Green Real Estate Investing Trends

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With 3 months left in 2010 there are some interesting green real estate investment trends emerging.  Here’s what I am seeing:

Survey Results:
A recent survey I gave to real estate investors across the nation revealed the following:
– 66% of real estate investors surveyed have not received any rebate money at all in 2010.
– Only 1 person surveyed has received over $20,000 in rebate money in 2010.
– The 2 main reasons people were not pursuing a green investment strategy were: ‘No idea where to start’ and ‘Too busy’.  When I did this survey last year the overwhelming response was that investors ‘didn’t believe a green strategy was valuable’.  Interestingly, no one surveyed this year gave that response.
– The biggest challenges for investors surveyed is finding qualified people to buy/rent.

NASCAR Homes:
As more homes, products and people get certified in ‘green’ the intrinsic value of those certifications is dropping.  When I started consulting several years ago, there were only 3 different certifications you could get: Certified Green Building Professional (got it); EcoBroker (got it); LEED AP (did not get it).  Now, there are at least 20.
The exact same thing has happened with homes.  Now a home can look like it belongs more at NASCAR than in your neighborhood with all of the different labels and certifications it has.  The result is the value of each certification drops with each new certification that is added.

Investors remain wary:
Last year, investors didn’t believe in green.  This year they believe in the concept, they just don’t know where to start.  Investors are wary of trying green out because they are not convinced it will increase their profits/reduce costs, etc.  This reluctance is bolstered by their competitors.  Since RE investors don’t see any of their competitors launching green strategies there is no market pressure for them to begin.  When that tipping point is reached these investors are going to be in for a rude awakening.

Buyers want numbers:
Prospective buyers/renters love the idea of living in a green home.  They just don’t want to pay more for it. However what you, the investor, consider ‘more’ and what they consider ‘more’ is completely different. It breaks down like this:
– They define ‘more’ as the additional monthly expense they must pay for a green home.
– You define ‘more’ as the additional profit (sales price or rent) you receive.

Put simply, these two views can work together just fine.  You can get more profit while actually REDUCING their overall monthly expense.  The key is that buyers want to see the numbers and will pay more for a home if and only if, their total monthly expense goes down.

Green Investors are staying quiet:
One of the fascinating things I run into with clients is that once we’ve developed a green strategy for their investments, they tend to be very quiet about it.  I’ve found that they really don’t want their competition knowing what they are doing. They see this as a huge competitive advantage so they play it very close to the vest. Consequently, you typically don’t hear about the successes of green real estate investors but they are out there.

Year-end rebates:
Many rebate and incentive programs are expiring before 2011.  So there’s a lot of money still available for you in the next 3 months.  Agencies responsible for giving rebates/incentives/grants will typically process applications faster so that they can disperse the funds before 2011.  Some programs have requirements that they mus meet (in terms of $$ given out) in order to get funding for the next year.  With no funding, people in these departments could lose their jobs.  Thus, they are often more than willing to help you get your rebates and incentives.

Any other green trends you’re seeing in your market?  Love to hear them if so.  Thanks..

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

2 Comments

  1. Hey Jim — As a RE investment broker/investor I’ve not seen significant demand by either tenants or buyers for ‘green’. I’m with you, as since the movement has finally figured out most don’t believe them about the ‘save the planet’ etc., they are getting solid traction with the economic argument.

    Why do you think the gap, or lack of traction with most of the buying/renting public still exists, when it comes to the real savings? Is it due to their perception of those preaching green, (not you) have lost so much credibility on the, ‘we’re all gonna die’ mantra?

  2. I’m with Jeff, somewhat on this one. The perception and presentation is all wrong. The other thing is? People don’t and won’t really know for sure, how much savings a green home will be until after the fact. I can show charts all day long, but until that first electric bill arrives, I’m going to be skeptical. The Green Home Living client base just isn’t there yet!! Multi-family on the other hand is starting to attract a few serious renters!! I’m a Realtor and District Sale Manager for Cutting Edge Homes.net. 90% of our business right now is in building Smart Panel/Mod Apartments. All Certified green under Ca. Code. My biggest challenge is in Educating City Council members, who for the most part, have no clue about building Green!

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