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Building a green real estate investing dynasty

Building a green real estate investing dynasty

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Published by Jim Simcoe
Jim Simcoe's presentation on green real estate investing
Jim Simcoe's presentation on green real estate investing

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Published by: Jim Simcoe on Aug 19, 2011
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Building a Green Real Estate Dynasty

Tonight: 3 Goals No Theory

Learn Choose to Act Choose to Ignore

Tree-hugging Capitalist

What I Believe

Real estate SHOULD be:

Healthier Safer Less expensive High-performance

WIIFM?

True Wealth.

What do we all want?

Love Health Wealth Sex Safety Friendship

3 Wins...

My reasons...

Why green homes?
Increased Profits Leverage OPM (Uncle Sam) No competition Eco-Friendly

Home Buyers Want Green Features

According to a ZIP Realty survey:
‡ 89% of homebuyers rated energy efficiency the
most important feature in a home.

‡ 55% of all home shoppers now cite green home
features as an important part of their purchasing decision.

‡ Less than 1% of homes on the market include
³energy efficiency´ in their description.

Homebuyers who value green features ranked them important for the following reasons:
12% 15% 37% 40% 49%

According to an Apartments.com survey:

‡

60% of prospective renters search for
properties that offer environmentally-friendly amenities.17% of renters said they would not rent an apartment without environmentally friendly amenities.57% of renters said their apartment community does not currently provide environmentally friendly amenities.

In a study done published by Inman News:

³32% of people said they'd pay an extra $5,000 for energy-efficient features, with the presumption that the homeowner would recoup the cost of those items over time.´

Phoenix example:
Columbine Ave, Phoenix Vacant rental property Market rent = $1000/month Competition for renters = High

What we did:
‡Improved energy efficiency ‡Improved water conservation ‡Projected utility bill decrease
= $105/month

Cost to owner:
‡$1500 for materials/labor ‡ Rebates = $750 ‡ Net cost = $ 750 ‡ Time to complete (3 days)

Marketing the rental:

‡ Utility savings ‡ Healthier living (Less toxic) ‡ Craigslist blind ads

Results:
‡ Property rented for $1100/month.
‡ $100 premium above market rent. ‡ $1200/year rental increase. ‡ 40% higher response to µgreen¶ CL
ad. ‡ Property rented prior to work being completed.

Is this µgreen¶ to you?

Defining green:

‡ 1. ‡ 2.

Saves money.

Less toxic living environment.

‡ 3. Less impact on the planet.

Green real estate is:

‡

The process of remodeling an existing structure to create a high performance property.

Common µgreen¶ real estate myths
Costs too much Too complicated No one cares about green

Follow the 3 µS¶s

Seal it up

Systems & Solutions

Sex it up...

Fundamentals of Healthy Green Environments
‡ ‡ ‡

Less toxic More efficient Polar bear friendly

Green buildings:

‡ Energy efficiency ‡ Water efficiency ‡ Resource conservation ‡ Indoor environmental quality

Green thinking:
‡ ‡ ‡ ‡ ‡

House as a µsystem¶ ³Whole systems´ approach Consume less energy and water Use resource efficient techniques and materials Healthier, safer, more comfortable

Key Points:
‡ ‡ ‡ ‡
Remove, Replace, Relax Remove toxic materials Ventilate the air Use renewable resources

Statistically...

‡ The United States comprises 5% of
the total world population

‡ We use 25% of the world¶s energy
resources

Buildings in the U.S.

‡ ‡ ‡ ‡

Consume 65% of electricity Create 30% of total green house gas emissions Create 136 million tons of C & D waste each year Use 40% of raw materials globally

Building and resource use:

‡ Construction of a 2,085 sq
ft home uses up to 1.5 acres of forest

Where does outdoor water go?

‡

40-60% of potable water goes into the landscape

‡ ‡ ‡ ‡ ‡

Pesticide facts
The likelihood of a child getting leukemia is 6X greater when herbicides are used on lawn More children with cancers had exposure to pesticides than children without cancer Pesticide links exist to infertility, birth defects, learning and neurological disorders, allergies, MCS (multiple chemical sensitivities) Come in on shoes and stay in carpet Moth balls (naphthalene) are one of the most dangerous chemicals available

Indoor Air
‡ ‡ ‡
Indoor air pollution is 2-5 times worse than outside We spend over 90% of our time indoors 60% of homes and 30% of commercial buildings are classified as ³sick´

Air leak issues come from...
1. Duct work leaks 2. Faulty insulation 3. Windows, door frames 4. Plumbing penetrations 5. Fireplaces 6. Floors, walls and ceilings

Duct issues
‡ ‡ ‡ ‡ ‡
Ducts leak average of 30% Leaky ducts waste energy an decrease comfort Leaky air ducts can cause negative pressure- this can pull CO out of gas appliances into the home Use duct mastic on all duct joints Do not use duct tape!

Indoor Air Quality (IAQ)

Indoor air/environmental quality IAQ/IEQ
‡ ‡ ‡ ‡
Materials and finishes Combustion gas safety Ventilation and moisture management µSick¶ Building syndrome

Impact of negative IAQ ‡ 15% of homeowners may be allergic to
elements in their own homes.

‡ ‡ ‡ ‡

40% of children born today will develop some form of respiratory disease. Prevalence of asthma has doubled since 1976. Increasing links to ADD and asthma in children. Of all the chemicals that EPA monitors, only ozone and sulphur dioxide are more prevalent outdoors than indoors

Indoor Air Quality
‡ ‡ ‡ ‡ ‡
Toxins Off-gassing Plastics Ventilation Plants

What is off-gassing?
‡
The release of toxic chemicals from common household materials (paint, furniture finishes, plastic, vinyl, etc)

Indoor Air Toxin Sources
a. b.

Formaldehyde (urea-particleboard/phenol-osb,exterior grade plywood VOC¶s (gasoline, kerosene,xylene,Toluene. Paint, sealers, adhesives, caulks, can be absorbed by carpets and furniture) Vinyl chloride (human carcinigen, found in PVC) Nerotoxins (backing, glues, fire retardants, styrene,latex binders, fungicides, anti-static and stain-resistant treatments) Carbon monoxide stove,furnace,gas water heater, gas dryer)

c. d. e.

Formaldehyde
‡
Two main types:

‡
‡

Phenol formaldehyde (used outside)
(Plywood, Oriented strand board)

‡
‡

Urea formaldehyde/ (used inside)
(Particle board, cabinet fiberboard, etc)

Volatile organic compounds (VOC¶s)
‡ ‡
VOCs are typically in solvents used in fluid or flexible products

‡ ‡ ‡ ‡ ‡ ‡

Paints, sealers, adhesives and caulks

Most of the µenes¶ are VOCs Gasoline Kerosene Benzene Xylene toluene

Vinyl Chloride
‡
The principle element in PVC products

‡ ‡

³Beach ball smell´ Problems with off-gassing, disposal

‡ ‡

Human carcinogen Dioxin and hydrogen chloride is emitted from production and during burning

Carpeting contains
‡
Toxic chemicals in the fiber bonding material,
dyes, backing glues, fire retardant, fungicides, antistatic and stain resistant treatments

‡ ‡ ‡

120 chemicals; some of which are neurotoxic They last at least 3 years Carpet is neither renewable, nor biodegradable

‡

Carpeting
Carpet is anathema to good air quality

‡ ‡ ‡ ‡ ‡

Offgasing and absorption issues Dust magnet (old carpet weighs more than new) Dust mites love it (if humidity is over 53%) Bacteria hide here It holds everything from bottom of shoes

Systems & Solutions

‡ ‡ ‡ ‡ ‡ ‡
‡ ‡

Energy efficiency
Structural system Increased insulation Air sealing Windows Lighting Energy Star appliances HVAC design, installation and testing Renewable energy

Water Conservation
‡

Install water conserving appliances

‡
‡ ‡ ‡ ‡

EnergyStar and WaterSense rated

Install water conserving fixtures/systems Optimize irrigation system Rainwater harvesting Greywater plumbing

Ventilation
‡
Ventilation is the second way to reduce the impact of high concentrations of toxic gases

‡ ‡

Natural ventilation (windows, etc) Mechanical ventilation (fans, etc)

Fix air leak issues
1. Seal all holes in building envelop including: sill plates, top plates, electrical openings, plumbing openings, boxes around windows, attic hatches, HVAC closet, door-frames, 2. Use: spray foam insulation, weatherstripping, foam gaskets on electrical openings, etc.

Low energy cooling
‡
Ceiling fans

‡ ‡ ‡

Standing in moving air under a ceiling fan makes the body feel 4 degrees cooler, thereby reducing air conditioning needs Increased comfort with the same temperature Choose EnergyStar fans (50% more efficient; have improved motor and blade designs; efficient lighting)

Insulating pipes
‡
Hot

‡ ‡ ‡ ‡

Reduces standby pipe loss Saves water by reducing waste while waiting for hot water at the fixture

Cold Reduces condensation and freezing problems

Green materials and Recommendations

Choosing green materials
‡ Insulation ‡ Flooring ‡ Appliances ‡ Lighting

Natural linoleum flooring
‡ ‡
Durable, stain resistant Made of rapidly renewable materials

‡

Linseed oil, limestone, pine rosins, wood powder and jute

Renewable cork flooring
‡ ‡ ‡
Cork is rapidly renewable (7-10 yrs), naturally fire and moisture resistant, sound absorbing hypoallergenic no trees are cut down

Rapidly renewable bamboo ‡ A renewable resource, replenished by natural
processes

‡ ‡

Bamboo is fast growing (7-10 years) comparable to wood Full grown stalks are cut lengthwise into narrow strips and glued together either horizontally or vertically

‡ ‡

Can be re-sanded and sealed Lots of products in market place

Carpet Alternatives
‡
Untreated natural fiber carpets:

‡ ‡ ‡

Wool, seagrass, sisal Make sure wool is NOT treated with toxic moth proofing chemicals

Install with low or non toxic backing

Best Carpet Choices
‡ ‡ ‡ ‡
Recycled PET fiber carpets available Avoid styrene-butadiene latex backing (get woven backing) Low pile ± high density may be more durable and hold less dirt Look for the carpet and rug institute¶s ³green label´ and ³green label plus´ logos

Adhesives/Glues/Se alants
1. Typical ones are very toxic and off-gas 2. Found in cabinets, floor sealants, caulking, spray foam, carpet backing 3. Look for all-natural alternatives 4. Greenbuildingsupply.com 5. greendepot.com

LED¶s: the facts
‡ ‡ ‡
LED¶s (light emitting diodes) are making a fast entrance into the residential market LED¶s produce more light with less electricity LED¶s can last 35,000-50,000 hrs.

‡

(CFL¶s last 8000-10,000 hrs)

Refrigerator and freezer
‡ ‡ ‡ ‡
Single largest power user in most households EnergyStar is minimum goal Size matters; small saves www.energystar.gov

Washer/dryer
‡
Horizontal axis washer (Front Loading)

‡ ‡

Use 40% less water & 50% less energy than most models Faster final spin- reduces drying time and cost

Paint
1. Chose No-VOC or LOW-VOC paint 2. Available at most most home stores 3. Very comparable to regular paint

Materials
1. Use natural/solid woods when possible 2. Stay away from OSB and pressed wood products 3. Glues and sealants used are toxic 4. Other great materials: brick, tile, metal. 5. The more natural, the better

Appliances
1. Replace old/faulty appliances 2. Look for Energy Star appliances 3. Washers, Dryers, Hot-Water heaters, Dishwashers

Mistakes to avoid
1. Spend too much 2. Do too much 3. Don¶t consider payback 4. Don¶t consider end-buyer¶s wants/needs 5. Don¶t have a clear plan

Free Money System

‡ Rebates ‡ Tax Credits ‡ Incentives ‡ Grant money

What money is available?

Where is it?
‡ City ‡ County ‡ State ‡ Federal ‡ NGO¶s

Rebate examples:

Text

DSIREUSA.ORG

GRANTS.GOV

ENERGYSTAR.GOV

\

Incentives

Energy Efficiency Loan Programs

Sex it up...

Buy on emotion, justify with logic

Don¶t be this guy...

³Don¶t give them what they want, give them what they NEED´

Want
Trip to Hawaii Bentley Mansion

Need
Groceries Car Shelter

Want
Bamboo floors

Need
No toxins

Cool looking lights Lower utility bills Luxury Safety

What buyers/renters need:

Save money Live safely

Sell Planet first = you lose Sell Savings/heath first = you win

Environmental benefit is a BY-PRODUCT

How to Increase Appraisal Values

1. Energy Audit report. 2.Build list of energy-efficient measures completed. 3. List of energy-efficient materials/ equipment installed. 4. Project annual utility expense savings based on historical data. 5. Projected asset value increase 1025 x annual savings)

Make Marketing Automatic

µGreen¶ Sale Sign

Wall Signs

µGreen¶ flyers

Results:

Sold for $5000 more, 61 days faster than market

Steps to build a green real estate investing dynasty

Determine your µWhy¶

Hire Free Interns

³What¶s in it for them?´
‡ They are passionate about green. ‡ They want the experience. ‡ It looks good on their resume.

Write Publish Repeat

4 of top 5...

Leverage Existing Data
(Warning: ugly slide coming up...)

Why Green, Why Now?

One Reason Only:

Something needs to change for you right now

Mountain bikes and Cosmetic Surgery

Potential Urgent Needs:

Falling revenues and decreasing profits

You need $200K by Tuesday

µThe Australians are coming...´

Launching your business next week (without a C.A.)

Don¶t pursue if you¶re just µInterested¶ or µcurious¶

Are you Thriving?

95% Rule

Q&A
Jim Simcoe JimSimcoe.com 760-271-7128

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