Green Investing worth it?

Question

Hello, I've been investing in Real Estate for awhile now, and recently I've seen some bigger players going into "Green" Investing.  Supposedly, they receive rebates and things of that sort from the Government to make their deals more profitable.  Does anyone have experience in this?  Is there a niche worth looking into?  Thank you.

Scott Hubbard · Answer

I believe your market or sub-market should dictate the kinds of things you put into your projects.  Green does not transalte equally from demographic to demographic, so going green across all of your projects will not be wise.
          
          For instance, if your doing a fix and flip in a retirement community, you probably will not go over as well as it would in other segments.
          
          I have a major rehab project where I need to replace 90% of the roof.  i am considering using solar tiles or a solar panel.  The house is near a university and after doing some research solar is really getting top dollar in this market,  is in high demand and our competition does not offer solar.
          
          In most of my past projects, I would not have considered solar otherwise.  So, I think Bill makes a good suggestion learn as much as possible and be ready to apply it in a market where it will be received well.
          
          Enviromentalists' money is just as good as the next guys.

Ron Czecholinski · Answer

I have been building "green" since the 70's and it is definitely not all about jacked up prices and only for environmentalists. Although there is plenty of market hype, greenwashing, and greenbashing going on, with some basic education you will be able to build or rehab a home that saves the owner money and is healthier for the occupants and planet.

In addition, by incorporating the principle of tradeoffs (the same way you do with any building project) you can successfully incorporate the "shade of green" that fits your budget and market.

Green is all about increasing energy efficiency, resource conservation, and air quality - things we all should be concerned about. I am usually able to build green with little increase in cost and always sell at the top of the market.

Bill Gulley · Answer

Hi, I've been looking into some of this, but I have not done anything in this area yet and not sure I will, but...for a rehab, if you can get a decent deal on appliances, windows, etc, it makes a difference since you get the credits. However, what I have also found is that buying for one house is a Harry homeowner price, say for quality windows. Prices have gone up for Harry where the supplier/dealer is actually trying to cash in on the credit, raise the price then offer the credit, not leaving much room for the contractor/developer.
But if you talk quanity for ten homes, then there would be a savings. I was considering new construction too (last fall), but I have found that going all out on green amenities just won't pay in my area. New construction seems to be where green makes a difference. I don't see major green renovation as something for an investor, right now, but what is green today will be the norm later on. So get familiar with the concepts and applications.  If you're going to do something and you can incorporate green for not much difference, and it will show for a marketing advantage, I'd do that. Like putting up a new roof. If you can run the ridge E & Westerly for a southern slope for solar applications, or add a chase up for connections, for a few more bucks, I might do that. but I'm not putting solar pannels up and hooking everything up to go off grid! There is a limit. In my area, bamboo came and gone I think for flooring. If you can incorporate small items, in line hot water, upgrade thermostates, high-e funrance and air, dehumidifiers, these things will justify a higher price in mid and upper middle income properties, IMO. The market seems pretty simple, if I'm looking at two house with most other things being equal and one is greener, the green gets the green! So what ever your market requires will determine what you need to do. As for the other guys, they may have other properties where the tax credits provide more of a tax impact for them. There isn't much of a credit if you don't get the benefits of a better price. Good luck, Bill

Bill Gulley · Answer

Very good point Ron! Green is not a new idea but has gaind popularity. I'm all for improving any property to better standards when it's cost efficient. Last time I bought windows (last year) the low e, argon filled, glazed window was about fifty bucks more than the plain double pane jobs, well worth the difference. You can sell the higher efficiency furnance to a buyer over a less efficient one with the payback and I think that's another item that won't cost you anything, if you have to change out the furnance in the first place. In the 90s I tried to put in as much as we could on new construction, but as pointed out above, the market had to bear that out. Bill

Dale Osborn · Answer

Most of the products being advertised as being "green" are not. It is justa regular product that has the price jacked up and sold as a green product!

Greg P. · Answer

Awesome.  Thank you ALL!

Joshua Dorkin · Answer

Greg - 
We've got a Green real estate expert who writes for the BiggerPockets Blog each week, Jim Simcoe.

You may want to check out his articles (see link above).  There's some pretty good wisdom buried in them.

Good luck.

Rich Weese · Answer

Just like the Prius, a loser! You are trying to make money. You won't LIVE long enuff to save in gas the extra you  paid for a prius. It is for environmentalists. I think you'd have VERY few environmentalist investors. The selling point is the bottom line, and Green doesn't cut it, yet.imo. Rich

Green Investing worth it?

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