Green can ONLY mean more profits…

10

What do Porsche and Volvo have in common?  They are all the best in their class, have little competition; and sell at a premium.  When you think fast, high-performance cars you think Porsche.  When you think about the safest car imaginable you probably think Volvo.

Quick story- Six years ago when my wife was pregnant with our 1st daughter we went to look at Volvos.  I’d never been a fan as I found them to be too boxy.  Nevertheless, it was time to trade in the convertible SAAB and get a ‘family’ car. As the Volvo sales person droned on and on, he started to realize that he was losing my interest.  He then showed me the over-sized door handles and asked me why I thought they were so big. I had no clue.  He explained that Volvo designed the handles that size so that if my Volvo was ever on fire, a fireman (wearing bulky fireman gloves) could open the doors easily to get my family out. After that I was the easiest sale that guy ever made.  Two daughters later and we’re still driving Volvos.

High-performance properties work the same way.  A high-performance green property is unlike any other in the market.  Because it is unique it has additional benefits that buyers (or renters) will pay a premium for.  In my direct experience here are some of the reasons I’ve seen people chose to purchase (or rent) a high-performance green property:

  • It would cost them less money on utility bills.
  • It was a less toxic, healthier home to rent.
  • It felt more comfortable inside the home.
  • It wasn’t drafty.
  • They believed the home was built sturdier.
  • The believed the previous owner took better care of the home.
  • They wanted the ‘cool’ cutting-edge green home on the block.
  • They were happy about reducing their family’s environmental impact.

Interestingly, in over 125 real estate deals spanning a 3 year period no buyers working with my real estate company EVER gave any of the above reasons on any other ‘non’ green homes we sold them.  All of the regular non-green homes were chosen almost exclusively on price.  In addition, I once had an investment group pay $50,000 over market value for a $850,000 green home because it was the only property in a 50 mile radius that they could put a ‘green’ kindergarten in.  We were literally the only game in town for them.

In creating high-performance properties, you create a tremendous competitive advantage.  Put simply, no one has what you have.  So would you rather sell regular properties with tons of competition (Honda Civics*) or green properties (Porsche’s) without any?

Click here for a sample energy audit report. I thought that if you’ve never seen one of these before you might enjoy checking it out.  As always, I welcome your questions and comments.

*No disrespect to Civic owners as Civics are good cars.  Hey, my first car was a 1972 SAAB 99 that cost $200 and didn’t go in reverse.  My Dad bought it for me when I was 16 from my Uncle Ray.  I still think we overpaid…

About Author

I help real estate investors increase profits and property values through a variety of green strategies. I help clients find hidden rebates, tax incentives and credits to maximize returns on any property. www.JimSimcoe.com

10 Comments

  1. Jeff Brown

    Jim — Though the ’59 Morris Minor Dad bought from his sister for, you guessed it, $200, went in reverse, it couldn’t hold a candle on the cool meter compared to your SAAB. No seat belts, and when you stopped quickly, the passenger seat lifted from the back, ending up hugging the dashboard. When girls agreed to go out with me knowin’ I was drivin’ that thing, I KNEW they wanted to date me. 🙂

    Bottom line on the post: How much would an investor hafta shell out on a 20-30 year old rental to achieve true ‘green’ status? Also, how long, overall, would it take for him to recoup? Lastly, would it really make a hill-a-beans difference in price down the road, when he sold/exchanged it? Much thanks.

    • It sounds like our fathers might have been in co-hoots on the whole car thing. My SAAB was great, the reverse issue notwithstanding.

      To your question: Here’s an example of a project I am doing right now:

      1. It is going to take approx. $1600 to make energy efficiency upgrades to a home.
      2. Of that $1600, the investor will receive approx. $850 back in rebates.
      3. Total net cost of the work will be $750.
      4. Market rent in the neighborhood is $1095/month.
      5. Due to our joint ‘green’ marketing efforts the investor secured a tenant at $1195/month.
      6. Increased revenue to the investor is $1200/year.

      Hopefully that gives you some insight into what you can do, Jeff.

      Thanks..Jim

  2. Jim, thanks for the numbers on your energy rehab. Most people I suggest doing energy upgrades tell me they can’t afford it — and that I’m making their homes “unmarketable.” And, your energy audit report– thanks for sharing.

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