Green Rehabs Add Value
Go Smart and Go Green – Invest in High-Efficiency Properties
by: Robert Stec
When we think of “going green,” we automatically think about being kinder to the environment and creating a cleaner, healthier place to live. It’s only after this that we consider the financial benefits. Turning existing real estate into green investment properties results in higher sales prices that yield higher returns. A few of the basic things that qualify a property as green are:
- The home is more energy efficient.
- The home has less environmental impact than comparable homes.
- The home creates an overall healthier living space.
- And so many more!
High-efficiency, or green, homes cost less to operate and are seen as better-quality properties. Making green home upgrades can give you an edge over other sellers, because many buyers have become thriftier in response to current economic conditions. The government might be able to help you in this venture through federal stimulus funding.
Consider the last several properties you visited that were for sale. How many of these were high-efficiency homes that did a good job of marketing their green upgrades? How many sellers understood green upgrades and could talk intelligently about the benefits? Two, maybe three? I would be seriously shocked if the number were higher. Green upgrades are still very new, so few investors around the U.S. really understand them, let alone how to market them.
Goal: Achieve High-Efficiency
You can literally corner your target market in a very short time. The big key is tying green upgrades to higher efficiency. If you can make that connection for people—green upgrades equal higher efficiently, which means lower cost of living—then green is no longer just a trendy, pseudo-political issue. It’s based on efficient performance–financially and operationally.
So when investing in green upgrades, consider efficient performance as your goal. Green is the natural result. For new green property investors, this will make your lives easier. You don’t have to be experts in bamboo flooring, hay bale construction, or geothermal systems; you just have to focus on efficient performance. I’ve worked with many clients who didn’t have a clue about green upgrades and then became extremely knowledgeable in a very short time—when there is a will to know, then great results can be achieved! These clients now consider green upgrades in terms of high efficiency first and kindness to the environment second. Interestingly enough, they don’t pursue green because it’s trendy; they do it because it’s more profitable.
Ask These Questions When Repairing or Remodeling Your Property
To get things started, make these five questions part of your mindset when working on your next home improvement project or repair:
- Are there any rebates, incentives, or credits available from government stimulus programs?
- What improvements can be made during this project to improve the property’s efficiency?
- Which steps can be taken during this project to reduce drafts and prevent heating or cooling loss?
- Are there any upgrades that can be applied during this project to improve the indoor air quality of this property?
- What building materials and supplies can be used during this project to reduce the risk of toxins?
These questions will help you build your strategy to turn your property green. Creating high-efficiency, green properties is as simple as that.
Green Actions to Take Right Now
To get you in a “green” state of mind, here are some very simple tips that you can put to use right now.
Identify your target market: Who supports high-performance properties, and what do they think about green upgrades? For example:
Seniors: They often live on fixed incomes and like the fact that green upgrades lower their monthly expenses.
Young families: They want their kids to grow up in a healthy environment that is toxin-free.
Determine simple changes: Make a list of the least expensive green upgrades that you can apply to your property now. You can begin with updating lighting, choosing nontoxic paint, and installing toxin-free carpet for starters.
Purchase your green materials local: This includes lumber, ecofriendly paint, sealants, electrical supplies, and more. Speak to the managers of your supply stores about your green upgrades and see what discounts you can get.
Keep a running list of benefits: Itemize the green upgrades you’ve made and the corresponding benefits to prospective buyers, tenants, appraisers, and so forth. This can be a very simple yet effective.
Draw attention to specific savings: Find out the average utility costs in your area. Then look at your improvements and list the savings for prospective buyers.