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Keith Cox, CFP®, ChFC® is a Retirement, Financial Planner and Wealth Manager at Stifel Nicolaus. He’s also the host of the Stifel Premier Financial Hour on Baton Rouge’s talk radio Talk 107.3 FM. I was thrilled to be invited to be a guest on his show, to discuss the renovation market, the concept of “age in place,” and my new book, “The Forever Home.”

Keith is a great financial mind and I love talking architecture, so the time flew. In the interview we covered:

• Factors in the decision for buy new / sell / renovate
• Age in place (which I prefer to call “grace in place”)
• The hierarchy of design
• The most important decision for your home
• What accounts for the largest expense of home ownership
• Why style is the last thing I consider when designing a home

To listen to the audio, click on the image above or here.

For the complete transcript, continue reading below.

Transcript

Keith: And good evening, welcome back to Stifel’s Premier Financial Hour, I’m your host Keith Cox, happy to be here on this Monday and my guest today is local architect and artist, he’s an artist, but author as well, Kevin Harris. Kevin, thanks for taking time to come in to the studio.

Kevin: Keith it is my pleasure and it’s a delight to be here, thank you for asking me.

Keith:  Well, since a home is one of the largest investment asset for most people, it’s a very important part of what I do as a Financial Planner because I have seen a home be a substantial part of someone’s retirement income, believe it or not, sometimes they downsize and if they’ve done their home correctly there is a substantial amount of money that can go to their retirement plan. Or unfortunately, I have also seen it be a substantial drag on the retirement lifestyle and this has been where they have had too big a home where the maintenance costs are too high, where the upkeep is too great and they’re constantly pouring money into a home and maybe they can’t get rid of it at a decent price and that’s one of the things that your book, The Forever Home, and as I mentioned earlier, beautiful pictures in it but a whole lot of content as well. The book talks about some of those issues.

One of the things you talk about is renovation, I don’t know if you want to go directly there but when people get ready to say “Well you know we need more house”, or say “I want to updo, the kitchen is too old, the appliances are always breaking down”, that sort of thing; so how do people decide , do I sell, or do I renovate?

Kevin: Well Keith, that’s a complex question. It’s like, I guess when people call in for coffee, sometimes you have more questions than answers. But that is certainly a series of considerations and one is the condition of the house; how old is the house? Right now, over 50% of the US homes are 45 years old or older and each year they get a year older.

Keith: Now do you consider that a negative, or can that be positive as well?

Kevin: I think it’s a positive because the artist side of the architect that I am really enjoys taking the canvas of an existing house in an existing neighborhood and then enhancing it, cutting it and fitting it, tailoring it if you will, to fit the current home owners; or if it is a new house, for the homeowners then to fit the new family.

Right now, over 50% of the US homes are 45 years old or older and each year they get a year older. – Kevin Harris, FAIA, Architect

Keith: But knowing that there is some gorgeous neighborhoods with stately oaks, broad magnolias, the whole nine yards, lots of other flora as well in the Baton Rouge area, a neighborhood has to be a big consideration for that too.

Kevin: It is. In my opinion, I have a hierarchy of decisions to make when you are deciding to build or renovate or purchase a new home. The most important item is that item which you can’t change with any of the later decisions you make and the hardest thing to change is your neighborhood. So the primary thing I recommend people to consider is the location of the neighborhood that they want to live in. And the second criteria is the lot or the parcel within that neighborhood, and if it happens to be your house, it’s an existing house, then great if you like the neighborhood, great; but if you don’t, you need to move because I can fix the house and any architect can really make a house wonderful, however, they cannot take one house and improve the entire neighborhood. So you don’t want to be in a situation where you are house rich and neighborhood poor, I like to say.

Keith:  Good point.

Kevin: The third thing I like to say, and this is where renovations can come in, with minor surgeries and fixings, if it’s your appliances that are broken, repair them or buy new ones. There is wonderful repair shops in Baton Rouge and there’s a wonderful new appliances and just buy appliances that fit the way you live. If you prefer gas, get a gas grill or gas cook top, but you don’t have to get the highest or most expensive item on the list, just because you’re renovating, just get what feels good.

The last thing, or the next item I work on is with the floor plan is to make sure it fits for you now and as you age.

Keith:  That’s important.

Kevin: We’ll get into that later, but the, I like to call it, not aging in place, but grace in place, because the house that fits your lifestyle as you age, not only fits it then, it fits you now, it fits your kids when they’re little, when they are growing up and then it fits you now when your in-laws come to visit with you, or to stay with you.

The last thing I consider is the style of the house. And regardless of the house you have, it’s style can change and in my book in chapter 6, which is the chapter on renovations, it shows examples of how houses have been completely changed. I have a dear friend who is a plastic surgeon who, when I was working on his house he commented to me and he said “Kevin , what you do and what I do is the same things. We take an existing body and we enhance it.” And I smiled and said, “Well, there’s just two big differences there. One is, you make 10 times what I make and two, I get to add parts and you don’t.”

Keith:  Oh good point, I didn’t think about that, but that is true, I totally get that. One of the things you mentioned was what’s inside the house and the appliances and I know there two appliances in my house that I will not change. I have a gassed cooktop and I absolutely love it, I will, God willing, never go back and cook on electricity again. And the other thing is I was without for a while and that’s a clear ice machine and I love my clear ice machine and always have that 30 pounds of ice sitting in that bin for whatever. I sent my son back to school early this morning with some food, had plenty of ice right there and know that when I come back to the house later tonight, there’s going to be 30 pounds waiting there for whatever I might need for and it’s all filtered, good tasting, those kind of things that make a big difference but a gassed cooktop makes a huge difference for someone like me that cooks on a regular basis.

Now, let me ask you this, it seems that a lot of my clients look at their homes and as they get a little older, there is maintenance issues that they begin to kind of worry about and we see that their maintenance costs go up. I have never really considered maintenance and upkeep to be a big portion of the cost of homeownership but it seems to me that it may be larger than I have been giving it credit for.

Kevin: Oh, it is the biggest cost. If you take the cost of all the costs you spend on your home over a 15 to 30 year period, statistics show that 70% of all of those dollars that you spend, go towards maintenance, repairs, and utilities.

Keith: Wow, that’s a big number.

If you take the cost of all the costs you spend on your home over a 15 to a 30 year period, statistics show that 70% of all of those dollars that you spend, go towards maintenance, repairs and utilities. – Kevin Harris, FAIA, Architect

Kevin:  Only 20% is for the actual construction, 7% is for the financing and 3%, which rounds it up to 100%, is for the design and engineering fees. So the biggest cost savings you can have is to work on the elephant and that’s the 70% number, and have a house that is low maintenance, low utility costs and build well so that you minimize the repairs over time.

Keith:  Yeah and minimize those utilities as well and I know there’s a whole lot of things out there now not only in the utilities sector, but also in the maintenance sector. There’s certain types of siding that looks like wood siding, but you don’t have to paint on a regular basis, right?

Kevin: Correct. Correct. There is synthetic materials out there and we employ them all the time. If you look through my book, and you know my work, I very much favor cultural expressions in architecture or other architects would call it traditional design. One problem with traditional design materials is, it was typically wood; it casts beautiful shadows when it’s painted, however in all the creases and joints it collects water in our climate and it rots. And so, to maintain the cultural expression, I like to assume that I am an architect, if I were an architect 150 years ago, say on St Charles Avenue in New Orleans and I had a house to design but I also had access to some of these synthetic materials, would I use them or not? And the answer is, absolutely. I would. And so you can maintain the style of the house, the look of the house, the feel and also reduce its maintenance cost.

Keith:  The other part of that as people are in their homes and they age, is how much work do I have to do on this, or how much work do I have to do, not just the cost, but the actual, you see this is constantly causing me problems and that and I have to get on the ladder and change a light bulb that’s way too high and are there ways around that? I hadn’t, we hadn’t discussed that at all, it just popped in my head but are there design methodologies that can prevent that?

Kevin: Well certainly, the biggest one is to think about what is that’s causing the problems, if it is a renovation on an existing house and talk to your architect about what are those things. For example if you have say a den with a 20 foot ceiling and you risk your life changing the light bulbs every six months or however often they go out, you can change those light bulbs to LED lights that will last 5 to 20 years before it has to be replaced.

Keith:  Yeah, that would be a real help because people don’t want to get on a ladder or don’t know who to call to come to even do it if they want to pay for it.

Kevin: Correct, correct.

Keith: That’s interesting that there has been so much renovation in home building materials and that sort of thing. Now a lot of people just say, oh we need a bigger house, we have got another baby coming we need another bedroom, we’re just going to sell this house and were going to buy another one. But that doesn’t always work out real well for them because there are some costs associated. I have found in my buying and selling of homes that if you don’t stay at a home for a while you will never recoup, it seems to me.

Kevin: You are fighting an uphill battle, trying to make back with appreciation what it cost to actually move. And according to the Tax Policy Center in looking at home ownership costs, if you own a home for around four years, the transaction costs, that’s the Realtor’s fee, the origination fee for your bank loan, that’s it. Just in order to borrow that money and to purchase a house, that is your largest expense. If you owned the house for eleven years, it comes down to being only 20% of the entire cost of owning the house; that’s the transaction cost. And of course as I said earlier, if you lived there for longer then you reduce that cost. So if you stay put, you save on all of these costs. You also save on not only the transaction cost, but the living cost during construction. If you can renovate your house or add on to it where you don’t have to move out, you have already paid closing costs on your note once and you can stay put there. You save on moving and storage costs and you save on Realtor’s fees not only in buying a new house but in selling the existing house.

Keith: And of course if I’m saving that money, then that’s money that I can very easily put into the existing home that I like the location, I like the floor plan but it just needs some modernization updating, that sort of thing.

Kevin: Correct, if you think of a suit, a man’s suit, if you go to one of the department stores and buy a suit, it fits but it doesn’t quite fit. I mean it looks okay, but if you have them tailor it and do some minor tailoring, boy then you look sharp.  Now if you want to avoid all of that, you can go get a custom suit made and you’re guaranteed it’s going to work.  But if you want to go the alternative route you can spend less money and still have a suit that fits, same thing with your house.

Now with an older house and an older family living in the house as all the baby boomers age, many of the houses, actually most of the houses that were built up until recently, the doors were 2 foot 4 inches wide, where a standard walker is 2 foot 11 wide, so you are trapped, you can’t get into the bathroom, you can’t get into your closets.  And so if you want to sell your house, you can but look at just the cost of changing the doors out, which may not be as big a number as you think;  so that there are alternative ways to do minor cosmetic surgery to make the house function well.  And there is a growing market of architects around the country that are beginning to specialize, or add to their specialty in doing design, with housing for what I call grace and place.

Keith: And that’s something that when we come back from this break, we’re going to talk about some more. So many of my clients, Kevin, are of course it seems that older people have more money and more money concerns quite often and so many of my clients look a little like me and you, gray headed, I always say no haired, gray haired or blue haired, pick one or more than one on a given occasion and so a lot of those folks say, “I want to stay in my house as I age and as my health begins to deteriorate, as long as I can.”  But of course if you’ve got a walker, if you’ve got a crutch, if you’ve got a wheelchair, most of our homes are just not set up for that.

And so we’re going to talk about grace and place when we come back. I want to remind you that not only will we be happy to do a second opinion and a cup of coffee but, Kevin Harris has offered to do basically the same thing for somebody that calls and we will give his number out a little later and if you want to spend a few minutes with him talking about what these options would be, he’s going to give you that entirely free. Now he’s not going to do a design consult, he’s not going to sketch you a new floor plan, those come at a cost and I know what those costs are, but they are nothing to be scared of, but he certainly can’t give those away. But it would be a great, if you’re contemplating whether to renovate, build or buy, then you certainly want to get a professional opinion and for the man who just wrote this gorgeous book, The Forever Home, is something that you might want to spend a few minutes with him.  And by the Way, Kevin, The Forever Home is a bestseller, did I read that?

Kevin: Yes, it’s a bestseller on Amazon and the first month it was out it was number one in five categories and it’s currently in the top 50.

Keith:  That’s great, I always think that to have a bestseller, you have to be in New York City or somewhere like that, where somebody would pump it. But obviously the publicity, the word got out and plenty of people started buying this lovely book, that’s quite informative as well.

We’re going to go to a break, we’re going to come back and we’re going to talk about grace and place and a couple of other things I want to mention in the last few minutes.  Don’t forget, second opinion and cop of coffee, absolutely free, we talk about your estate plan, your investment tax situation about how to take some, harvest some tax losses before the end of this year and that’s entirely important, very important especially if you have made more money than you anticipated and you’re going to owe Uncle Sam some more, we can discus that sort of thing. Whatever you have on your mind, your retirement plan or whatever.

Call us at 769-0715 for your second opinion and cup of coffee.  I am Keith Cox and we’re going to be back in a moment.

Keith: Kevin has written The Forever Home, which is a great book that details things you need to consider if you’re going to renovate or even the discussion between buying or renovating, buying a new home or renovating an existing home and how you work with those people that are in this business, that would be your professionals and I learned a whole lot of things but I want to mention this.  There were three rules of renovation that I don’t think he, he is not a comedic kind of guy normally, but I found this very amusing.

Three rules of renovation, if you are going to do a master bath and a kitchen, move out.  You can’t stay in the house if you’re going to do both of those.

Number two and I didn’t understand this until I read a little further, never raise a baby;  in other words, don’t try to do the renovations when you know a baby is coming and you’ve got to get it done before, because there is always some kind of little kinks that get thrown into it.

And  number three, design should involve coherence, and the way I interpret that is that the old home and the new part of the home need the compliment or to blend with one another.

Kevin: Right, preserve the integrity of the original house so that when you’re done with the renovations, it’s a bigger, better house.  And I like to challenge my clients that if in the beginning that if I do a good job, their family and friends will come in after the renovation and say “Okay, I know you redid your kitchen but where is the  old and where is the new?”  And they can’t find that line, it’s a successful renovation.

Preserve the integrity of the original house so that when you’re done with the renovations, it’s a bigger, better house. – Kevin Harris, FAIA, Architect

Keith:  That’s awesome. Now Kevin also was responsible for the, he was the architect for the renovation of part of the old state capital and that was a very interesting adventure due to the research that you had to do, right?

Kevin: The actual architect for the capital renovation was Ian McNaughton, an architect from New Orleans and I was hired by Secretary of State Fox McKeithen to write a master plan to make it a museum because the secretary of state was not in the museum business until 1990’s legislative session when he was given the old state capital, and so I was put in charge of writing the master plan because it was a hypothetical project and I certainly had those when I was a professor at LSU.  But two years into writing the master plan, my job increased to where I had to tell our former Secretary of State that I had bad news and good news. The bad news was I had to quit because this was taking too much time and the good news was, I was for hire.

Keith:  And he did indeed hire you and I’ve been to several weddings in the old state capital and it is a beautiful facility. I’d love to talk some more about it.  If you would like to have a discussion with Kevin Harris, he’s offered to do that for someone.  Kevin, how can they get in touch with you?

Kevin: They call me at my office, it’s 924-7450, and talk with our scheduler and they will schedule a time.

Keith:  That’s 924-7450, Kevin Harris, Architect.