’re buying it for the person you’ll sell it to in a couple of years.

We embraced some basic rules:

• The house shouldn’t stand out too much.
• The finishes should have mass appeal.
• The floor plan should be conventional.

Every home we’ve ever lived in has been a compromise. They were great to sell to someone else, but not a perfect place for us. Furthermore, I really dislike much of the way most homes are designed:

• Why do you need a separate family room and living room? Let’s just have one gathering space that flows well. The kitchen, dining room, and family room should be a contiguous space.
• Why do you need huge bedrooms? Most of the time you’re in there, you’re asleep. All rooms look the same when your eyes are closed.
• Walk in closets are a waste of space.
• Why are homes built to minimal standards; crappy windows, hollow doors, inefficient HVAC systems, minimal insulation, poor sealing, and low-quality fixtures that break within 5 years?
• If you have a great lot; in a forest, near water, or with a mountain view, the home should be designed to embrace it.

The F.O.O.L.I.S.H. Project (Good-Bye Frank Lloyd Wrong House)

Back in 2022, we bought a really bad house on a really nice lot. It backs up to open space, is next door to good friends, and in a neighborhood we enjoy. And it’s half the size of our current place, so we thought it would be a great place to live post-kids. The only issue was that it was in poor shape and had a ridiculously awful floor plan. Regarding the latter, I called is the Frank Lloyd Wrong Home. We weren’t ready to move in yet. So we fixed it up and then rented it. Our plan was this: Once Younger Daughter fled the nest, we’d do something about the horrible floor plan and move in.

Fast forward 2 years to 2024. I was talking to my next door friend, lamenting the floor plan. Next Door Neighbor Friend said this:

You should just scrape the thing and start over.

My first thought was:

No way! That’s a horrible idea, fraught with peril, anxiety, and marital strife!

But he had planted an idea that I couldn’t stop thinking about:

• I could build a modernist home that I’d actually enjoy looking at and living in.
• It could be constructed with modern, durable materials. I have noise sensitivity issues, so I could use triple-pane windows, build sound-insulated walls, and hang solid doors.
• I could build it with systems and features that I appreciate including:
  • hydronically heated floors
  • switchable privacy glass windows
  • highly efficient heat pumps
• The home would have room for an expansive solar array. Since I’ve already installed solar panels, this would be easy to do again.

But I mostly kept these thoughts at bay. After all, building a home is a ridiculous idea. Then, Mindy and I visited two friends:

Visit #1: This friend had recently built his own house. It is modern and embraces the land it sits on. It checked all of my boxes. I asked him a million questions. The most surprising thing was that he bought the plans from an architect on the internet for minimal cost.

Visit #2: Late in 2024, we visited friends who have a stunning place in the desert. They remodeled the home themselves and then decorated it in spectacular fashion. We tentatively talked about our idea to scrape Frank Lloyd Wrong Home and build anew. They were enthusiastic about the plan.

So late in 2024, we decided to build a house. We’re calling this:

The F.O.O.L.I.S.H. Project:

F*&^%$# Obnoxious Ostentatious Luxuriously Irreverent Silly House

You can figure out what the F stands for!

This home will reflect our values and my appreciation for modern home design. We value:

• A home with great design: This home won’t be everyone’s cup of tea, but it is mine! If you don’t like it, don’t look at it!
• Hosting friends and family: We have multiple visitors every month. It’s nice to live in a place that people want to visit.
• Fitness: The home will have a gym.
• Outdoor living: The home has a view and the home will make the most of it.

Some folks in the FI community couldn’t care less about their home. I totally get that. But I care deeply. So off we go.

FAQ

You have questions and I have answers!

General

Building a freakin’ house? What about FI? Have you sold out?

Maybe! Read on and decide! If nothing else, scroll to the very end of post and read that.

You’re demolishing a home to build another one? Yeesh!

Yep, it feels strange. I know. It took over a year of careful thought to come to the decision. Some of my thoughts:

The floor plan of the house was awful. It was always our intention to do a major remodel. But most of the house was built on slab which makes it difficult to change things up.

Many of the systems of the house were old and in need of repair:

• The fake stucco (EIFS) leaked water into the envelope of the house and was also ravaged by woodpeckers.
• The HVAC system was 20+ years old.
• The house had little insulation.
• The roof needed to be replaced.
• The windows needed to be replaced.
• The house was poorly built. In strong winds, we could feel the structure move.
• The house backed up to beautiful open space, but the only views of it came from a bathroom and a bedroom.

We talked to several architects and they came to the conclusion that it was better to start over. Asking an architect if you need a new house is similar to asking the barber if you need a haircut. Of course there is bias. But in this case, they were right. It was time to sell or scrape.

We went with the latter.

We salvaged everything we could. We took out the kitchen, doors, light fixtures, old vanities, and water heater.

My frugal, waste-nothing mentality still struggles with the whole thing.

Wait what? Building a home is an awful experience!

Please restate that in the form of a question. This is an FAQ!

Why are you putting yourself through this torture?

The joy of life is in solving puzzles, challenging yourself, and building things. FIRE allows you to choose what you want to work on:

• write
• get in the best shape of your life
• run a marathon
• build stuff: Check out Bob Beck’s COMPLETELY AWESOME Halloween projects. And he does pretty well traveling too.
• learn a language
• paint (hello JD Roth!)
• make furniture
• rebuild a car
• volunteer
• live abroad

I know people who do all of these things.

I love design and building. Working on this home might be more fun than living in it. The challenges that come with the project make me excited to get up in the morning.

But also, working with contractors can be infuriating. I don’t want to do most of the work on this place. Been there, done that. I also don’t want to be the general contractor (GC). The only way I would do this project is if I found a GC that I knew wouldn’t give me anxiety; a very tall order since I trust very few people. It took me a year to find someone to work with and so far, it’s going awesome. I tell him something in January and he magically remembers it in June.

You have mentioned that you’re kinda done with construction. Are you going to be doing anything on this place?

I’m so glad you asked! Actually I asked, but whatever.

You’re correct. I don’t want to do much. I will not be doing much. But I will do some of the very high dollar jobs. I will install:

• hydronic floors
• metal roof
• solar panels

Are you done with the renovations on your current place yet?

No. But almost. **sigh**

The House

How big is this place? Are you building a silly McMansion Mr. FatFIRE Man?

The home will be modest by modern standards. 1,600 square feet above grade with a basement.

Tell me more about the house.

I’ll save the final renders for a future post, but it’s a ranch with modern lines.

How did you come up with the design?

I bought the plan from here and then tweaked it.

What kind of things do you care about in a home? What do you not care about?

Efficiency. The structure will be tightly sealed and well insulated. The windows (triple-pane, fiberglass) will be one of the single most expensive parts of the structure.

Low maintenance, well performing heating and cooling. We’ll have high-end HVAC; hydronic heating for the floors and heat pumps for the air conditioning. The heat pumps will also be cold weather rated, so I can use them to heat as well. 

I don’t care about:

• Custom cabinets or fancy woodwork. IKEA is fine.
• Super expensive lighting or plumbing fixtures, just a well executed design.
• Exotic appliances.

Will it be a passive home?

I considered this, but going passive would have added at least $75,000 to the cost of the home. My compromise is to supersize my photovoltaic array. Adding four extra solar panels (Hyundai 440W) will ensure that I produce all of the electricity the home needs and also enough to power our two electric vehicles. Panels only cost about $200 each, so a 24 panel system will cost:

• $4,800 (24 panels)
• $2,491 (24 optimizers)
• $3,221 (inverter)
• $2,000 (racking, mounts, wiring, etc.)
• Total: $12,512

$12,512 is a great value. This one-time expense will mostly eliminate my home energy and auto fueling bills for as long as we own the home. I say “mostly” because I still have to pay a service charge to connect to the grid and I’ll pay to charge the EVs on road trips.

The Money

How much will it cost?

A lot! I’m thinking about $800,000. This is in addition to the $550,000 that we paid for the original home/lot.

How much have you spent on construction so far?

$206,137. Noteable expenses:

• Permits: $29,000
• Foundation excavation and concrete: $50,000 (This is one of the priciest parts of the project.)
• Windows: $55,000 (Triple-pane, fiberglass, very efficient)
• Front door: $8,000 (Perhaps a ridiculous amount to pay for a front door, but it’s ridiculously awesome.)

How are you paying for this?

We had different options. Here are the ones we didn’t go with.

• Sell stocks from our post-tax portfolio. We have over $2,000,000 in our post-tax portfolio. We could sell stocks and pay for the entire thing in cash. However, we’d incur a big capital gains tax bill.
• Construction loan. These are painful to deal with and have high interest rates.
• Refinance our current place. We have a 2.75% mortgage. No way I’m touching that sucker!

We arrived at creative financing:

• Friend lending. I have a friend who keeps his portfolio in low-risk, income generating accounts. He kindly volunteered to loan us money at a good rate, near 5%.
• Margin lending. MMM-Pete wrote about it here. We have a margin line that allows me to easily borrow money at great rates (currently 4.75% for between $100,000 and $1,000,000). We have about $915,000 available. But this rate is also variable and my limit changes based on the value of my portfolio. If we borrowed a lot and then my portfolio took a hit, I could risk a margin call. So we’re playing it very safe here.

And because we have backup plans for my backup plans:

• HELOC on our primary place. We have $225,000 available.
• 401(k) loan. We could borrow $100,000.

So, our plan is this:

1. Borrow from my friend and margin account to get the home built.
2. Sell our current place and use the proceeds to pay my friend back.
3. To pay off the rest of the debt, we’ll either:
   • Sell stocks over the next few years.
   • If 30 year mortgage rates get back to the 5s, we’ll do a cash-out refi on the new place.

I feel good about the plan.

• We have about $1,600,000 available and the home will cost about half of that to build. Even if Elon Musk goes completely off the rails and crashed my position in Tesla (currently $1,200,000), we should be OK.
• Building the home will take at least 8 months. If something goes bad, we’ll have plenty of time to adapt.

I’m a big fan of the Buy-Borrow-Die strategy. Except we won’t borrow forever. In the years to come, we’ll sell our investments and pay down our loans, minimizing taxes.

How are you accounting for this in your numbers in your net worth?

I’m far too busy and far too lazy to update them on a regular basis. I have the old house that we just demolished pegged at $700,000 and we owned it free and clear. I’m going to leave it at that until the project nears completion. The new place will be worth more than $700,000, but we’ll have debt against it that I’ll account for at the end.

The project is not a money making adventure. We will have less money for doing it, but much more joy. That’s what we care most about now.

Current Status

Where are you in the process now?

We still have a little while before we can move in:

What have the pain points been so far?

Waiting.

• In Boulder County, a structural engineer has to sign off on your plans. This took over 2 months.
• We needed a soil test to check for expansive soils.
• Before demolition, we had to have the home checked for asbestos.
• The Longmont building department is great to work with, but they are also very busy. It took their planner 3 months to complete his review.

And faulty equipment: The folks who I bought the hydronic floor equipment from sent me leaky gauges and manifolds. I had to break out my propane torch to fix hte copper. And I had to rebuild the gauges to stop the leaks:

I had originally anticipated that the project would start around April. Instead we started in August, four months behind. But that’s still enough time to get a weatherproof structure built before the snow flies. I hope.

This is the best blog ever and you’re a wonderful human.

How did that get in there?

What could possibly go wrong?

Haha! Lots! But not much yet. Tune in for another titillating update in next month.

Unexpected Joy

Going into the project, I had anxiety. I’ve hired bad people in the past and that does NOT work out well. A conversation from a past project:

• Bad Worker #1: HEY! This doesn’t fit!
• Bad worker #2: JUST SH*T IT IN!!!

While I felt pretty good about the general contractor I hired to help manage the project, you don’t really know until you get into it. I’m not super picky, but probably more than most. I want the work done correctly. So far, so good.

Watching the home be built has given me great joy. I love the process. Seeing concrete poured and walls go up makes me smile.

I also had a lot of fun designing and installing the hydronic floors. It was a puzzle to solve and I am saving about $100,000 (!) by doing it myself.

Living in the home will be great too.

• Our current place is a split-level with 4 different floors. Single floor living in a ranch with a basement will be a nice upgrade.
• I look forward to seeing the sunrise every morning in the eastern open space that the home sits next to.
• It will be great hosting people in the basement ADU.

Life has come full circle:

• 10 year old me looked visited a restaurant that was designed by Frank Lloyd Wright.
• In my 20s, I visited Falling Water and Robie House.
• In my 30s, I visited Frank Lloyd Wright’s studio and his structures in Madison Wisconsin.
• In my 40s, I visited the original Taliesin in Wisconsin and Taliesin West in Scottsdale

All along the way, I’ve spent a lot of time taking in design including buildings, bookshelves, electronic gadgets, cars, and tools.

Now, here I am, about to live in a structure that I helped design and build. Life is good. This gives me joy. And that’s what I care about most in life now.