Earth Sheltered Multi-Family Strategy--Your Thoughts?

[Jason McCain]

I have been knocking this around in my head and wanted to open it up for discussion.

Goal: Create long term passive income
Timeline: Approx 50 years
Proposed Method: Earth Sheltered Multi-family Units

Questions:
1. Is anyone using earth sheltered home designs to do this or have you considered this option?
2. What are your thoughts about the strategy?
3. I believe the unique benefits will create a competitive advantage in most markets, do you agree?
4. Are my assumptions on maintenance costs savings valid?
5. Is the “curb appeal” a major concern or is it offset by the other advantages?

My premise: Given my long timeline these homes will substantially decrease maintenance costs and be more attractive to tenants reducing vacancy, thus increasing net profit.

I suspect my up initial acquisitions costs will be higher than with existing builds so the payoff with reduced maintenance would need to offset this over the long term.

For those not familiar with earth sheltered (google) this would eliminate the need for roof replacements and most of the other exterior work. On the inside of the units I would be using concrete floors. All exterior walls are concrete…depending on the company internal walls may be concrete as well. I hope this will reduce painting expense. I plan on constructing the kitchen and baths with maintenance costs in mind to keep them simple, timeless and easily maintained.

Costs eliminated:
*Roofing

Costs Reduced:
*Flooring (greatly reduced)
*Painting
*Exterior maintenance, including windows
*HVAC
*Exterminator costs (greatly reduces ants and termites)
*Overall costs that you would see with any new construction

I also believe I will be creating a competitive advantage from the home design with the stated benefits of:

*Greatly reduced utility cost for tenants (50-80%)
*Safe from tornados (a factor in my market)
*Outside noise reduction
*Safe from storms and fire
*Increased security
*Less bugs and dust
*Unique design and conversation worthy
*“Green” construction
*Potentially increased yard space

My worries:
*Maintenance savings will not be great enough to offset higher acquisition costs.
*Maintenance savings are overstated by the builders.
*Tenants will think they are weird…not cool like I do.

So, I am seeking opinions…is this as good an idea as I think it is? Thanks for your feedback.

I will also be reaching out those who are currently using this technology to further do my due diligence. If others are interested I can continue to share what I find.