Green is the biggest opportunity for any business or real estate investment company. Billions in rebates/incentives and skyrocketing consumer demand make green your gateway to increased profits, new customers, elevating your brand, etc. To see how you can use green to become a cutting edge leader in your field, contact me now.

If you’re like most real estate investors, you might have the following 2 objections about green real estate investing.  These are the two I hear most often in my work:

1. You do not believe there is a market of people who want green properties.
2. You do not know how to quantify the profitability of going green on your properties.

The first objection is usually handled when we discuss the true definition of ‘green’ real estate.  Put simply a green property:

1. Saves the end user (homeowner, tenant) money every month on utilities.
2. Creates a healthier living environment for that end-user.

With that said is there anyone who is not interested in saving money every month and living in an environment that is LESS toxic?  Probably not.

The second objection has been harder to address.  When I first started in this business several years ago there was no data at all around this topic.  Even now, there are precious few data sources to point to.  So I am pleased to say that my team and I recently developed a sophisticated formula to project the increased profits available to an investor by greening up an investment property.

Our formula is designed to give you the following:

1. Give you the projected max price you can charge for a green home in any market.
2. Give your end buyer the numbers that show that it will actually SAVE them money if they spend more to purchase your property.

Here’s a brief example:

In a certain neighborhood in Los Angeles, all of the homes sell for roughly $200,000.  The utility bills for those homes average $300 per month. With our formula, we can show an end-buyer that it will be less expensive for them to spend $215,000 to purchase your home than to buy a comparable home at $200,000.  We show them that the combined total of their mortgage payment and utility bills will be less on our place (at $215k) than the total monthly payment at a comparable home ($200k).  As the investor, you net an additional $15k AND you’re helping to create a sustainable neighborhood.

The end buyer loves it because although they pay more for your property, their monthly expense actually goes down.  Since most buyers get a mortgage that additional $15k they spent is never fully re-paid. Their monthly savings is real money that they save right now.

Here are a few of the benefits to you:

1. You net $15,000 more on the sale of this property.
2. You’re able to sell the property faster and thus have less holding costs.
3. You know the exact price that is the break-even point for a buyer.  With  that you can price your property accordingly.
4. You can do this on any property for sale in any part of North America.  This can be used on residential, multi-family, and commercial properties.

Some (not all) of the factors involved in our formula include:

• Average sales prices in the neighborhood
• Average Days on Market
• Sales price to List price ratios
• Current mortgage rates and programs
• Down-payment amounts (0%, 5%, 20% for example)
• Projected utility savings
• Green rehab expense
• Rebate, incentive money coming back to you
• Number of (if any) green properties currently for sale
• **There are roughly 25 more inputs into our formula**

This formula has been a labor of love for my team.  We recognize that real estate investors deserve to know how much additional profit they can expect to earn on any green real estate investment.  Many thanks to Kevin Gaynor, our Project Manager for his tireless work on this project.  If you’re interested in learning more or would like to have us run one of your properties through this formula,please contact me below.

When converting a client’s property into a high-performance green real estate investment, there is a clear road map we follow to ensure we maximize the results (profit, ROI, etc).  Below are the highlights of that road map along with additional comments (in red).

1. Schedule site visit
2. Video exterior and interior of property
   1. Take minimum of 20 pictures (all sides) of exterior of property
   2. Take minimum of 30 pictures (all rooms) of interior of property
   3. (When the project is outside our area, we have someone shoot this video so we can get an accurate assessment of the property)
3. Assess entire property including: exterior, interior, appliances, plumbing, building envelop, HVAC, etc. (This gives us a good baseline of where the proprty stands today and what the opportunities are)
4. Create comprehensive green retrofit strategy (We answer the fundamental question- What will it take to turn this property into a high-performance green property?)
5. Schedule energy audit [if applicable] (In some states/cities, you can double your rebates and incentives by first doing an energy audit.)
6. Identify any applicable ‘green’ city incentives (We call the Mayor and the City Manager’s office to discuss the project with them and see what incentives are available)
   1. Expedited permit process
   2. Fees waived
   3. Variance approvals
   4. Etc…
7. Create Materials List DRAFT
   1. Include contractors initial list
8. Initial rebate/incentive/credit/grant/Stimulus funds research (We research every possible rebate available from city, state, federal, county and NGO organizations to maximize the savings for our client)
9. Identify Materials supplier (Where the client’s contractor will be buying the materials)
   1. Conduct initial meeting (We drive 2 things home in this meeting: 1. This is a green project which will be good branding for them and 2. We expect a large discount from them)
   2. Discuss potential discounts
10. Identify green vendors
    1. a. Insulation
    2. b. HVAC [if needed]
    3. c. Painter [if needed]
    4. d. All others [Solar, Rain-harvesting, Irrigation, Carpet, etc.]
11. Area utility expense research (This gives us the baseline #’s for a neighborhood that we can use in our marketing once the project has been completed.  For example, if we know we’re going to save the end-buyer 50% on utilities and neighborhood utilities average $200/month, that’s $100/month savings. It’s crucial to get exact as possible on these #’s)
    1. Gas
    2. Electric
    3. Water
12. Area comparables for both sales and rentals
13. Phase I Client Meeting (Gives the client my initial thoughts about the project, budgets, etc)
    1. Project Scope
    2. Discuss initial assessment, budget, proposed materials, etc.
    3. Review Green Project Workbook [excel spreadsheet-see KG]
    4. Finalize next steps with client
14. Create FINAL Materials List
15. Site walk-through with contractor (To explain what we’re going to accomplish and how building envelop science comes into play)
    1. Review strategy
    2. Review materials
    3. Finalize Materials List
    4. Answer questions
16. Site visit within 3 days of construction commencement (Check on the work and make sure it’s getting done properly)
    1. Video exterior and interior of property
    2. Photograph exterior and interior of property
    3. Perform Quality Control checks on work
17. Identify prospective media outlets for press possibilities (Use a variety of methods to pitch them on this as a ‘feel good’ green story.
    1. TV
    2. Print
    3. Radio
    4. Web
18. Identify local city officials for local publicity (Elected officials want one thing (to be re-elected) so we show them how helping us helps them achieve that goal)
    1. City Mayor
    2. City Manager
19. Marketing Process launch [see Marketing Process] (Different process, specific process available to clients only)
20. Appraisal Process launch [see Appraisal Process] (Process to increase appraised value 10-15%, specific process available to clients only)
21. Site visit upon construction completion
    1. Assess final project
    2. Video exterior and interior of property
    3. Photograph exterior and interior of property
22. Phase II Client Meeting (Occurs right after construction completion)
    1. Sales price recommendations
    2. Total construction budget savings
    3. Applicable rebates
    4. Etc…
23. Phase III Client Meeting [at completion of project] (Look at total results of project)
    1. Results
    2. Increased profits
    3. Increased performance

A study conducted by Rent.com (click here for the report) in February 2010, concluded that the desire for eco-friendly homes has significantly increased. For example:

1. 86 % of renters would prefer to live in an eco-friendly home.
2. 55 % are willing to spend more in rent to live in one.
3. Renters were almost three times as likely to say that living in an eco-friendly home is absolutely necessary for them.

Click here for the full article

Recently, my college intern, Becky Sanders, conducted interviews with two of our clients for one of her class projects.   The goal of the interviews was to get a read on their thoughts on green business before working with me, during our work together and the results afterward.  Below are the transcripts.

Client: Roger Segure-APR Investments.  Roger runs a real estate investment company in Southern California.  His company specializes in purchasing short sales or foreclosure properties, remodeling them and selling them at a profit.

What was your experience with green business practices?

“None! I was previously in tune with wanting solar, taking short showers and being green but didn’t really know anything about how to go about incorporating it into my business. I went to conference and met with company who was doing green sustainability (using Jim)  And I was intrigued with the idea of turning into a green business. * No active business practice before Jim, just aware of environmental problems.”

Did you have any prior green business practices in place?

“None. Only my environmental conscience.”

On a scale of 1 to 10 (10 being most important) , how important was it for you to be a ‘green’ company?

“10, make more money greening up a home as well as do what is right for the environment.”

What benefits did you expect when you began working with Jim?

“I initially needed to feel things out. I expected to be told what to do and in what order.
I liked Jim from get go – after meeting him I thought that if Jim hit even 65 percent of what he was saying, that  it was going to be exciting – seems to me hes right about everything he says..  Expected higher income for properties and was excited about branding myself as green.”

How many competitors did you have prior to beginning this project?

“Who knows – lots of competition, Lots of opportunity for flipping homes.”

What were the 2 biggest surprise positive outcomes you experienced while working with Jim?

“If you aligned yourself with people like Jim you learn about things such as discounts at home depot 15 to 20% less. PRICE. Before Jim I thought carpet was carpet – discovered what carpet was made of, found out about green options that I didn’t think about before or even know existed. Also surprised about all the advantages of making your home green, hidden benefits like getting a soundproofed home from blown insulation.

How has your perception of being a ‘green’ business changed?

“From the first moment I decided to do this I have become more convinced that it will not only work [financially] but that it’s a good thing to do.

On a scale of 1 to 10 (1-not much, 10- total domination) how much of a competitive advantage do you believe you have by being a ‘green’ company?

“10+++  Have a hunch that it will make all the difference”

How many competitors do you have now?

“None in the area that are known of. – May be people doing it at much less extent, not to the extent I am that’s for sure..”

What do you believe the future holds in regards to sustainability in your industry?

“I feel really good about, I know I am making a move in right direction and that it will pay off.”

How far (if at all) do you feel you are ahead of the curve in terms of knowledge, skills and experience?

“I feel like I’m  ahead of most in this field,I have found a niche in the business to hold on to. While I am learning more everyday the majority of the knowledge is from Jim. I like having notes on hand. I wants to be able to explain basics to general population, don’t expect to be an expert.”

Ryan Burk – CEO – In The Now Investments. Ryan, along with his wife, Shanan, run a wholesale real estate investment business that largely invests in Section 8 homes in Detroit. We began working together in August of 2009 and I became their Chief Green Officer in January 2010.  Shanan and I successfully worked together to have her replace me as Chief Green Officer in May 2010.

What was your experience with green business practices prior to working with Jim?

“Zero, no experience, other than thinking it would be cool to go green, but I always thought it would be too much money.”

Did you have any prior green business practices in place?
“None”

On a scale of 1 to 10 (10 being most important), how important was it for you to be a ‘green’ company?
“8, Once I started I became aware of green as an option it became very important.”

What benefits did you expect when you began working with Jim?

“I expected to have happier clients and tenants. Expected more profits for business, and the opportunity to leave a legacy.”

What were the 2 biggest surprise positive outcomes you experienced while working with Jim?

“I wasn’t aware how responsive the general public would be to becoming green. It
allowed me to open up my database while giving me an entirely new types of clients.  I was surprised at how much  easier it is to brand yourself as a green company.”

How has your perception of being a ‘green’ business changed?

“I have revolutionized my entire business model, Jim has opened eyes to how perfect this time is to get into this field, how people not only want to go green but will eventually need to.”

On a scale of 1 to 10 (1-not much, 10- total domination) how much of a competitive advantage do you believe you have by being a ‘green’ company?

“10- I don’t have any competition I stand out, I have absolutely no competitors.”

What do you believe the future holds in regards to sustainability in your industry?

“The future holds huge things, within the next 5 years all houses need to have energy rating, people will need companies like mine, there will be a huge need.”

How far (if at all) do you feel you are ahead of the curve in terms of knowledge, skills and experience?

“Way ahead of the curve, with what we know and the qualifications we have been getting. We feel we are ahead  far enough to really benefit from these green trends.”

The business of ‘green’ is constantly evolving.  As one of the only consultants in North America who focuses solely on green business and green real estate, I get contacted very frequently for career advice.  People have emailed from all over the Us and France, Guam, Switzerland, Ohio, Canada, etc.

With that said I recently developed my green career mentoring program.  The video below gives a simple explanation of the program and why it makes sense for someone interested in utilizing ‘green’ to fast track their career.  It’s applicable for real estate investors, business owners, new grads, etc.  check it out and if you’re interested, shoot me an email.