Green Real Estate
A growing part of the world of real estate could represent a prime opportunity for anyone interested in fixing and flipping properties.
Expected to grow by 13% over the next five years, this new market sector will boost real estate values by millions (if not billions) of dollars across the country. It’s a type of investment that’s getting significant tax breaks and other benefits from local, state, and federal government offices, and is a category of real estate where buildings sell more quickly for more money than anywhere else.
What is it? It’s green real estate investing, and it could be the next big thing for fix-and-flip investors.
What is green real estate investing?
Generally speaking, opens in a new windowgreen investing focuses on opportunities that conserve natural resources, produce alternative energy, or otherwise work to improve the world from an environmental perspective.
From a real estate perspective, green investing typically involves identifying properties that drain natural resources, then working to improve them in hopes of reselling the properties for a profit. For instance, a green real estate investor could purchase an older home, update the insulation and other parts of the property to make it more energy efficient, install solar panels, and then re-list the improved home in hopes of making a return on their investment.
At its core, green fix-and-flip investing isn’t all that different from traditional fix-and-flip investing. It’s just more focused on particular elements of a property that have a bigger impact on the environment.
Why does green real estate investing matter?
If green real estate investing isn’t that different from traditional investing, why does it matter? There are two reasons.
First, from a purely altruistic perspective, fix-and-flippers can have an impact on the environment through pursuing green real estate opportunities. According to Credit Suisse, more than half of the world’s natural resources are used by the real estate sector in some way, shape or form and more than 40% of that is used to cool, light and ventilate buildings. By pursuing green investments, fix-and-flippers can put a dent in this outsized use of energy and resources.
Secondly, environmentally responsible features are becoming more important to home buyers. Millennials, who represent about 32% of current home buyers, say they’re more likely to consider buying a property if it has energy-efficient features. That should be music to a real estate investor’s ears: homes with higher energy certifications (LEEDS and GreenStar) can sell for up to opens in a new window30 percent more on average than those without, and owners of green rental properties can often charge more as well.
In short, the more green you put into your fix-and-flip properties, the more green you could see in your wallet.
How to get started in green real estate
If green real estate seems like a good fit for you, there two main areas you can target to get started.
First, consider using opens in a new windowenergy-efficient materials in your future renovations. For example, insulating concrete allows for smaller heating and cooling equipment and can provide up to 25% energy savings on energy bills. Or, if you don’t have an opportunity to alter the insulation of a building, consider exploring opens in a new windowcool roof technology. Cool roof materials reflect rather than absorb heat, which makes homes easier to cool and lowers energy bills.
These energy efficient materials may cost more in the short term, but they’ll be more efficient in the long run and could lead to higher resale prices.
Second, when possible, you may want to add alternative-energy or energy efficient features to the home. opens in a new windowIncorporating solar energy into your next project could make you or your future buyer eligible for tax credits. It could also make you some serious money: according to a UC Berkeley study, home buyers could be willing to opens in a new windowpay up to $15,000 more for a home with an average-sized solar photovoltaic system.
If solar energy sounds too ambitious, consider installing energy efficient appliances, starting with the air conditioner, water heater and refrigerator. Among the most common household appliances, opens in a new windowthese three use the most energy. Getting them up to par will go a long way towards making your investment property more energy efficient.
The bottom line on green fix-and-flip investing
Green real estate investing may not be for everyone. The time and expense involved may be more than some investors are willing to bear. But if you’re ready to be among the trend-setters prepared to take advantage of this somewhat unexplored part of the real estate landscape, Anchor Loans is here for you. opens in a new windowContact us today to get started on your fix-and-flip journey.