Real Estate News & Commentary

Green Real Estate Investing Trends Q2 2011

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The world of green real estate investing changes fast.  Below are some of the latest trends I’m seeing nationally.

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  1. Green companies that sell ‘guilt’ (buy this/do this because it’s your responsibility to the planet) are getting crushed.  Green companies selling on value are thriving. Customers buy value, not to suppress guilt.  Some things don’t change.
  2. Solar is getting quieter. It used to be the topic of conversation, now it rarely comes up with investors and/or buyers.  It’s still expensive and the incentives aren’t commensurate with the upfront cost.
  3. Green investors are finding and getting private money much easier these days.  It’s like 1998 when if you had a ‘website’ you got angel funding for $10M. Green used to be just a buzz word, now angel investors see it as a way to increase their % return. When investors  (looking for cash/investor partners) incorporate ‘green’ into their pitch, they almost always get better results.
  4. Single best time to buy and ‘green’ multifamily in our lifetimes. Tons of inventory, low prices, all need retrofitting.  New builds will all have to be green. Existing buildings will all eventually have to ‘green’ to be in compliance with new building codes.
  5. The popularity of energy audits continues to increase.  It’s a cheap and effective way to determine how to make a property more energy efficient.  Instead of spending thousands on solar, you can get an energy audit, make some small repairs and save the same amount of energy that solar would have given you. Plus, almost all energy audits have rebates attached to them.
  6. Potential buyers increasingly want green homes for the cost savings.  In the past, green was associated with pure environmentalism and not the real world needs of people like you and I.  More and more, people are equating ‘green’ with practical ideals like saving money and living less toxic.
  7. Investors successfully leveraging grant money are cleaning up. I spoke with an investor this week who applied for a $250K grant 6 months ago and just found out he got it.  He’s got a few other grants coming to him as well.  The key is that you must take a long-term view of your business to be successful. Applying for grant money today when you may not receive it for several months can be daunting for investors looking for a quick buck. For those of you who are in this for the long-term it’s definitely something you should pursue.
  8. Untapped green real estate investing opportunity – Luxury residential.  These buyers have the cash, can pay more for green and need a compelling reason to choose your luxury property over the 7 others they are considering.  Green is a no-brainer on these deals.

If there are other trends you are seeing in your market please share them in the comments below.  Thanks.

In case you missed them, here were my Green Real Estate Predictions for 2011 from back in December.

    Justin Velthoen
    Replied about 9 years ago
    Excellent point about the grants! I’ll start applying next week.
    Replied about 9 years ago
    Quality contribution. I agree that the buzz word “green” is generating more investment potential. What multifamily property owners need help with is recognizing that green doesn’t mean you have to decrease net income. Thanks for the discussion.
    Jim Simcoe
    Replied almost 9 years ago
    You’re welcome, Josh. Glad you enjoyed the post. I agree, mfu owners need to understand that NOI should INCREASE when they pursue green strategies. Green is not an added expense it’s a revenue stream.