The Market Has Changed Blessed Are The Flexible.... Following are some of the strategies that are working at GreenEarthEquities to Keep On Fixing Houses Keep On Doing DEEP Energy Retrofits Keep On Providing The American Dream Of Home Ownership & Keep On Saving The Planet One House At a Time (Mission)
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
House
They Started Off The Same
$70,000 $10,000 Renter Zero No Change Zero Lowered Dragged Down
A
House
Purchase Price Improvements $ Occupant Energy Retrofit Carbon Footprint Green Jobs Tax Base Neighborhood
B $70,000 $50,000 New Owner Everything Reduced Yes Raised Lifted Up
Then Everything Changed
m e l t b I o l l Saving? r G i P W N o I e t The Planet s L N EL i u a B r One House S p p A At A Time Š 2010 G r e e n E a r t h E q u i t i e s . C o m
The Flood of Cheap Flips (A) has created APPRAISAL Challenges for Quality & Green projects (B)
House
A
House
B
The Success of A ... Is impacting B The Success of Conventional Investors with their philosophy of minimal cosmetic improvements (Lipstick on a Pig) has established an easy valuation technique that can be used by uneducated or lazy appraisers, (who dont know how or wont take the time to evaluate energy efficiency of a home) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Current Examples In “My Neighborhood”
Assuming we buy at 60 ... We need to sell at 160. Not difficult to add that much value but difficult to get appraisal
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
The Success??? of this type of investing gives the Appraisers & Bankers the ammunition they need to protect the status quo and their jobs and minimize all improvements that Energy Wise investors and homebuyers would like to bring: Less Carbon, More Green Jobs, Less Imported Oil, Higher Tax Base, Improved Neighborhoods... Is anyone listening?
Text
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
The Problem In A Nutshell 1. Lipstick Flippers have been too successful. 2. This has caused (lazy) appraisers to evaluate homes based on these numbers. 3. This has made retail flips with DEEP Energy Retrofits more difficult to sell at fair margins Solutions?....... G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#1 Sell Them Before They Are Done This is a continuation of what we have been doing all along. More than half of our projects have been sold before they were complete. I wish I could attribute this to the Energy Package, but it is really a result of all 3 Packages ... And mainly the WOW! Package
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#1 Sell Them Before They Are Done You can build a project and get a qualified buyer to want to buy it for a fair price BUT Can you find an appraiser to appraise the home for that price? ....
And If Not ... What Then? G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Sold Right But Appraised Wrong One Solution: Example: You complete a project and have a buyer who would love to buy it for your asking price of $160,000. Appraisal comes in at $145,000 One Solution: Lower the price to $145,000 Receive the additional $15,000 through a Personal Note* (unsecured)
(This works best if the option is discussed with the buyer before the appraisal) Also 203K & EEM G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#2 Sell Them Before You Buy Them This works well if buyers have seen your work (even photos of previous work plus a compelling presentation) and know that’s what they want. Get them pre-approved and use the 203K loan. Property must appraise (physical inspection plus appraisal of the plans and specifications) * Personal Note with UCC filing. May not be acceptable to Lender If it doesn’t appraise you can Saving #1. Find another Lender #1. still use a Personal Note* The Planet Disclosure is always the best policy. G r e e n E a r t h E q u i t i e s . C o m
© 2010
One House At A Time
#3 Dont Sell Them, Keep Them No Sale = No Appraisal To Kill The Sale You will soon run out of money with this method so plan on: CASH OUT RE-FI & Continuing Positive Cash Flow At 60 to 80% of appraisal, these will return most of your invested capital for further investment. (Limited to 10 of these (FHA). Most lenders only allow 4) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#4. Partner With An Investor Who Wants A Long Term Green Investment With Positive Cash Flow This includes lots of benefits for the investor besides positive cash flow (tax credits, lower property taxes, etc)
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#5 Use All The Programs SMUD, Redding & other cities, Utilities, PG&E, SCE & others HUD 203K Loans, EEM Loans CHF 0 or 3% Energy Loans, ECO Fund loans
Note: Most of these programs are designed for HOMEOWNERS & BPI Contractors, Not Investors = Flexibility Required
$17K Total...Wow!
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
#6 Do A Little Less = (GEE Lite) YUCK!!!
This idea flies in the face of one of our favorite mantras: “Do Everything, Everytime” Therefore we will look to other options first ... In order to continue doing DEEPER Energy Retrofits. And Stay More On Mission G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
But, If We Had To ..... Options: 1. HVAC. Keep the Equipment. Seal, and add Return (s) & Insulate Ducts. 2. Single Mini Split with bath fan powered jump ducts (25 SEER) 3. Re Weatherstrip Windows 4. Storm Windows Never Ever Ever Skip the Shell Seal, ever G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
More Than One Way.....
Stay “On Mission” G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Information at Zillow.com This shows what we do and how our projects are treated by the Algorithms (This one appraised at $160,000)
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
3332 N Ezie Same Neighborhood Same Graph
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
5664 E Bernadine, Clovis, CA
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
145 Gettysburg, Clovis CA Perfect “100K Spread” Example
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Not Enough Spread (paid too much, even after haircut to 65) Still A Great Deal For The County ...compare next door G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
House
They Started Off The Same
$70,000 $10,000 Renter Zero No Change Zero Lowered Dragged Down
A
House
B
Purchase Price Improvements $ Occupant Energy Retrofit Carbon Footprint Green Jobs Tax Base Neighborhood
The Flood of Cheap Flips (A) has created APPRAISAL Challenges for Quality & Green projects (B) G r e e n E a r t h E q u i t i e s . C o m
$70,000 $50,000 New Owner Everything Reduced Yes Raised Lifted Up
Then Everything Changed
m e l b o r P G No ELLIN Saving S The Planet Š 2010
One House At A Time
House
A
House
B
The Success of A ... Is impacting B The Success of Conventional Investors with their philosophy of minimal cosmetic improvements (Lipstick on a Pig) has established an easy valuation technique that can be used by uneducated or lazy appraisers, (who dont know how or wont take the time to evaluate energy efficiency of a home) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
The Success??? of this type of investing gives the Appraisers & Bankers the ammunition they need to protect the status quo and their jobs and minimize all improvements that Energy Wise investors and homebuyers would like to bring: Less Carbon, More Green Jobs, Less Imported Oil, Higher Tax Base, Improved Neighborhoods... Is anyone listening? (mayors, governors, presidents, utilities?)
Text
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Finding These Graphs On Zillow 1. Put the address in the Google Search Box. 2. Search for the Zillow entry from the choices. Click. 3. Dont go directly to Zillow and type the address in there. That will lead you to a different set of data. 4. For the next address, go back to Google & Repeat. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Questions
Q1. So, Why would you NOT add Solar? Q2. Which would save more, $17K of Solar, Or $17K of Home Performance? Q3. Which adds more comfort? Q4. Which are Appraisers closer to understanding?TheSaving Planet
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
One House At A Time
Yahoo!!! “Better Than Break-Even” ... But Will The Appraisers & Banks Wake Up??? So Politely Put..... G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
The Following Is Not A Sales Pitch! (But you can use it however you would like.) So far, everyone who has heard this G.R.I.P. Presentation has said, “Yes, that makes sense, Let’s do it.” Your mileage may vary.
Next Week: Complete Outline of GRIP G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
5 ways to be in the Green Renovation business in addition to the standard Retail Flip
Next Week
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time