Green Community Residential Development and Green Rehabbing is an art in bringing about greater change for the good in all areas of conservation and Eco Energy Efficient Real Estate in this beautiful world we inhabit.
As we all inhabit and live in this beautiful world given to us to create, develop, work and help bring growth we as people are also responsible to be mindful of always being conservation minded.
We lend on Green Real Estate Projects. If you are wanting money for projects you need to be intentional on calculating costs. Our lending parameters are the same adding 10-15% per your calculations since materials are more costly.
Please read these posts to consider if you want to do Green Real Estate.
1. What kind of green do you want to be?
There are a lot of different definitions for “green.” For some people, it just means energy-star appliances in the kitchen. For others, it means solar panels and triple-paned windows. For still others, it means that the building meets a complicated and convoluted set of requirements that actually certifies it as environmentally friendly. Know what your market means when your buyers say “green” and you will know what kind of green you really need to be.
2. Is energy-saving enough?
Energy-saving appliances and insulation are great, but if you are into commercial buildings you may not even legally be able to call them “green” if energy-conservation is all you do. And many home-buyers also want more than a water-saving washing machine and some squiggly light bulbs in today’s market. They want true comparisons that show that every aspect of the home is working to save them money on their energy bills, but also to help the environment or reduce their “footprint.”
3. Will certification pay off?
For commercial builders, a LEEDS (Leadership in Energy and Environmental Design) certification can make a huge difference not only in how many companies want to buy or lease the building, but how many lenders will finance it. There have been a lot of highly-publicized problems with the LEEDS program – and it’s not an easy process to get certified – but the demand for your building will likely increase dramatically if you go to the trouble to get this stamp of approval.
Boosting Appraisal Values on Green Homes by Jim Simcoe
Here’s what to do to boost appraisal values of a green home:
1. Determine (through past bills or closest comps) what the average utility bills (water/gas/electric) for a similar home in the neighborhood would be annually. For examples sake, call this $200/month.
2. Calculate the projected annual utility bill savings for gas/electric/water in your project. Base your calculations on both national data from a recognized brand (Energy Star) and the local utility company. If Energy Star says that you’ll save 20% on water heating expenses by using a water heater blanket and your local water company says 17%, use the local company number. For examples sake, call this $600/annually.
3. Give these figures to your appraiser.
4. Recommend to the appraiser that they do their own independent research on what factor these annual savings equate to in terms of added value. As a general rule, multiplying the annual savings by a factor of 10-25 gives you the added value on your appraisal. There is precedent for this in several markets nationwide that the appraiser can research and leverage in their report. Remember that appraisers are gun-shy so you need to hold their hand during this process.
For example, a recent project in Arizona projected an annual utility savings of $601 based on the green upgrades completed. The appraiser did his research and assigned a factor of 15, thereby boosting the appraisal value by $9000. The investor could have appealed that factor but was happy with the $9000 boost.
All in all, this is a simple way to boost appraisal values on your projects. Also, if you’re an investor who invests in the same geographic area repeatedly, then you’ll only have to do step #2 once.
7 Impacts of Green Real Estate Investing by Jim Simcoe
It’s easy to think of green real estate as only being a channel of profit. Increased revenues, decreased rehab costs and other factors are all easy to understand. However there are other groups (outside of Investors) who benefit directly from green real estate projects. Let’s take a look at each and what they potentially gain from green real estate projects:
- Green Product Suppliers
- Housing Industry
- Higher returns through higher cash flow, decreased expenses, reduced vacancy expenses.
- Reduction in capital expenses as rehab expenses can be funded through a variety of energy efficiency grants/incentives/rebates.
- Increased appraisal values.
- Safer investment as properties enjoy greater demand and stability.
- Pride of ‘Action’. Investors are directly to contributing to improving our environment, creating jobs and improving the lives of buyers while earning healthy profits.
- Healthier residents resulting in decreased public health-care expenses.
- Economic growth through job creation, tax revenue, etc.
- Increased home values. Green properties appraise higher and raise the median home prices in their neighborhoods.
- Neighborhood beautification potentially contributing to lower crime rates.
- Lower monthly utility bills.
- Healthier lives (potentially lower health-care expenses, lower obesity, etc).
- Healthier children (potentially lower incidences of childhood asthma, diabetes, etc).
- More disposable income to pump into our economy.
- New ‘green’ jobs are created throughout the US.
- Unemployment is reduced as laid off workers are re-trained and re-hired.
- Green companies can leverage ‘green’ employment grant subsidies to increase employee size.
- More suppliers in marketplace.
- Increased demand equals more production equating to lower product prices.
- New, beneficial products enter the market faster.
- Larger selection of products more readily available.
- Improve home values nationally.
- Homes are more affordable to own and operate.
- Take bank-owned properties off the market.
- Reduce vacancies potentially resulting in crime rate declines.
- Lower CO2 emissions.
- Less energy consumed.
- Reduction in landfill waste.
- Recycle materials that were targeted for waste stream.
While green real estate is not a panacea for all that ails our country, the positive benefits that derive from it are substantial. You should pursue ‘green’ because it makes fiscal sense. You should feel proud of what you’re doing based on the benefits to the groups above.
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