Answers to the Most Common Questions on Green Real Estate Investing

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Ever feel like you’re shouting into the wind?

When I first started talking to people several years ago about green real estate investing, I felt that way a lot.  They didn’t bother asking me questions-they just looked at me quizzically as though I had three heads (which I don’t). Luckily times have changed and I get asked questions all the time now.  So I thought I’d put together a list of the common questions I hear that you might have as well.  In no particular order, here they are:

“Tell me again why green will make me more money”

Simple:
– You’ll sell your properties faster and for more money.
– If you own rental properties, you’ll rent them faster to better tenants for more money, have less churn and lower vacancies.
– You’ll have less than 1% competition in any market in the US.

“Isn’t green more expensive?”

Not if it’s done correctly and according to a well thought out plan.  Sure, tons of people get it wrong and spend too much but you don’t have to be one of them.  Green, by definition, should cost you less money.  If it’s costing you more to achieve it, then it’s really not a green solution.  For example, installing solar panels to save 30% on your utility bills will cost you a ton and deliver a marginal payback.  You can achieve that 30% reduction simply by improving your building envelop.”

“Why would people spend more money to live in a green home?”

95% of people, in my experience, won’t spend a penny more to live in just a green home.  BUT they will spend more to live in a green home if it costs them less to operate and is healthier for their families.  Quick example- Seniors on fixed incomes might love a green property because their monthly utility bills can be  40-50% less than if they live in a comparable home.  There’s a strong chance they’d pay a premium for a green home if they knew that their monthly bills were going to be reduced and there were less toxins in the home.  [As an aside- Indoor toxins from paint, carpets, etc. are more damaging to the young (babies) and old (seniors) due to their developing/weakening immune systems].

“No one is really serious about green, that’s just talk, so why should I bother?”

I have not met a client from Paris to Boston to Detroit to San Diego, etc, etc. that wasn’t interested in at least one of the following:

– Saving money monthly on their utility bills
– Living in a healthier environment that is safer for their families.

They may not have cared about the environment but 100% of them cared about one of those two factors. Those factors are the essential elements of green homes.  The fact that they also have less impact on the planet is a bonus for most people.  You must keep that in mind when you’re explaining the concept.

“What’s the most important thing to do to make an investment property green?”

Get the building envelop under control.  Fix the leaks, gaps and holes so your AC (Summer) and heat (winter) aren’t literally going out the window.  Look at your exterior walls first and your attics and roofs next. DO NOT buy anything or do anything else until you get the envelop under control.  A good energy audit can show you where the problem areas are so you can fix them immediately.

“Do I need to install solar?”

Typically, solar doesn’t pencil out for investment properties unless you are talking about multi-family or commercial.  The high cost of materials, and install negate any potential return over the near-term unless your residential home is over 4000 square feet.  Solar-water heating, however, can make a lot of sense in the right circumstance.  Recently in parts of California there was a rebate of up to 30% (uncapped) on the cost of the install/materials in addition to a pilot program that offered $1500 cash rebate to install. Installed systems were costing approx. $8000 so after the 30% rebate and $1500, the net cost was $4000.  For big houses that spend more than $200/month in water, that pays off in about 18 months.
[Another aside- solar companies are notorious (in my experience) for overselling what you need.  They want you to buy a system that could power NYC, when what you need is much less].

“I don’t know anything about green, how can I get up to speed?”

There are some great books on the subject and there are great green building seminars going on in almost every major metropolitan area these days.  Working with a green consultant is a good way to start as well IF they have direct experience doing projects.  Don’t work with someone who is all ‘theory’ and no ‘practice’.  Set up some google alerts on the subject and read those daily.

“Where can I find green products and materials?”

Quick and easy answer is to look online. The better solution is to hire an unpaid intern to source products for you.

Leads to:

“Intern! Why would I hire an intern and why would they work for me for free?”

You hire an intern because they can:
– Research rebates and incentive programs for you
– Source products and materials
– Schedule contractors
– Drop off paperwork, video-tape properties, take pictures (and any other admin work you don’t want to do)

Why they will work for you for free:
– They are passionate about green
– They want the experience
– It looks good on their resume if they’ve worked for a ‘green’ company
-They are doing work that contributes to society as a whole

For what it’s worth, I am the only employee of my company and I have had at least one intern working for me over that past 4 years.  Last summer I had four working for me.  There is almost no limit to what you can have them do to support your business.  The more passionate they are about green, the harder they will work and the more they will help you.  [Email me offline if you’d like more info on this, including actual ads I’ve run, etc. The last ad I posted I had over 65 people apply for an unpaid position.  Many had their Masters’ degrees and one had her PhD.   During the interview process I conveniently left out that I almost flunked out of high school].

Hope these were helpful, feel free to add any additional questions and i will do my best to answer them.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.