All The Testing & Certification You Need....And None That You Dont Disclaimer: The Ideas presented here are for a noble experiment: “Delivering Excellent Home Performance Projects using only our own properties, purchased right and renovated with the concepts developed on this site and implemented purely in the American Free Enterprise System. They may not be appropriate for “Home Performance Contracting” as normally practiced G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Contractor, Rater, or Energy-Wise Investor? The “Rules” and Best Practices for these disciplines are different. An assumption that is true in one discipline can be false or irrelevant in another area. Most of the assumptions that you’ve heard are designed for contractors and their symbiotic cousins, the raters, contracting with homeowners in incentive driven programs. (and they are mostly true in that context) G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
So What’s So Different? The Differences 1. Testing 2. Certification 3. Third Party Inspection 4. Computer Modeling 5. Energy Guarantees 6. Marketing and Sales Expense 7. Buyers Knowledge 8. Buyers Expectations These are common in Home Performance Contracting but not in Energy-Wise Renovation of Investor Owned Foreclosures Let’s explore the reasons: G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Quick Review Of G.E.E. Principles 1. Work only on our own properties, 2. Select an area and stay in it. 3. Sell to first time home buyers 4. Complete 3 package system: Energy, Wow! & Done 5. Sub-Contract Everything 6. Systemize Everything 7. Negotiate Hard @purchase 8. Control the Comps, see#2 9. Influence the appraisal, see #2 10. Demand Wholesale Pricing 11. In & Out Quickly 12. Do everything short of Renewables, almost everytime. 13. $100K spread 20-20-20-20-20
GreenEarthEquities.Com
Projects Done & In the Pipeline
7 5
Tarpey North Cluster
2
1
6 Tarpey South Cluster
G r e e n E a r t h E q u i t i e s . C o m
3
4
Š 2009
Saving The Planet One House At A Time
Testing The value of Testing is either: 1. If you dont know what to do -2. Test, then convince the customer that you know what to do 3. The Program requires testing This is appropriate on complicated & one of a kind houses. We work in very simple houses that are all the same & do “everything” & have no customers to convince. So we perform tests essential to good Home Performance (blower door, duct blast, CO) but none to help make the sale or fit into an incentive program. G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Testing #2 Other Factors On When To Test 1. Everything that would be tested for air tightness usually goes away in the dumpster. (HVAC, Ducts, Registers, Doors, Weatherstrip, Windows, etc) This renders a complete Test In useless. Instead specific testing is done with the specific work. 2. Looking at previous bills for modeling purposes is impractical in foreclosed homes because they have been empty for 6 to 18 months or more and the previous owner is not available. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Certification Certification is valuable in the Contracting Business. It gives you something to sell. Something to differentiate you from the competition. Of course it costs money. Time, training, equipment, etc. You hope that it generates more additional than it costs. The First Time Home Buyer A. Doesn’t care very much about Energy or Green B. We double their knowledge on Efficiency and Green in the Sales Process
GreenEarthEquities.Com
3332 N Ezie Ave.
At GreenEarthEquities all we do is Energy Wise Renovation of homes. Each item that goes into our homes must address one of these three objectives: ! 1. "Energy Efficiency ! 2. "Wow! Factor ! 3. "Done! Factor This is what we chose to do to meet those objectives on this home: Energy Efficiency 1. "All new dual pane windows. "" 2. "Big west window is Low E 140 (nearly twice the resistance to Solar Heat Gain as LoE2) 3. "Deciduous tree will be properly selected and planted to aid summer shading. 4. New Trane Air Conditioner and Furnace 5. New Engineered Duct System (ACCA Manual D) R8 Mylar Coated 6. "Shell Sealing of cracks and holes in the attic at the ceiling level. 7. "Attic insulation to R-50+ : far above Energy Star Standards for brand new homes. 8. "Wall Insulation with dry packed cellulose. "The subdivision originally had no wall insulation. 9. "Gas stove and gas option for the dryer. " Electric is available at both locations also. 10. "Dual pane and foam core front entry door 11. "Upgraded ceiling fans in every room
Wow! Factor 1. New Cabinets throughout in Kitchen and both baths. Real Wood throughout, no particle board. 2. "Matching Granite Counters in Kitchen and both baths. 3. "New Hood Fan Microwave 4. "New Gas Stove and Oven 5. "New Dishwasher" 6. "New Disposal 7. "New Deep Stainless Steel Sink with premium faucet and spray 8. "Travertine Floors in Kitchen and Baths with Custom Tile showers with Shampoo Shelves and accent tiles 9. "Designer 2 and three tone painted interior 10. "Crown molding and chair rail with wainscoat 11. "Designer 3 tone paint exterior with New Dash over sculptured trim at windows, doors, & corners. 12. "All ceilings have been replaced with new designer texture and paint The “Done” Factor ! (Ready to move in with minimum work and maintenance for a LONG time) 1. "New front and back lawn 2. "Automatic sprinklers front and back 3. "Finished Garage, Drywall and painted 4. "Sewer line recently serviced and encroaching tree roots removed. 5. "Recently replaced 30 year roof 6. "New Roll Up Garage Door with new automatic opener 7. "Recently replaced water heater 8. Newer carpet 3 grades up from FHA standard, normal in renovation, with 6 lb pad. (4 lb is normal) 9. "New receptacles, new switches and covers 10. "New six panel doors and new hardware. 11. "New light fixtures 12. "New faux wood blinds. 13. "Additional return duct in master suite so the comfort system continues to work with the door closed."
We value your opinion. How do you think we did toward meeting our objectives? What would be one or two things that you would change to make this home more desirable? !
!
Waterfront View!
Thank You
Dave Robinson,
Ben Carroll, Rogelio Covarrubius, Jennifer Martin
G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
rd 3
Party Inspection
Third Party Inspection is valuable when there is a universe of “bad actors” who would do bad work and need policing. This is even more essential with sophisticated buyers shopping for contracting services We do good work, police ourselves, do our own essential testing and skip the costs of participation in 3rd party tested programs. This savings is part of the reason that we can squeeze all of the value into our projects to make them compelling offers that sell quickly without aid or cost of “Programs” G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Computer Modeling Like Testing, Computer Modeling is good in one of a kind, custom construction where I might not know what to do. It also helps convince a customer that they are dealing with the right contractor. Homebuyers are not that interested. I have not been asked once about Certification. My buyers are happy to hear about all the energy saving items, but it’s me telling them more things than they were expecting. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Energy Guarantees Because of Base Load and Lifestyle issues that we dont control, these can turn a happy customer into an unhappy customer. We choose to stay away Instead we offer to pay 1/2 of the Utility Bills for 2 years. This is enough to leave all the competition behind and there is nothing to argue about. They turn in the bills. I write a check. It’s a good way to stay involved with my customer. And collect referrals etc. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Marketing & Sales When Contracting with Homeowners a huge amount of effort goes into marketing and sales. I was reminded of this at a recent Home Show. Entry Fees, Set-up, Staffing, giveaways, literature, and sore feet. It adds up. As an Energy Wise Investor, I skip all of that. This is just more savings that we can pass on in making the compelling package for the buyer. We do a little marketing for buyers, This brochure is superior to the typical realtor one page brochure and helps us control our comps and appraisals.
GreenEarthEquities.Com Energy Wise Renovation Dave Robinson Principal
About GreenEarthEquities & SmartEnergyHomes
At GreenEarthEquities we acquire distressed properties in prime neighborhoods and renovate them with 3 goals in mind: The Energy Factor , The Wow! Factor, and It’s All Done! Buyers enjoy lower utility bills and more comfort, every month in their Low Maintenance SmartEnergyHome.TM
Thank you for visiting
3332 N Ezie 4 Bedroom, 2 Bath 1362 sq ft. Living & Dining Rooms Built 1960, Re Built 2009 See p.2 for more details.
*$165,000 5,5% fixed rate, $10,000 down. Includes principal, interest only. Other down payments or terms will require different payments. Qualifications depend on lender guidelines. Not all people qualify. Estimated total payment with taxes and insurance should be less than $1,111 per month.
The Right Neighborhood: Clovis Schools. Established neighborhood with tree lined streets. Close to Sierra Vista Mall, Old Town Clovis, Bus Lines,Shopping & Parks. 244 employers and over 10,000 jobs are within a 2.5 miles radius.
G r e e n E a r t h E q u i t i e s . C o m
Why Rent? Buyers can own this Clovis School District home for $880 per month*
Š 2009
For more information: Jennifer Martin 259 8153
Saving The Planet One House At A Time
Realities Of The Buying Public I wish it weren’t true. I’m even the president of an association that is trying to make it not be true. But it’s still true...... Buyers, especially first time home buyers know very little about the REALITIES of Energy or Green. They like the concept of Green, having been subjected to a constant barrage of “Greenwash” to market everything else these days. They are then easily convinced with a simple list of a lot more Energy Savings and Green than they were expecting
GreenEarthEquities.Com
Address
Projects Done & In the Pipeline
Details
#1 5741 E Bernadine
1574 sf 3-2 LR & Fam 1959 Corner Lot, RV access, Wow! Done! And Energy Packages
#2 3328 N Purdue
1164 sf 4-2 50 year roof, covered patio, Wow! Done! And Energy Packages
List Price
Completion Target
$185,000
Jan 15, 2009
SOLD! $138,500
Feb 10, 2009
$185,000
Feb 20, 2009
SOLD!
#3 5664 E Bernadine
1404 sf 3-2 LR & Fam 1962 pool Drive Thru Garage, Wow! Done! And Energy Packages
#4 3332 N Ezie
1362 4-2 LR & Dining 1960 Possible RV parking Wow! Done! And Energy Packages
$165,000
June 1, 2009
#5 4404 N Eddy
1348 sf 4-2 Great Room, RV Access, Huge Corner Lot, Wow! Done & Energy Packages
Pending
July 4, 2009
SOLD!
#6 5967 E Fedora
1188 sf 3-2 1971 Great Room, Custom Kitchen, Wow!, Done! & Energy Packages Possible RV
$155,000
July 15, 2009
#7 145 Gettysburg
1171 sf 3-2 1971 Great Room, Custom Kitchen, Wow! Done! And Energy Packages
$169,000
July 4, 2009
Apx 1550 sf 4-2 1948 LR & Formal Dining, New Master Suite, Detached Garage Quiet Neighborhood.
$129,000
August 15, 2009
#8 3915 E Townsend
Notes for Realtors: Our business plan dictates that we renovate and sell rapidly. We plan that many homes will be sold before they reach MLS. All homes will be offered to the group of Preferred Realtors for 7-14 days before listing in MLS. For details and to be alerted of new projects as they become available contact Jennifer Martin 259 8153 Because all of our homes will be done in less than the 90 day FHA minimum hold time, we will consider “Owner Financing” and are seeking appropriate funding to support those transactions. We are also have a program to give preference to Veterans.
G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Review From Last Week
Deliver More For Less?
Delivering More For Less: It sounds like a violation of the Second Law of Thermodynamics Or a Crazy Sales Pitch Actually It’s neither It’s just about all the things you Dont Have To Do when you work on Foreclosed Homes (That are Empty and You Own) See The Comparison on the next slide. Compare the percentages to your current business model G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
These are industry averages. Do you think you do better than the rest of the industry? Where? How Much?
Cost & Benefit Analysis Conventioal Contracting To Residential Customer Marketing To Acquire Customer
25%
10,000
Sales Commission
10%
4,000
Premium for Occupied Working
10%
4,000
Overhead & Profit
30%
12,000
Contracted Work Total Contract
Why would you want to do this?
10,000 40,000
40,000
Energy-Wise Renovation of Foreclosure by Investor Marketing To Acquire Customer
2%
800
Sales Commission (pro-rata)
10%
4,000
0
0
30%
12,000
Premium for Occupied Working Overhead & Profit Contracted Work Total Contract
23,200 40,000
G r e e n E a r t h E q u i t i e s . C o m
40,000
When You Could Do This?
Saving The Planet One House At A Time
What’s Missing? These Parts of “NORMAL” Contracting are missing from Energy Wise House Flipping Big Overhead including: Marketing, up to 25% Sales Commissions 10%+ Working in customer’s homes Working with “Programs” Computer Modeling or Ratings* Partial Home Performance Projects* Problem Homeowner Headaches* Lawsuits* Labor Board Complaints* *How Can This Be? >>> G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
*
The Rest Of The Story
No Programs, Incentives, Rebates or Tax Credits Required. Computer Modeling & Ratings are unnecessary - get in the way. No Partial Jobs. All Projects are as complete as I want them to be. No Problem Homeowners because the homes are always empty. No legal problems because no “new home” promises are made No Labor problems because there is no “labor” in this method. (Labor works for the Subcontractor) G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Multiple Streams Of Income I am not suggesting that people torch their day job and burn their bridges to start a new life ONLY working on their own projects. (I still have the residue of a day job or two) But dont miss the beauty of Multiple Streams of Income. When one dries up, another will keep you supplied.
G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Can I Hybridize These Concepts? Absolutely...It’s America. The beauty of working with no incentive programs (and the costs and constraints that come with them) is that you can add any of these things back in to your formula when you decide that it will benefit you. Be cautious, however. Give away enough of your freedom or compromise on “Do Everything Everytime” and what you will have will be a totally different business. You will no longer be doing the right thing because it’s the right thing to do G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
What Could Go Wrong? Along with the money of programs, comes the control and additional overhead. The biggest blessing I’ve found in EnergyWise Renovation as an Investor is the Freedom to Do Good & Complete Home Performance. If you modify too far from the concepts presented here, you may find yourself no longer doing the right thing because it’s the right thing to do. Instead you’ll be doing it to fit into some program or just to keep the overhead paid. I dont wish that for you, my friend. G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time