building a green real estate investing dynasty

8/4/2019 Building a green real estate investing dynasty

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Building aGreen Real

Estate

Dynasty



Tonight:3 Goals

No Theory



Learn

Choose to Act

Choose to Ignore



Tree-huggingCapitalist



What I Believe



Real estate

SHOULD be:



H

ealthier Safer

Less expensive

High-perf

ormance



WIIFM?



True Wealth.



What do we all want?



Love

HealthWealth

SexSafety

Friendship



3 Wins...



My reasons...



Increased Profits

Leverage OPM (Uncle Sam)

No competitionEco-Friendly

Why green homes?



Home Buyers WantGreen Features



According to a ZIP Realty

survey:� 89% of homebuyers rated energy efficiency the

most important feature in a home.

� 55 % of all home shoppers now cite green home

features as an important part of their purchasingdecision.

� Less than 1% of homes on the market include³energy efficiency ́ in their description.



H omebuyers who value green features

ranked them important for the following reasons:

12%

15%

37%

40%

49%



According to an A partments.com

survey:

� 60 % of prospective renters search for

properties that offer environmentally-friendly amenities.17 % of renters said they would not

rent an apartment without environmentally

friendly amenities.5 7 % of renters said their

apartment community does not currently provideenvironmentally friendly amenities.



In a study done published by Inman

News:

³32 %

o

f peo

ple said they'd pay an extra$5,000 for energy-efficient features, with thepresumption that the homeowner would recoupthe cost of those items over time.´



Columbine Ave, Phoenix

Vacant rental property

Market rent = $1000/month

Competition for renters = High

Phoenix example:



�Improved energy efficiency

�Improved water conservation�Projected utility bill decrease

= $105/month

What we did:



�$1500 for materials/labor

� Rebates = $750

� Net cost = $ 750

� Time to complete (3 days)

Co

st to

o

wner:



� Utility savings

� Healthier living (Less toxic)

� Craigslist blind ads

Marketing the rental:



� Property rented for $1100/month.

� $100 premium above market rent.

� $1200/year rental increase.

� 40% higher response to µgreen¶ CL

ad.� Property rented prior to work being

completed.

Results:



Is this µgreen¶ to you?



�1. Saves money.

� 2. Less toxic living

environment.� 3. Less impact on the planet.

Defining green:



�The pr ocess of remodeling

an existing structure to

create a high perf ormance

pr operty.

Green real estate is:



Common µgreen¶

real estate mythsCosts too much

Too complicated

No one cares about green

o o



o ow

the3 µS¶s



Seal it up



Systems & So

lutio

ns



Sex it up...



� Less toxic

� More efficient

� Polar bear friendly

Fundamentals of Healthy

Green Envir onments



Green buildings:� Energy efficiency

� Water efficiency

� Resource conservation

� Indoor envir onmental quality



Green thinking:

� House as a µsystem¶

� ³Whole systems´ approach

� Consume less energy and water

� Use resource efficient techniques

and materials� Healthier , safer , more comfortable



Key Points:� Remove, Replace, Relax

� Remove toxic materials

� Ventilate the air

� Use renewable resources



S tatisticall y ...

�The United States comprises 5% of the total world population

� We use 25% of the world¶s energy

resources



Buildings in the U.S.

� Consume 65% of electricity

� Create 30% of total green house gas

emissions� Create 136 million tons of C & D waste each

year

� Use 40% of raw materials globally



Building and resource use:

� Construction of a 2,085 sqft home uses up to 1.5 acres of forest



Where does outdoor water go?

� 40-60% of potable water goes intothe landscape



Pesticide facts� The likelihood of a child getting leukemia is 6X

greater when herbicides are used on lawn

� More children with cancers had exposure topesticides than children without cancer

� Pesticide links exist to infertility, birth defects, learning and neurological disorders, allergies, MCS (multiple chemical sensitivities)

� Come in on shoes and stay in carpet

� Moth balls (naphthalene) are one of the mostdangerous chemicals available



Indoo

r Air � Indoor air pollution is 2-5 times

worse than outside

� We spend over 90% of our time

indoors

� 60% of homes and 30% of commercial buildings are classified

as ³ sick´



Air leak issues

come fr om...1. Duct work leaks

2. Faulty insulation

3. Windows, door frames

4. Plumbing penetrations

5. Fireplaces

6. Floors, walls and ceilings



Duct issues

� Ducts leak average of 30%

� Leaky ducts waste energy an decrease

comfort

� Leaky air ducts can cause negativepressure- this can pull CO out of gas

appliances into the home� Use duct mastic on all duct joints

� Do not use duct tape!



Indoor Air Quality(I AQ)



Indoor air/envir onmental

quality IAQ/IEQ� Materials and finishes

� Combustion gas safety

� Ventilation and moisture management

� µSick¶ Building syndr ome



Impact of negative IAQ� 15% of homeowners may be allergic to

elements in their own homes.

� 40% of children born today will develop

some form of respiratory disease.� Prevalence of asthma has doubled since

1976.

� Increasing links to ADD and asthma inchildren.

� Of all the chemicals that EP A monitors,

only ozone and sulphur dioxide are more



Indoor Air Quality� Toxins

� Off-gassing

� Plastics

� Ventilation

� Plants



What is

off-gassing?

� The release of toxic chemicals fr om common

household materials (paint, furniture finishes, plastic, vinyl, etc)



Indoor Air Toxin

Sourcesa. Formaldehy de (urea-particleboard/phenol-osb,exterior grade

plywood

b. V OC¶ s (gasoline, kerosene,xylene,Toluene. Paint, sealers, adhesives, caulks, can be absorbed by carpets and furniture)

c. Viny l chloride (human carcinigen, found in PVC)

d. Nerotoxins (backing, glues, fire retardants, styrene,latex

binders, fungicides, anti-static and stain-resistant treatments)e. C ar bon monoxide stove,furnace,gas water heater , gas

dryer)



Formaldehyde� Two main types:

� Phenol formaldehyde (used outside)

� (Plywood, Oriented strand board)

� Urea formaldehyde/ (used inside)

� (Particle board, cabinet fiberboard, etc)



Volatile organic compounds

(VOC¶s)� VOCs are typically in solvents used in fluid or flexible pr oducts

� Paints, sealers, adhesives and caulks

� Most of the µenes¶ are VOCs

� Gasoline

� Kerosene

� Benzene� Xylene

� toluene



Vinyl Chlo

ride� The principle element in PVC products

�³Beach ball smell´

� Problems with off-gassing, disposal

� Human carcinogen

� Dioxin and hydrogen chloride is emittedfrom production and during burning



Carpeting contains� T oxic chemicals in the fiber bonding material,

dyes, backing glues, fire retardant, fungicides, antistatic and stain resistant treatments

� 120 chemicals; some of which are neurotoxic

� They last at least 3 years

� Carpet is neither renewable, nor biodegradable



Carpeting� Carpet is anathema to good air quality

� Offgasing and absorption issues

�Dust magnet (old carpet weighsmore than new)

� Dust mites love it (if humidity is over 53%)

� Bacteria hide here

� It holds everything from bottom of shoes



Systems & So

lutio

ns



Energy efficiency� Structural system

� Increased insulation

�Air sealing

� Windows

� Lighting

� Energy Star appliances

� HV AC design, installation and testing

� Renewable energy



Water Conservation

� Install water conserving appliances

� EnergyStar and WaterSense rated

� Install water conserving fixtures/systems

� Optimize irrigation system

� Rainwater harvesting� Greywater plumbing



Ventilation

� Ventilation is the second way to reduce the

impact of high concentrations of toxic gases� Natural ventilation (windows, etc)

� Mechanical ventilation (fans, etc)



Fix air leak issues

1. Seal all holes in building envelop including: sillplates, top plates, electrical openings, plumbingopenings, boxes around windows, attic hatches, HV AC closet, door-frames,

2. Use: spray foam insulation, weatherstripping, foamgaskets on electrical openings, etc.



Low energy cooling

� Ceiling fans

� Standing in moving air under a ceiling fan

makes the body feel 4 degrees cooler , thereby reducing air conditioning needs

� Increased comfort with the same temperature

� Choose E nerg y S tar fans (50% moreefficient; have improved motor and bladedesigns; efficient lighting)

I l ti i



Insulating pipes

� Hot

� Reduces standby pipe loss

� Saves water by reducing waste whilewaiting for hot water at the fixture

� Cold

� Reduces condensation and freezingproblems



Green materials

andRecommendations



Choosing green

materials� Insulation

�Flooring

�Appliances

�Lighting



Natural lino

leum floo

ring� Durable, stain resistant

� Made of rapidly renewable materials

� Linseed oil, limestone, pine rosins, woodpowder and jute



Renewable cork flooring

� Cork is rapidly renewable (7-10 yrs),

naturally fire and moisture resistant, sound absorbing

� hypoallergenic

� no trees are cut down



Rapidly renewable bamboo

� A renewable resource, replenished by naturalprocesses

� Bamboo is fast growing (7-10 years) comparable to

wood

� Full grown stalks are cut lengthwise into narrowstrips and glued together either horizontally or

vertically� Can be re-sanded and sealed

� Lots of products in market place



Carpet Alternatives

� Untreated natural fiber carpets:

� Wool, seagrass, sisal

� Make sure wool is NOT treated withtoxic moth proofing chemicals

� Install with low or non toxic backing



Best Carpet Cho

ices� Recycled PET fiber carpets available

� Avoid styrene-butadiene latex backing (getwoven backing)

� Low pile ± high density may be more durableand hold less dirt

� Look for the carpet and rug institute¶s ³greenlabel´ and ³green label plus´ logos

Adh i /Gl /S



Adhesives/Glues/Se

alants1. Typical ones are very toxic and off-gas

2. Found in cabinets, floor sealants, caulking, spray foam, carpet backing

3. Look for all-natural alternatives

4. Greenbuildingsupply.com5. greendepot.com



LED¶s: the facts

� LED¶s (light emitting diodes) are making a fastentrance into the residential market

� LED¶s produce more light with less electricity

� LED¶s can last 35,000-50,000 hrs.

� (CFL¶s last 8000-10,000 hrs)

R f i t d



Refrigerator and

freezer � Single largest power user in most

households� EnergyStar is minimum goal

� Size matters; small saves

� www.energystar.gov



Washer/dryer

� Horizontal axis washer (Front Loading)

� Use 40% less water & 50% lessenergy than most models

� Faster final spin- reduces drying timeand cost



Paint

1. Chose No-VOC or LOW-VOC paint

2. Available at most most home stores

3. Very comparable to regular paint



Materials1. Use natural/solid woods when possible

2. Stay away from OSB and pressed wood

products3. Glues and sealants used are toxic

4. Other great materials: brick, tile, metal.

5. The more natural, the better



Appliances

1.Replace old/faulty appliances

2.Look for Energy Star appliances

3.Washers, Dryers, Hot-Water heaters, Dishwashers



Mistakes to avoid

1. Spend too much

2. Do too much

3. Don¶t consider payback

4. Don¶t consider end-buyer¶s

wants/needs

5. Don¶t have a clear plan



Free Money

System

What money is



What money is

available?� Rebates

� Tax Credits

� Incentives

� Grant money



Where is it?

� City

� County

� State

�Federal

� NGO¶s



Rebate examples:



Text



DSIR E USA.ORG



GRANT

S.GOV



ENERGYST

AR.GOV



\ Incentives



Energy Efficiency

Loan Pr ograms

Sex it up



Sex it up...



Buyo

n emo

tio

n, justify with logic



Don¶t be this guy...



³Don¶t give themwhat they want, give

them what they

NEED´



Want Need

Trip to Hawaii Groceries

Bentley Car

Mansion Shelter



Want Need

Bamboo floors No toxins

Cool looking lights Lower utility bills

Luxury Safety



Save mo

neyLive safely

W hat buyers/renters need:



Sell Planet first = you lose

Sell Savings/heath first = you win

Environmental benefit

is a BY-PRODUCT



How to Increase

AppraisalValues



1. Energy Audit report.2.Build list of energy-efficientmeasures completed.3. List of energy-efficient materials/

equipment installed.4. Project annual utility expensesavings based on historical data.

5. Projected asset value increase 10-25 x annual savings)



Make MarketingAutomatic



µGreen¶ SaleµGreen¶ SaleSignSign

µGreen¶ SaleµGreen¶ SaleSignSign



Wall Signs



µGreen¶ flyersµGreen¶ flyersµGreen¶ flyersµGreen¶ flyers



Results:

Sold for $5000 more, 61 days faster than market



Steps to build a

green real estateinvesting dynasty



Determine yo

ur µWhy¶



H

ireFree Interns

³What¶s in it for



What s in it f or

them?´� They are passionate about green.

� They want the experience.

� It looks good on their resume.



WriteP

ublishRepeat

4 of top 5...



p



LeverageExisting Data

(Warning: ugly slide coming up...)



Why Green,W

hy No

w?



One Reaso

n Only:



Something needsto change f or you

right now



Mountain bikes

andCosmetic Surgery



Potential

Urgent Needs:



Falling revenues and

decreasing pr ofits



You need $200K

byT

uesday



µThe Australians

are coming...´



Launching your businessnext week

(without a C.A.)



Do

n¶t pursue if yo

u¶re just

µInterested¶ or µcurious¶



Are you Thriving?



95% Rule



Q& A

Jim Simcoe

JimSimcoe.com

760-271-7128

building a green real estate investing dynasty

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