Green Real Estate Case Study

Property Specifics:
18633 Prairie is a 1600 square foot, 3 bedroom, 1 bath home in Detroit, Mi. This property required significant cosmetic improvements to both bring it up to code and gain a Certification of Occupancy.

Objectives of the Green-Retrofit:
Our objectives in performing a green retrofit on this property were: 1. Increase the appraised value of the property by a minimum of 10%. 2. Receive the maximum rebates and incentives applicable for this property. 3. Reduce our time-to-rent by 20%. 4. Gain a premium market rent for this property.

491 Second Street, Suite 104, Encinitas, Ca 92024 www.JimSimcoe.com Direct: 760-271-7128

Methodologies:
1. Performed an extensive Energy Audit on the property. This was done both to understand the rehab issues within the property and maximize the applicable rebates. In this area of Detroit, rebates were doubled if an energy audit was performed.

2. Select and procure all of the green materials for the project. This included paint, eco-friendly carpet, non-toxic floor sealants, etc. Roughly 30 different materials were used on this property.

3. Advised the contractor on the various green methods and materials to be used. Facilitated the training of the construction crew on the green retrofit process.

4. Built a branding campaign for the property for both prospective investors to purchase the home and prospective renters.

5. Worked with the appraiser and gave all of the documentation and Energy Star formula calculations to gain a maximum appraisal for the property.

6. Consulted with investor-owner to explain both the process of the green retrofit and the long-term benefits of the project.

491 Second Street, Suite 104, Encinitas, Ca 92024 www.JimSimcoe.com Direct: 760-271-7128

Results of the project:
Our results at the end of the project were as follows: Results Appraised Value Rehab cost Rebates received Total Net Rehab cost Market Rent Rental Premium Received Time to rent 18633 Prairie $110,000 $11,000 $1500 $9500* $850 $600 per year 2 days Comparable properties $100,000 $10,000 n/a $10,000 $800 n/a 14-30 days

*Does not include any potential tax credits coming back to the investor. Results Appraised Value Increase Rehab cost savings (after rebates) Annual income increase from additional rent Holding cost reductions Competitive advantage in market Lower utility bills for tenant $10,000 $500 $600 Yes Yes Yes 18633 Prairie

491 Second Street, Suite 104, Encinitas, Ca 92024 www.JimSimcoe.com Direct: 760-271-7128

Conclusions:

Upon completion of this project we arrived at the following conclusions: 1. The demand for green homes was higher than expected. While prospective renters and investors cared little about the environmental impacts of this green home, they did care about 3 main items: a. The monthly utility savings they would enjoy b. The reduction in their long-term operational expenses for the property. c. The amount of money they would get back in the form of rebates and incentives. 2. By using the Energy Star appraisal formula we were able to increase appreciation on this home by 10%. In fact, on all subsequent projects in Detroit, we’ve been able to increase the appraisal value by 10%. 3. The supply of green materials was greater than anticipated and the costs were lower than anticipated. 4. The additional costs to green this property were projected to be a minimum of 15% higher than a standard rehab. In fact, when considering the rebates received the green retrofit actually cost less.

For more information on this or other projects, please contact Jim Simcoe at: jim@jimsimcoe.com or 760-271-7128.

491 Second Street, Suite 104, Encinitas, Ca 92024 www.JimSimcoe.com Direct: 760-271-7128

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