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Archive for the 'Politics and Programs' Category
May 28th, 2010
Passiv Haus, Dresden, Day 1
The first day of the PassivHaus conference in Dresden showed some clear similarities in the Home Performance Industry in Europe and America as well as some huge differences. 
Similarities:
1. The industry on both continents is developing with a strong reliance on subsidies, either government grants or tax credits, or utility rebates. Testing and certification is essential to this approach and is a backbone of both industries.
2. The early adopters of deep energy retrofits are usually very expensive. One home that was showcased today had a $574,000 Euro price tag for the retrofit. This obviously takes significant subsidy or a “true believer” with plenty of money to act on their beliefs about peak oil, climate change or stewardship of the planet. … and there are more and more of those folks. This expensive retrofit was a combination of a government grant and a true believer with money to spend.
3. Later, Energy Efficient building gets systemized and the craftsmen learn the craft, and the building gets a lot cheaper. A factory built wood Passive House from Norway was demonstrated.
4. Occupant behavior is essential to the success of a Home Performance project. Occupant education and buy in has as much impact on performance as the quality of the work. This is especially true in the multi family projects that were demonstrated.
5. Both continents make good use of new building technologies such as Structural Insulating Panels and Concrete Insulated Forms. Both of these were demonstrated at both conferences I’ve attended recently. (The best conference on Home Performance in the US is Affordable Comfort, which was last month in Austin)
Differences:
1. Europeans really do windows and doors right. While Americans argue over whether windows should be dual or triple pane, the Eropeans assume all windows have three panes. Vinyl isn’t hardly used. It’s all wood or fiberglass. Doors are about 3.5 inches thick and close like a bank vault. We dont even have doors like that in the US. (at least that I’ve seen)
2. Europeans are really serious about ventilation. More like Canadians. I saw more ERV-HRV’s and “Magic Boxes” (all in one, vent and heat) than I had ever seen in my life.
3. Europe is way ahead of the US on using rigid foam. They have in all configurations with the fittings & flashings to make it last 100 years.
In sum, there are more similarities than differences. The main difference is that Europe is ahead of America on almost all of the technology. I’ll write more on that after the conference.
It was good to see several California friends and a few GreenEarthEquities Planetsavers here at the conference. But it’s also good to start up a conversation with a German or a Bulgarian. This of course depends on their English, but most attendees have at least some English. Some dont, but they are still nice. One German couldn’t speak to me but he gave me a big pretzel and a smile. There is a camaradarie among Energy Geeks from all continents. It is kind of like a family and kind of like a religeon. Like in religeon and family, you do things for long term gain, rather than just short term ”best for me right now” thinking. Everyone is willing to share and everyone seems happy with other’s success. It’s a good place to be.
January 4th, 2010
For Real Home Performance… Monitor The Bills
(Reprinted from Nov, 2009)
There’s been a lot of talk about “Really Green” vs “Greenwashing.” The biggest hit has been taken by LEED with Henry Gifford’s blistering presentation in April this year. (Skip to the last paragraph for Henry’s true feelings.) Henry showed how LEED and other points-based rating programs can entice designers to specify gizmos that are currently popular at the expense of tried and true design concepts that dont garner as many points.
First Time Homebuyers, Juan, Corrin & their new son. Although they didn't receive a plaque or certificate or a computer prediction, they are happy about their new home and especially the low utility bills and the comfort of the home.
This results in many LEED buildings costing more to operate than the equivalent non-LEED buildings. Henry suggests that simply monitoring the energy usage (and continuing to monitor it and publish it) is the best way to move us toward energy independence.
What a great idea, Henry! That’s what we do here at GreenEarthEquities. Today I stopped by to pick up the utility bills of one of our buyers participating in our “We Pay Half” program. That’s where we pay half of the Utility Bills for a period of time, usually 2 years. It allows us to put our money where out mouth is and stand behind our claims of energy efficiency… and at the same time keeps the customer motivated toward efficiency because they are paying the other half.
Here are the first 6 months of bills, May thru October. The home is a 40 year old 1200 square foot tract home in Fresno where the summers are really hot. Perhaps even more important is that the homeowner was pregnant with her first child and kept the thermostat at 70 degrees all thru the summer.
Month Gas Electric Total
May 11.06 43.70 55.62
June 5.20 40.36 45.97
July 6.92 109.32 116.88
August 5.09 112.77 118.31
September 6.17 109.97 116.72
October 6.51 71.15 78.24
The home got no certification or plaque. No HERS rating required. No third party testing or computer modeling. The project was designed toward the main thing that counts = the bills. And the bills are about half of what the rest of the neighborhood experiences. Is the homeowner happy? Ecstatic is more like it. Sad that they didn’t get a rating or a plaque? Dont think so. So what’s to not like about that? The deliverable was delivered.
Henry Gifford’s critique was directed at LEED, primarily for commercial buildings. But Residential Programs are not far behind. How much non performance from Home Performance programs will the tax payer allow? Is there political will to demand transparency and performance?
Would the real efficiency of Energy Efficiency Programs improve if the following were implemented:
1. ”We Pay Half” where contractors & developers paid half the utility bill for two years. OR
2. Contractors & Developers wait a year for 50% of their incentive payment and receive it only if the promised deliverable was really delivered.
3. Allow rate payers to see the “Neighborhood Average” along with their bill every month.
Pretty simple stuff really. Please comment in the comments section below. Do you think it’s too simple? Would it work to deliver more energy independence? Or is there too much investment in the testing and modeling and certifying industry that is providing so many of the good new Green Jobs that dont always deliver what the programs promise?
December 1st, 2009
91201 All The Testing & Certification You Need… And None That You Dont
November 21st, 2009
“McMansion” Era Coming To An End?
“McMansion” Era Coming To An End? So wondered a recent Wall Street Journal article. Read it Here.
Slimming Down. Compare the floor plans of a boom-era luxury home and a smaller, post-recession design.
You can recall the history of homebuilding by taking a driving tour in your city. What you’ll notice is that there has always been a small percentage (5-10) of the “Grand Old Homes” Mansions or Near Mansions, and then the rest of the housing stock. In my town of Fresno, CA the Grand Old Homes were on Huntington and Van Ness Boulevard in the early 1900s. Two Stories with 4ooo square feet or more was the order of the day. (Today these are nightmares to renovate from an energy efficiency perspective. Those desiring to do so should view Tom Hanks movie “The Money Pit” and have plenty of patience and cash and check with the Historical Society before proceeding.
During that time, the rest of the town built in the Craftsman and Bungalow style. Two bedroom, one bath from 700 to 1000 feet was the norm with some larger homes having 3 bedrooms and sometimes 2 baths. There were larger homes between the two extremes, but not that many.
(From the WSJ Article) At 2,450 square feet, this new Wieland home in North Carolina looks like a cottage compared with some of the 3,900-square-foot models down the road.
The Housing Boom that came with the Baby Boom after WWII brought a new invention to the market: The American Classic Tract Home, 3 bedroom, 2 bath, 1100 to 1500 square feet moving up to about 2000 square feet as the century closed out.
But along with it came the “Executive Home” aka McMansion. These have the things necessary to impress, not just to live.
Grand Entries with Grand Architectural Staircases
All the Rooms are larger than they need to be, and there are more of them.
As many Baths as Bedrooms is common. Walk-in closets larger than your bedroom growing up.
All the Ceilings are taller than they need to be and they are mainly different from each other
Home Theaters and Gyms and 3 to 5 car garages.
European Chef’s style Kitchen with commercial appliances
And a huge energy bill to go with it….Because these opulent shrines to impressing the neighbors weren’t built any better than their smaller cousins. Actually the smaller home is harder to do poorly and easier to fix than the McMansion. And the McMansion with its architectural wizardry is very easy to get wrong from an energy and comfort perspective.
So here’s the good news:
1. There is going to be a huge opportunity for Home Performance Contractors to fix McMansions.
2. Another huge opportunity is doing a complete EnergyWise Renovation on the All American Tract Home. These homes are actually drawing many of the Baby Boomers who have had the McMansion and are tired of keeping them up
Well Done Complete Energy-Wise Renovations Are In High Demand & Sell Quickly
With Mature Landscaping, all automatic, a new 40 year roof that will outlast them, all new appliances, all new HVAC, Energy Saving Windows and fixtures and paint inside and out and all new tile and floor coverings, what’s to not like about that for easy living? In my experience these renovations are in high demand and sell quickly at full price.
In California there will soon be money available to fund both of these opportunities with the AB 811 funds for Energy Retrofits. There are sites about fixing McMansions. (Check out CBPCA.org for a list of trained Home Performance Contractors) This site will continue to focus on Energy Wise Renovation of moderate sized homes, especially on the Golden Opportunity presented by Foreclosed Homes.
Back to the WSJ article: I didn’t get the impression that the McMansion builders were going away. Or that the buyers demanding the Big House have learned their lesson and changed for good. It seemed they both are pulling back only as much as they have to and a recovered economy would launch them into new realms of opulence. Did I read that into the article? or did you get the same impression? Let me know in the Comments section.
October 24th, 2009
Excuse Me, That Thing You Just Did… You Cant Do That! (And Other Pessimistic Nonsense)
Its been fun this last year listening to people tell me it’s impossible to do complete remodels with deep energy retrofits and sell them at a profit. ”Difficult anytime and Impossible in this economy,” they say. But since that is exactly what we’ve developed over this last year, it leads to an interesting conversation.
It happened again today. An old friend and I were re-connecting and in the catching up, he expressed surprise that I was flipping houses with full energy retrofits. “I didn’t think you could do that in this market.”
Bad News Travels Fast And A Little Bit Goes A Long Way.
Where does all this negativity and pessimism come from? The main thing I can think of is an over-indulgence in mainstream media consumption. Followed by “Conventional Wisdom & Urban Legend,” stuff passed around at the water cooler and golf course….No basis in reality required.
Since pessimism is so prevalent, and its consumption is so detrimental to one’s success, my advice is that if a person wants to be successful as an Energy Wise House Flipper, they would do well to go on a Media and Gossip Fast.
This is good advice for any contrarian who determines to swim against the current of the main stream. But wait, there’s more! To maintain forward progress swimming against the main stream, you must not only close your ears to the mainstream media and friends who repeat its negative mantras… You’ll have to filter carefully the advice of experts of your own industry.
Being an Energy-Wise Renovating House Flipping Investor requires some knowledge of three industries, Real Estate, Remodeling, and Building Performance-Green Building. The main stream in each of those industries repeats the pessimism of the general mainstream media. So a successful Energy Wise House Flipper will find themselves swimming against the current, even in the industries that he or she is demonstrating success in.
A Diet Of This Stuff Will Make It Hard To Stay Positive And Be Creative.
My friend is a contractor, a very good one, probably the best one in his trade in our city. Why was he surprised that I’m being successful at Energy Wise House Flipping? I say the culprit is the pessimism that he hears at his supply house, and from the general contractors he works for and the coffee shop talk combined with the nightly news…… just too much negativity for a human brain to stay positive in.
Am I saying to be an ostrich and stick your head in the sand? Not exactly. But what if the sand is in sand bags and bullets are whizzing overhead? Negativity bullets come at you every time you turn on the news. Maybe you’d better duck behind those sand bags. It’s easy, just turn it off.
It’s been said that the brain is like a computer, and GIGO is the number one rule, Garbage In, Garbage Out. In the case of ingesting negative and pessimistic garbage, the garbage that comes out is the inability to believe and act decisively.
Over in the Real Estate Investing Stream, most seminar gurus will tell you, “Now is not a time for flipping, just buy and hold” and “just put in the minimum to make it clean and safe, you’ll never make a return on that energy stuff.”
The main stream in Building Performance is primarily occupied with building an industry around programs and the incentive monies which are flooding into our economy. Dont get me wrong, that’s not a bad idea. Its just not the input an Energy Wise House Flipper needs to be focused on.
Contrarians Are Different. They Think Differently And Feed Their Brains A Different Diet.
To Summarize: If you want to be successful as an Energy Wise House Flipping Investor (or any kind of a contrarian,) a Media Fast might be in order. Or at least some critical filtering. One filtering question might be: “What was this “expert” saying 3 years ago?” If he missed it so bad then, why should I listen to him now? Another might be to listen to people who are actually doing what you want to do, rather than academics,media people, and other spectators who prognosticate and repeat each others’ stuff.
Next week I’ll have lunch with my friend. I think we’ll meet in one of my energy wise renovation projects. Maybe the real thing will be enough to counter all the negative he’s heard. Maybe he’ll jump in and swim upstream with me. Maybe. Maybe you’d like to be a contrarian and swim upstream. Email me. I’m looking to build an Army of Contrarians…. and I’m willing to help anyone who will turn the TV off.
October 10th, 2009
Energy Programs: What’s Next? What’s Best? What Would You Recommend?
As you know, the methods used here at GreenEarthEquities, require no government funding, stimulus or otherwise, no utility programs, and no tax breaks to operate profitably.
Just because a program has more documentation, doesn't mean it really delivers more Energy Savings or Green Jobs.
So I haven’t paid much attention to those programs as they have been developing. But last week I heard two comments that caught my attention:
One came from a program manager who said, “You’ve heard of money with strings attached? This money doesn’t have strings, It has iron re-bar and concrete controls attached….” Wow! What can you say about that? Probably the result of consultancy and bureaucracy gone wild? Definitely didn’t make me want to participate.
Then, one of the participants on last week’s round table call had been to an investor’s meeting and met an accomplished “house flipper” (not Energy-Wise, just a good businessperson) who had participated in one of the foreclosure programs in a large Northern California City who reported, “Our average renovation costs $25,000 but when we participate in the program the cost goes up to $70,000. Double Wow! It may not have been so bad, but the program in question doesn’t even deliver respectable energy savings for the bloated price tag.
These two comments in the same week, caused me to put on my Taxpayer’s Hat and say, “There’s got to be a better way!” It seems clear, Bureaucracy, if left to it’s own devices, will run amuck. So if there’s a better way to spend all this stimulus money, what is it? What would you recommend?
I’ve decided to collect and publish “best practices” about the various programs that I become aware of around the State and Nation. I will be looking for the following as I rate the various programs:
1. How well does the program deliver measurable energy savings?
2. How well does the program create new Green Jobs?
3. What percentage of the funds go to overhead as opposed to really saving energy?
4. How “User Friendly” is the program? To Consumers, and Contractors?
Join The Paperwork Slashing Revolution!
Please weigh in. Do you have a favorite program that should be emulated and promoted? Maybe an un-favorite program that should be exposed as a bloated paperwork nightmare that doesn’t spend your tax dollars to meet these objectives…
None of us are as smart as all of us. And I have purposely stayed out of the loop, being happy enough to avoid the bureaucracy of the programs. But I can see that I can no longer stay in my happy place. I must speak up. But I need your input. Earlier today I taught my “Energy Wise Renovation Of Foreclosed Homes” class at the PG&E Stockton Training Center. At the end, I put out the same request and I really did hear 2 great brand new (to me) ideas that I will be incorporating into the programs that I will be recommending.
Please add your ideas to the Comment section or email me if you would like to be a guest blogger on this site.
September 10th, 2009
Energy Incentive Money… How Would YOU spend it?
As you know, there is a flood of Federal Money descending on cities everywhere and very few are equipped to WISELY go out and spend all that money. Unfortunately, a lot of what gets cobbled together will be the result of who had the best salesman or lobbyist, or simply who got there first. Like Von Bismark is reported to have said, “to retain respect for sausages and laws, one must not watch them in the making.” 
I just learned of one such program being offered in Sacramento, The Vacant Properties Program, which uses Neighborhood Stabilization Funding. The program:
Targets low income neighborhoods that might be hard to help otherwise,
Mentions Green Building with minimal PRESCRIPTIVE standards and no mention of PERFORMANCE.
Employs a unique mix of private investment guaranteed by the Federal Funding. After becoming an “Approved Builder” you can purchase an REO property that meets the Sacramento Housing & Redevelopment Agency (SHRA) guidelines. Then you put $15,000 to $60,000 of improvements in and list the property for the lower of the two:
Appraised After Repair Value (ARV) or
Costs including the Purchase Price, Building Costs & Developer Fee
After the process is completed, you get your “Developer Fee” which is $30,000. If the costs are more than the ARV, No problem, the shortfall will be forgiven and you will just get your $30,000 Development Fee anyway.
Here is a program with some major flaws (my opinion) as well as some creative use of public – private collaboration. One good aspect of the program is that the Developer is not paid until they deliver a final product. Which means that a new homeowner is in a renovated home with a sustainable mortgage. That’s better than what it was before, a boarded up foreclosed home with grafitti. So that’s a good thing….
But the program could be so much better with just a little tweaking. The program is committed to being “Prescriptive” instead of Performance Based, but even still it could be improved by
1. Requiring shell sealing with at least a test out. For those of us who test houses, we usually find this to be the biggest Energy Culprit
2. If you seal, you must ventilate “on purpose” rather than just let the leaks take care of things. Carbon Monoxide needs to be tested as well.
3. Adding Insulation Standards
4. Requiring Duct Replacement, not just sealing, engineered to Manual D then sealed and tested and covered.
If these simple things were done, the final product would be greatly improved, while retaining the simplicity that SHRA desires.
IF I WERE IN SACRAMENTO….. Yes, I would hustle on down to the Housing Authority and start getting myself qualified for the program. Just because it is not a perfect program, doesn’t mean I should stay away. I would go ahead and add the 4 items mentioned above and take the $30K. Remember the Lesser Golden Rule, “Whoever has the gold, Makes the rules.” SHRA has the gold and you might consider playing in their game.
All you guys and gals in Sacramento, let me know how it goes. For those in other towns, if you are called on to help draft programs in your city, here are at least 4 ways this program could be made better from an Energy Efficiency perspective.
Here’s the Vacant Properties Program Handbook. Take a look. It’s a lot of bureacracy, Davis Bacon, WMBE, etc but if you can handle that sort of thing, they do have some gold. You can always build better than the minimum… and still sleep at night.
My final comment. This program shares some similarity with the Solar Subsidies of the late 70’s. When the subsidies went away, so did the Solar business. This program will do some good things for some neighborhoods but when the money is gone, this is not the type of activity that will build a continuing industry. For ideas on how to do that, Click PLANET SAVERS UNIVERSITY, above.
September 6th, 2009
Next “Wave” of Foreclosures: Fact or Fiction? (Dont Hold Your Breath)
We’ve all been told that there’s another “Wave” of foreclosures coming and I’ve even done some of my own planning based on that prediction. Almost all of the people I’ve heard the next “wave theory” from were just repeating what they had heard from someone else. The more thoughtful of these pointed to the continuing rise in Notices Of Default but we all scratched our heads because the expected actual foreclosures didn’t show up on the REO market. What happened? The foreclosures seemed to get lost on their way to the MLS…
I had nothing objective to base it on but just started losing my faith in the Foreclosure Wave theory a few months ago. Then I finally found an objective explanation of why the foreclosures aren’t showing up on the expected schedule. Check out this chart which shows what happened to foreclosures after Secretary Paulson’s Troubled Asset Relief announcement last September 19th. Here it is on the chart, courtesy of Sean O’Toole of Foreclosure Truth.com.
Before and After Secretary Paulson's announcement on Sept 19, 2008
O’Toole explains, “While many will point out this was necessary to keep home loans available and interest rates low, I think it also clearly sent banks a message… you will get more for these assets from the taxpayer than you will through foreclosure. Add to that the mark-to-model rule changes from the Federal Accounting Standards Board, and a ton of politicial pressure and it should be no surprise to anyone that foreclosures have slowed. The drop in foreclosure sales defies logic given the continued increase in properties scheduled to be foreclosed on. But defying logic to do what is politically expedient while simultaneously inflating bank earnings and bonuses and without regard to future consequences IS the new normal. We are yet again trading tomorrow for today.” (Full Article here)
Whether O’Toole’s analysis is right or wrong, the fact remains, Investors can no longer choose from many available foreclosures like in the “old days” of 6 months ago. I believe there are still good deals out there, we just have to look harder for them. The larger spread from buy to sell which is available in foreclosures is what allows me to do large energy saving packages in the renovation and still sell my projects to first time buyers. So even if the good deals are harder to find, they are worth the effort. Here are three techniques that I’m using while waiting for the wave.
1. Increased attention to Short Sales. As you know these can take a long time, so it’s good to have a lot of offers in the pipeline. My broker and I have turned our attention to Short Sales and recently got one (after 5 months)
My Newest Really Ugly House
2. Remember the Ugly House. The house that I just put in escrow last week may qualify for the “Ugliest House” award. Certainly in the City, Maybe the State. My perfect plan is to buy the Worst House in the neighborhood and make it the Best House in the neighborhood. We call it our Cinderella Process. I’ll be showing pictures and talking about my latest Ugly House on the RoundTable Conference Calls every Tuesday at 6pm Pacific. Sign up on the FREE WEBINAR form and I will send you the slide deck before the Conference Call.
3. More Conventional Ways Of Finding Motivated Sellers. We’ve really gotten spoiled this last year with such easy pickings in the REO market. It’s time to dust off some of the harder ways to find those great deals. Pre foreclosure letters, signs, working with attorneys…. none of which are my specialty, but I will post here and we can learn together.
The effort is worth it and we need really good deals if we are going to Save The Planet, One House At A Time thru Energy-Wise House Flipping.
And who knows. The political winds and banking rules may change and the “Wave” may really come. Wise investors will have a little cash available for the buying party when it’s Wave Season.
June 18th, 2009
Who knew? We treat our Vets so badly?
Two weeks ago I had no clue that Veterans have such a difficult time using that supposed benefit, the VA Loan. But in the last two weeks, I’ve got an education. I’ve sold one of my Energy-Wise Renovations to a Veteran. We’ve been working with his wife all along during renovation on design and color selection etc. Now it seems that the family is not going to qualify and I’ve found out that both the credit and appraisal process for Vets is more difficult than either conventional or FHA financing. When I started asking my Realtor friends about this, they all said, “Yes, VA has always been difficult. We shudder when a buyer wants to go VA. We’ll probably spend a lot of time and then the Vet will be disqualified or the house wont appraise and we’ll have to start all over.”
It seems that my GreenEarthEquities projects will never qualify and meet the VA appraisal. With the Wow! Package, the Done! Package and the Energy Package, these homes have all new everything and need to be priced at the top of the Comparables. They are not for everyone. Some people want a fixer upper. I want to provide a nice, finished home, with everything new that wont have maintenance issues for a long time for a returning Vet. My Realtor friends say it isn’t going to happen, not with a VA Loan anyway.
That made me mad to hear that. I’m a Vet. And I enjoyed my Cal-Vet benefit purchasing my first home many years ago. I dont remember any difficulties. I think a lot of Americans agree with me that our Veterans should get preferential treatment…..And it seems that they are actually getting discriminatory treatment. I have three questions which I will be getting the answers for over the next few months
1. Is this poor treatment of our Vets system wide, or is our local situation in Central California an anomaly. (4 out of 5 Realtors I asked rolled their eyes when I asked about VA financing and confirmed the situation described by the first friend that I asked.) How about other areas of the country? Are they more Vet friendly?
2. What can be done to improve the situation for Veterans? Who are the Advocates that work to improve things for our Veterans?
3. Is the Congress and the Obama Administration aware that the VA is treating our Veterans so poorly? And that the VA program has such a bad reputation in the Real Estate Community? Will any politician stand up and be a champion for Vets? It seems that the VA is a bureaucracy that could benefit from some red tape slashing and streamlining……. (that should be politically popular these days)
Please respond if you have any good ideas or contacts. Hopefully together we can turn the VA Loan back into a blessing instead of a curse that it has become.
2. Europeans are really serious about ventilation. More like Canadians. I saw more ERV-HRV’s and “Magic Boxes” (all in one, vent and heat) than I had ever seen in my life. For Real Home Performance… Monitor The Bills
(Reprinted from Nov, 2009)
There’s been a lot of talk about “Really Green” vs “Greenwashing.” The biggest hit has been taken by LEED with Henry Gifford’s blistering presentation in April this year. (Skip to the last paragraph for Henry’s true feelings.) Henry showed how LEED and other points-based rating programs can entice designers to specify gizmos that are currently popular at the expense of tried and true design concepts that dont garner as many points.
First Time Homebuyers, Juan, Corrin & their new son. Although they didn't receive a plaque or certificate or a computer prediction, they are happy about their new home and especially the low utility bills and the comfort of the home.
This results in many LEED buildings costing more to operate than the equivalent non-LEED buildings. Henry suggests that simply monitoring the energy usage (and continuing to monitor it and publish it) is the best way to move us toward energy independence.
What a great idea, Henry! That’s what we do here at GreenEarthEquities. Today I stopped by to pick up the utility bills of one of our buyers participating in our “We Pay Half” program. That’s where we pay half of the Utility Bills for a period of time, usually 2 years. It allows us to put our money where out mouth is and stand behind our claims of energy efficiency… and at the same time keeps the customer motivated toward efficiency because they are paying the other half.
Here are the first 6 months of bills, May thru October. The home is a 40 year old 1200 square foot tract home in Fresno where the summers are really hot. Perhaps even more important is that the homeowner was pregnant with her first child and kept the thermostat at 70 degrees all thru the summer.
Month Gas Electric Total
May 11.06 43.70 55.62
June 5.20 40.36 45.97
July 6.92 109.32 116.88
August 5.09 112.77 118.31
September 6.17 109.97 116.72
October 6.51 71.15 78.24
The home got no certification or plaque. No HERS rating required. No third party testing or computer modeling. The project was designed toward the main thing that counts = the bills. And the bills are about half of what the rest of the neighborhood experiences. Is the homeowner happy? Ecstatic is more like it. Sad that they didn’t get a rating or a plaque? Dont think so. So what’s to not like about that? The deliverable was delivered.
Henry Gifford’s critique was directed at LEED, primarily for commercial buildings. But Residential Programs are not far behind. How much non performance from Home Performance programs will the tax payer allow? Is there political will to demand transparency and performance?
Would the real efficiency of Energy Efficiency Programs improve if the following were implemented:
1. ”We Pay Half” where contractors & developers paid half the utility bill for two years. OR
2. Contractors & Developers wait a year for 50% of their incentive payment and receive it only if the promised deliverable was really delivered.
3. Allow rate payers to see the “Neighborhood Average” along with their bill every month.
Pretty simple stuff really. Please comment in the comments section below. Do you think it’s too simple? Would it work to deliver more energy independence? Or is there too much investment in the testing and modeling and certifying industry that is providing so many of the good new Green Jobs that dont always deliver what the programs promise?
December 1st, 2009
91201 All The Testing & Certification You Need… And None That You Dont
November 21st, 2009
“McMansion” Era Coming To An End?
“McMansion” Era Coming To An End? So wondered a recent Wall Street Journal article. Read it Here.
Slimming Down. Compare the floor plans of a boom-era luxury home and a smaller, post-recession design.
You can recall the history of homebuilding by taking a driving tour in your city. What you’ll notice is that there has always been a small percentage (5-10) of the “Grand Old Homes” Mansions or Near Mansions, and then the rest of the housing stock. In my town of Fresno, CA the Grand Old Homes were on Huntington and Van Ness Boulevard in the early 1900s. Two Stories with 4ooo square feet or more was the order of the day. (Today these are nightmares to renovate from an energy efficiency perspective. Those desiring to do so should view Tom Hanks movie “The Money Pit” and have plenty of patience and cash and check with the Historical Society before proceeding.
During that time, the rest of the town built in the Craftsman and Bungalow style. Two bedroom, one bath from 700 to 1000 feet was the norm with some larger homes having 3 bedrooms and sometimes 2 baths. There were larger homes between the two extremes, but not that many.
(From the WSJ Article) At 2,450 square feet, this new Wieland home in North Carolina looks like a cottage compared with some of the 3,900-square-foot models down the road.
The Housing Boom that came with the Baby Boom after WWII brought a new invention to the market: The American Classic Tract Home, 3 bedroom, 2 bath, 1100 to 1500 square feet moving up to about 2000 square feet as the century closed out.
But along with it came the “Executive Home” aka McMansion. These have the things necessary to impress, not just to live.
Grand Entries with Grand Architectural Staircases
All the Rooms are larger than they need to be, and there are more of them.
As many Baths as Bedrooms is common. Walk-in closets larger than your bedroom growing up.
All the Ceilings are taller than they need to be and they are mainly different from each other
Home Theaters and Gyms and 3 to 5 car garages.
European Chef’s style Kitchen with commercial appliances
And a huge energy bill to go with it….Because these opulent shrines to impressing the neighbors weren’t built any better than their smaller cousins. Actually the smaller home is harder to do poorly and easier to fix than the McMansion. And the McMansion with its architectural wizardry is very easy to get wrong from an energy and comfort perspective.
So here’s the good news:
1. There is going to be a huge opportunity for Home Performance Contractors to fix McMansions.
2. Another huge opportunity is doing a complete EnergyWise Renovation on the All American Tract Home. These homes are actually drawing many of the Baby Boomers who have had the McMansion and are tired of keeping them up
Well Done Complete Energy-Wise Renovations Are In High Demand & Sell Quickly
With Mature Landscaping, all automatic, a new 40 year roof that will outlast them, all new appliances, all new HVAC, Energy Saving Windows and fixtures and paint inside and out and all new tile and floor coverings, what’s to not like about that for easy living? In my experience these renovations are in high demand and sell quickly at full price.
In California there will soon be money available to fund both of these opportunities with the AB 811 funds for Energy Retrofits. There are sites about fixing McMansions. (Check out CBPCA.org for a list of trained Home Performance Contractors) This site will continue to focus on Energy Wise Renovation of moderate sized homes, especially on the Golden Opportunity presented by Foreclosed Homes.
Back to the WSJ article: I didn’t get the impression that the McMansion builders were going away. Or that the buyers demanding the Big House have learned their lesson and changed for good. It seemed they both are pulling back only as much as they have to and a recovered economy would launch them into new realms of opulence. Did I read that into the article? or did you get the same impression? Let me know in the Comments section.
October 24th, 2009
Excuse Me, That Thing You Just Did… You Cant Do That! (And Other Pessimistic Nonsense)
Its been fun this last year listening to people tell me it’s impossible to do complete remodels with deep energy retrofits and sell them at a profit. ”Difficult anytime and Impossible in this economy,” they say. But since that is exactly what we’ve developed over this last year, it leads to an interesting conversation.
It happened again today. An old friend and I were re-connecting and in the catching up, he expressed surprise that I was flipping houses with full energy retrofits. “I didn’t think you could do that in this market.”
Bad News Travels Fast And A Little Bit Goes A Long Way.
Where does all this negativity and pessimism come from? The main thing I can think of is an over-indulgence in mainstream media consumption. Followed by “Conventional Wisdom & Urban Legend,” stuff passed around at the water cooler and golf course….No basis in reality required.
Since pessimism is so prevalent, and its consumption is so detrimental to one’s success, my advice is that if a person wants to be successful as an Energy Wise House Flipper, they would do well to go on a Media and Gossip Fast.
This is good advice for any contrarian who determines to swim against the current of the main stream. But wait, there’s more! To maintain forward progress swimming against the main stream, you must not only close your ears to the mainstream media and friends who repeat its negative mantras… You’ll have to filter carefully the advice of experts of your own industry.
Being an Energy-Wise Renovating House Flipping Investor requires some knowledge of three industries, Real Estate, Remodeling, and Building Performance-Green Building. The main stream in each of those industries repeats the pessimism of the general mainstream media. So a successful Energy Wise House Flipper will find themselves swimming against the current, even in the industries that he or she is demonstrating success in.
A Diet Of This Stuff Will Make It Hard To Stay Positive And Be Creative.
My friend is a contractor, a very good one, probably the best one in his trade in our city. Why was he surprised that I’m being successful at Energy Wise House Flipping? I say the culprit is the pessimism that he hears at his supply house, and from the general contractors he works for and the coffee shop talk combined with the nightly news…… just too much negativity for a human brain to stay positive in.
Am I saying to be an ostrich and stick your head in the sand? Not exactly. But what if the sand is in sand bags and bullets are whizzing overhead? Negativity bullets come at you every time you turn on the news. Maybe you’d better duck behind those sand bags. It’s easy, just turn it off.
It’s been said that the brain is like a computer, and GIGO is the number one rule, Garbage In, Garbage Out. In the case of ingesting negative and pessimistic garbage, the garbage that comes out is the inability to believe and act decisively.
Over in the Real Estate Investing Stream, most seminar gurus will tell you, “Now is not a time for flipping, just buy and hold” and “just put in the minimum to make it clean and safe, you’ll never make a return on that energy stuff.”
The main stream in Building Performance is primarily occupied with building an industry around programs and the incentive monies which are flooding into our economy. Dont get me wrong, that’s not a bad idea. Its just not the input an Energy Wise House Flipper needs to be focused on.
Contrarians Are Different. They Think Differently And Feed Their Brains A Different Diet.
To Summarize: If you want to be successful as an Energy Wise House Flipping Investor (or any kind of a contrarian,) a Media Fast might be in order. Or at least some critical filtering. One filtering question might be: “What was this “expert” saying 3 years ago?” If he missed it so bad then, why should I listen to him now? Another might be to listen to people who are actually doing what you want to do, rather than academics,media people, and other spectators who prognosticate and repeat each others’ stuff.
Next week I’ll have lunch with my friend. I think we’ll meet in one of my energy wise renovation projects. Maybe the real thing will be enough to counter all the negative he’s heard. Maybe he’ll jump in and swim upstream with me. Maybe. Maybe you’d like to be a contrarian and swim upstream. Email me. I’m looking to build an Army of Contrarians…. and I’m willing to help anyone who will turn the TV off.
October 10th, 2009
Energy Programs: What’s Next? What’s Best? What Would You Recommend?
As you know, the methods used here at GreenEarthEquities, require no government funding, stimulus or otherwise, no utility programs, and no tax breaks to operate profitably.
Just because a program has more documentation, doesn't mean it really delivers more Energy Savings or Green Jobs.
So I haven’t paid much attention to those programs as they have been developing. But last week I heard two comments that caught my attention:
One came from a program manager who said, “You’ve heard of money with strings attached? This money doesn’t have strings, It has iron re-bar and concrete controls attached….” Wow! What can you say about that? Probably the result of consultancy and bureaucracy gone wild? Definitely didn’t make me want to participate.
Then, one of the participants on last week’s round table call had been to an investor’s meeting and met an accomplished “house flipper” (not Energy-Wise, just a good businessperson) who had participated in one of the foreclosure programs in a large Northern California City who reported, “Our average renovation costs $25,000 but when we participate in the program the cost goes up to $70,000. Double Wow! It may not have been so bad, but the program in question doesn’t even deliver respectable energy savings for the bloated price tag.
These two comments in the same week, caused me to put on my Taxpayer’s Hat and say, “There’s got to be a better way!” It seems clear, Bureaucracy, if left to it’s own devices, will run amuck. So if there’s a better way to spend all this stimulus money, what is it? What would you recommend?
I’ve decided to collect and publish “best practices” about the various programs that I become aware of around the State and Nation. I will be looking for the following as I rate the various programs:
1. How well does the program deliver measurable energy savings?
2. How well does the program create new Green Jobs?
3. What percentage of the funds go to overhead as opposed to really saving energy?
4. How “User Friendly” is the program? To Consumers, and Contractors?
Join The Paperwork Slashing Revolution!
Please weigh in. Do you have a favorite program that should be emulated and promoted? Maybe an un-favorite program that should be exposed as a bloated paperwork nightmare that doesn’t spend your tax dollars to meet these objectives…
None of us are as smart as all of us. And I have purposely stayed out of the loop, being happy enough to avoid the bureaucracy of the programs. But I can see that I can no longer stay in my happy place. I must speak up. But I need your input. Earlier today I taught my “Energy Wise Renovation Of Foreclosed Homes” class at the PG&E Stockton Training Center. At the end, I put out the same request and I really did hear 2 great brand new (to me) ideas that I will be incorporating into the programs that I will be recommending.
Please add your ideas to the Comment section or email me if you would like to be a guest blogger on this site.
September 10th, 2009
Energy Incentive Money… How Would YOU spend it?
As you know, there is a flood of Federal Money descending on cities everywhere and very few are equipped to WISELY go out and spend all that money. Unfortunately, a lot of what gets cobbled together will be the result of who had the best salesman or lobbyist, or simply who got there first. Like Von Bismark is reported to have said, “to retain respect for sausages and laws, one must not watch them in the making.”
I just learned of one such program being offered in Sacramento, The Vacant Properties Program, which uses Neighborhood Stabilization Funding. The program:
Targets low income neighborhoods that might be hard to help otherwise,
Mentions Green Building with minimal PRESCRIPTIVE standards and no mention of PERFORMANCE.
Employs a unique mix of private investment guaranteed by the Federal Funding. After becoming an “Approved Builder” you can purchase an REO property that meets the Sacramento Housing & Redevelopment Agency (SHRA) guidelines. Then you put $15,000 to $60,000 of improvements in and list the property for the lower of the two:
Appraised After Repair Value (ARV) or
Costs including the Purchase Price, Building Costs & Developer Fee
After the process is completed, you get your “Developer Fee” which is $30,000. If the costs are more than the ARV, No problem, the shortfall will be forgiven and you will just get your $30,000 Development Fee anyway.
Here is a program with some major flaws (my opinion) as well as some creative use of public – private collaboration. One good aspect of the program is that the Developer is not paid until they deliver a final product. Which means that a new homeowner is in a renovated home with a sustainable mortgage. That’s better than what it was before, a boarded up foreclosed home with grafitti. So that’s a good thing….
But the program could be so much better with just a little tweaking. The program is committed to being “Prescriptive” instead of Performance Based, but even still it could be improved by
1. Requiring shell sealing with at least a test out. For those of us who test houses, we usually find this to be the biggest Energy Culprit
2. If you seal, you must ventilate “on purpose” rather than just let the leaks take care of things. Carbon Monoxide needs to be tested as well.
3. Adding Insulation Standards
4. Requiring Duct Replacement, not just sealing, engineered to Manual D then sealed and tested and covered.
If these simple things were done, the final product would be greatly improved, while retaining the simplicity that SHRA desires.
IF I WERE IN SACRAMENTO….. Yes, I would hustle on down to the Housing Authority and start getting myself qualified for the program. Just because it is not a perfect program, doesn’t mean I should stay away. I would go ahead and add the 4 items mentioned above and take the $30K. Remember the Lesser Golden Rule, “Whoever has the gold, Makes the rules.” SHRA has the gold and you might consider playing in their game.
All you guys and gals in Sacramento, let me know how it goes. For those in other towns, if you are called on to help draft programs in your city, here are at least 4 ways this program could be made better from an Energy Efficiency perspective.
Here’s the Vacant Properties Program Handbook. Take a look. It’s a lot of bureacracy, Davis Bacon, WMBE, etc but if you can handle that sort of thing, they do have some gold. You can always build better than the minimum… and still sleep at night.
My final comment. This program shares some similarity with the Solar Subsidies of the late 70’s. When the subsidies went away, so did the Solar business. This program will do some good things for some neighborhoods but when the money is gone, this is not the type of activity that will build a continuing industry. For ideas on how to do that, Click PLANET SAVERS UNIVERSITY, above.
September 6th, 2009
Next “Wave” of Foreclosures: Fact or Fiction? (Dont Hold Your Breath)
We’ve all been told that there’s another “Wave” of foreclosures coming and I’ve even done some of my own planning based on that prediction. Almost all of the people I’ve heard the next “wave theory” from were just repeating what they had heard from someone else. The more thoughtful of these pointed to the continuing rise in Notices Of Default but we all scratched our heads because the expected actual foreclosures didn’t show up on the REO market. What happened? The foreclosures seemed to get lost on their way to the MLS…
I had nothing objective to base it on but just started losing my faith in the Foreclosure Wave theory a few months ago. Then I finally found an objective explanation of why the foreclosures aren’t showing up on the expected schedule. Check out this chart which shows what happened to foreclosures after Secretary Paulson’s Troubled Asset Relief announcement last September 19th. Here it is on the chart, courtesy of Sean O’Toole of Foreclosure Truth.com.
Before and After Secretary Paulson's announcement on Sept 19, 2008
O’Toole explains, “While many will point out this was necessary to keep home loans available and interest rates low, I think it also clearly sent banks a message… you will get more for these assets from the taxpayer than you will through foreclosure. Add to that the mark-to-model rule changes from the Federal Accounting Standards Board, and a ton of politicial pressure and it should be no surprise to anyone that foreclosures have slowed. The drop in foreclosure sales defies logic given the continued increase in properties scheduled to be foreclosed on. But defying logic to do what is politically expedient while simultaneously inflating bank earnings and bonuses and without regard to future consequences IS the new normal. We are yet again trading tomorrow for today.” (Full Article here)
Whether O’Toole’s analysis is right or wrong, the fact remains, Investors can no longer choose from many available foreclosures like in the “old days” of 6 months ago. I believe there are still good deals out there, we just have to look harder for them. The larger spread from buy to sell which is available in foreclosures is what allows me to do large energy saving packages in the renovation and still sell my projects to first time buyers. So even if the good deals are harder to find, they are worth the effort. Here are three techniques that I’m using while waiting for the wave.
1. Increased attention to Short Sales. As you know these can take a long time, so it’s good to have a lot of offers in the pipeline. My broker and I have turned our attention to Short Sales and recently got one (after 5 months)
My Newest Really Ugly House
2. Remember the Ugly House. The house that I just put in escrow last week may qualify for the “Ugliest House” award. Certainly in the City, Maybe the State. My perfect plan is to buy the Worst House in the neighborhood and make it the Best House in the neighborhood. We call it our Cinderella Process. I’ll be showing pictures and talking about my latest Ugly House on the RoundTable Conference Calls every Tuesday at 6pm Pacific. Sign up on the FREE WEBINAR form and I will send you the slide deck before the Conference Call.
3. More Conventional Ways Of Finding Motivated Sellers. We’ve really gotten spoiled this last year with such easy pickings in the REO market. It’s time to dust off some of the harder ways to find those great deals. Pre foreclosure letters, signs, working with attorneys…. none of which are my specialty, but I will post here and we can learn together.
The effort is worth it and we need really good deals if we are going to Save The Planet, One House At A Time thru Energy-Wise House Flipping.
And who knows. The political winds and banking rules may change and the “Wave” may really come. Wise investors will have a little cash available for the buying party when it’s Wave Season.
June 18th, 2009
Who knew? We treat our Vets so badly?
Two weeks ago I had no clue that Veterans have such a difficult time using that supposed benefit, the VA Loan. But in the last two weeks, I’ve got an education. I’ve sold one of my Energy-Wise Renovations to a Veteran. We’ve been working with his wife all along during renovation on design and color selection etc. Now it seems that the family is not going to qualify and I’ve found out that both the credit and appraisal process for Vets is more difficult than either conventional or FHA financing. When I started asking my Realtor friends about this, they all said, “Yes, VA has always been difficult. We shudder when a buyer wants to go VA. We’ll probably spend a lot of time and then the Vet will be disqualified or the house wont appraise and we’ll have to start all over.”
It seems that my GreenEarthEquities projects will never qualify and meet the VA appraisal. With the Wow! Package, the Done! Package and the Energy Package, these homes have all new everything and need to be priced at the top of the Comparables. They are not for everyone. Some people want a fixer upper. I want to provide a nice, finished home, with everything new that wont have maintenance issues for a long time for a returning Vet. My Realtor friends say it isn’t going to happen, not with a VA Loan anyway.
That made me mad to hear that. I’m a Vet. And I enjoyed my Cal-Vet benefit purchasing my first home many years ago. I dont remember any difficulties. I think a lot of Americans agree with me that our Veterans should get preferential treatment…..And it seems that they are actually getting discriminatory treatment. I have three questions which I will be getting the answers for over the next few months
1. Is this poor treatment of our Vets system wide, or is our local situation in Central California an anomaly. (4 out of 5 Realtors I asked rolled their eyes when I asked about VA financing and confirmed the situation described by the first friend that I asked.) How about other areas of the country? Are they more Vet friendly?
2. What can be done to improve the situation for Veterans? Who are the Advocates that work to improve things for our Veterans?
3. Is the Congress and the Obama Administration aware that the VA is treating our Veterans so poorly? And that the VA program has such a bad reputation in the Real Estate Community? Will any politician stand up and be a champion for Vets? It seems that the VA is a bureaucracy that could benefit from some red tape slashing and streamlining……. (that should be politically popular these days)
Please respond if you have any good ideas or contacts. Hopefully together we can turn the VA Loan back into a blessing instead of a curse that it has become.
“McMansion” Era Coming To An End?
“McMansion” Era Coming To An End? So wondered a recent Wall Street Journal article. Read it Here.
Slimming Down. Compare the floor plans of a boom-era luxury home and a smaller, post-recession design.
You can recall the history of homebuilding by taking a driving tour in your city. What you’ll notice is that there has always been a small percentage (5-10) of the “Grand Old Homes” Mansions or Near Mansions, and then the rest of the housing stock. In my town of Fresno, CA the Grand Old Homes were on Huntington and Van Ness Boulevard in the early 1900s. Two Stories with 4ooo square feet or more was the order of the day. (Today these are nightmares to renovate from an energy efficiency perspective. Those desiring to do so should view Tom Hanks movie “The Money Pit” and have plenty of patience and cash and check with the Historical Society before proceeding.
During that time, the rest of the town built in the Craftsman and Bungalow style. Two bedroom, one bath from 700 to 1000 feet was the norm with some larger homes having 3 bedrooms and sometimes 2 baths. There were larger homes between the two extremes, but not that many.
(From the WSJ Article) At 2,450 square feet, this new Wieland home in North Carolina looks like a cottage compared with some of the 3,900-square-foot models down the road.
The Housing Boom that came with the Baby Boom after WWII brought a new invention to the market: The American Classic Tract Home, 3 bedroom, 2 bath, 1100 to 1500 square feet moving up to about 2000 square feet as the century closed out.
But along with it came the “Executive Home” aka McMansion. These have the things necessary to impress, not just to live.
Grand Entries with Grand Architectural Staircases
All the Rooms are larger than they need to be, and there are more of them.
As many Baths as Bedrooms is common. Walk-in closets larger than your bedroom growing up.
All the Ceilings are taller than they need to be and they are mainly different from each other
Home Theaters and Gyms and 3 to 5 car garages.
European Chef’s style Kitchen with commercial appliances
And a huge energy bill to go with it….Because these opulent shrines to impressing the neighbors weren’t built any better than their smaller cousins. Actually the smaller home is harder to do poorly and easier to fix than the McMansion. And the McMansion with its architectural wizardry is very easy to get wrong from an energy and comfort perspective.
So here’s the good news:
1. There is going to be a huge opportunity for Home Performance Contractors to fix McMansions.
2. Another huge opportunity is doing a complete EnergyWise Renovation on the All American Tract Home. These homes are actually drawing many of the Baby Boomers who have had the McMansion and are tired of keeping them up
Well Done Complete Energy-Wise Renovations Are In High Demand & Sell Quickly
With Mature Landscaping, all automatic, a new 40 year roof that will outlast them, all new appliances, all new HVAC, Energy Saving Windows and fixtures and paint inside and out and all new tile and floor coverings, what’s to not like about that for easy living? In my experience these renovations are in high demand and sell quickly at full price.
In California there will soon be money available to fund both of these opportunities with the AB 811 funds for Energy Retrofits. There are sites about fixing McMansions. (Check out CBPCA.org for a list of trained Home Performance Contractors) This site will continue to focus on Energy Wise Renovation of moderate sized homes, especially on the Golden Opportunity presented by Foreclosed Homes.
Back to the WSJ article: I didn’t get the impression that the McMansion builders were going away. Or that the buyers demanding the Big House have learned their lesson and changed for good. It seemed they both are pulling back only as much as they have to and a recovered economy would launch them into new realms of opulence. Did I read that into the article? or did you get the same impression? Let me know in the Comments section.
October 24th, 2009
Excuse Me, That Thing You Just Did… You Cant Do That! (And Other Pessimistic Nonsense)
Its been fun this last year listening to people tell me it’s impossible to do complete remodels with deep energy retrofits and sell them at a profit. ”Difficult anytime and Impossible in this economy,” they say. But since that is exactly what we’ve developed over this last year, it leads to an interesting conversation.
It happened again today. An old friend and I were re-connecting and in the catching up, he expressed surprise that I was flipping houses with full energy retrofits. “I didn’t think you could do that in this market.”
Bad News Travels Fast And A Little Bit Goes A Long Way.
Where does all this negativity and pessimism come from? The main thing I can think of is an over-indulgence in mainstream media consumption. Followed by “Conventional Wisdom & Urban Legend,” stuff passed around at the water cooler and golf course….No basis in reality required.
Since pessimism is so prevalent, and its consumption is so detrimental to one’s success, my advice is that if a person wants to be successful as an Energy Wise House Flipper, they would do well to go on a Media and Gossip Fast.
This is good advice for any contrarian who determines to swim against the current of the main stream. But wait, there’s more! To maintain forward progress swimming against the main stream, you must not only close your ears to the mainstream media and friends who repeat its negative mantras… You’ll have to filter carefully the advice of experts of your own industry.
Being an Energy-Wise Renovating House Flipping Investor requires some knowledge of three industries, Real Estate, Remodeling, and Building Performance-Green Building. The main stream in each of those industries repeats the pessimism of the general mainstream media. So a successful Energy Wise House Flipper will find themselves swimming against the current, even in the industries that he or she is demonstrating success in.
A Diet Of This Stuff Will Make It Hard To Stay Positive And Be Creative.
My friend is a contractor, a very good one, probably the best one in his trade in our city. Why was he surprised that I’m being successful at Energy Wise House Flipping? I say the culprit is the pessimism that he hears at his supply house, and from the general contractors he works for and the coffee shop talk combined with the nightly news…… just too much negativity for a human brain to stay positive in.
Am I saying to be an ostrich and stick your head in the sand? Not exactly. But what if the sand is in sand bags and bullets are whizzing overhead? Negativity bullets come at you every time you turn on the news. Maybe you’d better duck behind those sand bags. It’s easy, just turn it off.
It’s been said that the brain is like a computer, and GIGO is the number one rule, Garbage In, Garbage Out. In the case of ingesting negative and pessimistic garbage, the garbage that comes out is the inability to believe and act decisively.
Over in the Real Estate Investing Stream, most seminar gurus will tell you, “Now is not a time for flipping, just buy and hold” and “just put in the minimum to make it clean and safe, you’ll never make a return on that energy stuff.”
The main stream in Building Performance is primarily occupied with building an industry around programs and the incentive monies which are flooding into our economy. Dont get me wrong, that’s not a bad idea. Its just not the input an Energy Wise House Flipper needs to be focused on.
Contrarians Are Different. They Think Differently And Feed Their Brains A Different Diet.
To Summarize: If you want to be successful as an Energy Wise House Flipping Investor (or any kind of a contrarian,) a Media Fast might be in order. Or at least some critical filtering. One filtering question might be: “What was this “expert” saying 3 years ago?” If he missed it so bad then, why should I listen to him now? Another might be to listen to people who are actually doing what you want to do, rather than academics,media people, and other spectators who prognosticate and repeat each others’ stuff.
Next week I’ll have lunch with my friend. I think we’ll meet in one of my energy wise renovation projects. Maybe the real thing will be enough to counter all the negative he’s heard. Maybe he’ll jump in and swim upstream with me. Maybe. Maybe you’d like to be a contrarian and swim upstream. Email me. I’m looking to build an Army of Contrarians…. and I’m willing to help anyone who will turn the TV off.
October 10th, 2009
Energy Programs: What’s Next? What’s Best? What Would You Recommend?
As you know, the methods used here at GreenEarthEquities, require no government funding, stimulus or otherwise, no utility programs, and no tax breaks to operate profitably.
Just because a program has more documentation, doesn't mean it really delivers more Energy Savings or Green Jobs.
So I haven’t paid much attention to those programs as they have been developing. But last week I heard two comments that caught my attention:
One came from a program manager who said, “You’ve heard of money with strings attached? This money doesn’t have strings, It has iron re-bar and concrete controls attached….” Wow! What can you say about that? Probably the result of consultancy and bureaucracy gone wild? Definitely didn’t make me want to participate.
Then, one of the participants on last week’s round table call had been to an investor’s meeting and met an accomplished “house flipper” (not Energy-Wise, just a good businessperson) who had participated in one of the foreclosure programs in a large Northern California City who reported, “Our average renovation costs $25,000 but when we participate in the program the cost goes up to $70,000. Double Wow! It may not have been so bad, but the program in question doesn’t even deliver respectable energy savings for the bloated price tag.
These two comments in the same week, caused me to put on my Taxpayer’s Hat and say, “There’s got to be a better way!” It seems clear, Bureaucracy, if left to it’s own devices, will run amuck. So if there’s a better way to spend all this stimulus money, what is it? What would you recommend?
I’ve decided to collect and publish “best practices” about the various programs that I become aware of around the State and Nation. I will be looking for the following as I rate the various programs:
1. How well does the program deliver measurable energy savings?
2. How well does the program create new Green Jobs?
3. What percentage of the funds go to overhead as opposed to really saving energy?
4. How “User Friendly” is the program? To Consumers, and Contractors?
Join The Paperwork Slashing Revolution!
Please weigh in. Do you have a favorite program that should be emulated and promoted? Maybe an un-favorite program that should be exposed as a bloated paperwork nightmare that doesn’t spend your tax dollars to meet these objectives…
None of us are as smart as all of us. And I have purposely stayed out of the loop, being happy enough to avoid the bureaucracy of the programs. But I can see that I can no longer stay in my happy place. I must speak up. But I need your input. Earlier today I taught my “Energy Wise Renovation Of Foreclosed Homes” class at the PG&E Stockton Training Center. At the end, I put out the same request and I really did hear 2 great brand new (to me) ideas that I will be incorporating into the programs that I will be recommending.
Please add your ideas to the Comment section or email me if you would like to be a guest blogger on this site.
September 10th, 2009
Energy Incentive Money… How Would YOU spend it?
As you know, there is a flood of Federal Money descending on cities everywhere and very few are equipped to WISELY go out and spend all that money. Unfortunately, a lot of what gets cobbled together will be the result of who had the best salesman or lobbyist, or simply who got there first. Like Von Bismark is reported to have said, “to retain respect for sausages and laws, one must not watch them in the making.”
I just learned of one such program being offered in Sacramento, The Vacant Properties Program, which uses Neighborhood Stabilization Funding. The program:
Targets low income neighborhoods that might be hard to help otherwise,
Mentions Green Building with minimal PRESCRIPTIVE standards and no mention of PERFORMANCE.
Employs a unique mix of private investment guaranteed by the Federal Funding. After becoming an “Approved Builder” you can purchase an REO property that meets the Sacramento Housing & Redevelopment Agency (SHRA) guidelines. Then you put $15,000 to $60,000 of improvements in and list the property for the lower of the two:
Appraised After Repair Value (ARV) or
Costs including the Purchase Price, Building Costs & Developer Fee
After the process is completed, you get your “Developer Fee” which is $30,000. If the costs are more than the ARV, No problem, the shortfall will be forgiven and you will just get your $30,000 Development Fee anyway.
Here is a program with some major flaws (my opinion) as well as some creative use of public – private collaboration. One good aspect of the program is that the Developer is not paid until they deliver a final product. Which means that a new homeowner is in a renovated home with a sustainable mortgage. That’s better than what it was before, a boarded up foreclosed home with grafitti. So that’s a good thing….
But the program could be so much better with just a little tweaking. The program is committed to being “Prescriptive” instead of Performance Based, but even still it could be improved by
1. Requiring shell sealing with at least a test out. For those of us who test houses, we usually find this to be the biggest Energy Culprit
2. If you seal, you must ventilate “on purpose” rather than just let the leaks take care of things. Carbon Monoxide needs to be tested as well.
3. Adding Insulation Standards
4. Requiring Duct Replacement, not just sealing, engineered to Manual D then sealed and tested and covered.
If these simple things were done, the final product would be greatly improved, while retaining the simplicity that SHRA desires.
IF I WERE IN SACRAMENTO….. Yes, I would hustle on down to the Housing Authority and start getting myself qualified for the program. Just because it is not a perfect program, doesn’t mean I should stay away. I would go ahead and add the 4 items mentioned above and take the $30K. Remember the Lesser Golden Rule, “Whoever has the gold, Makes the rules.” SHRA has the gold and you might consider playing in their game.
All you guys and gals in Sacramento, let me know how it goes. For those in other towns, if you are called on to help draft programs in your city, here are at least 4 ways this program could be made better from an Energy Efficiency perspective.
Here’s the Vacant Properties Program Handbook. Take a look. It’s a lot of bureacracy, Davis Bacon, WMBE, etc but if you can handle that sort of thing, they do have some gold. You can always build better than the minimum… and still sleep at night.
My final comment. This program shares some similarity with the Solar Subsidies of the late 70’s. When the subsidies went away, so did the Solar business. This program will do some good things for some neighborhoods but when the money is gone, this is not the type of activity that will build a continuing industry. For ideas on how to do that, Click PLANET SAVERS UNIVERSITY, above.
September 6th, 2009
Next “Wave” of Foreclosures: Fact or Fiction? (Dont Hold Your Breath)
We’ve all been told that there’s another “Wave” of foreclosures coming and I’ve even done some of my own planning based on that prediction. Almost all of the people I’ve heard the next “wave theory” from were just repeating what they had heard from someone else. The more thoughtful of these pointed to the continuing rise in Notices Of Default but we all scratched our heads because the expected actual foreclosures didn’t show up on the REO market. What happened? The foreclosures seemed to get lost on their way to the MLS…
I had nothing objective to base it on but just started losing my faith in the Foreclosure Wave theory a few months ago. Then I finally found an objective explanation of why the foreclosures aren’t showing up on the expected schedule. Check out this chart which shows what happened to foreclosures after Secretary Paulson’s Troubled Asset Relief announcement last September 19th. Here it is on the chart, courtesy of Sean O’Toole of Foreclosure Truth.com.
Before and After Secretary Paulson's announcement on Sept 19, 2008
O’Toole explains, “While many will point out this was necessary to keep home loans available and interest rates low, I think it also clearly sent banks a message… you will get more for these assets from the taxpayer than you will through foreclosure. Add to that the mark-to-model rule changes from the Federal Accounting Standards Board, and a ton of politicial pressure and it should be no surprise to anyone that foreclosures have slowed. The drop in foreclosure sales defies logic given the continued increase in properties scheduled to be foreclosed on. But defying logic to do what is politically expedient while simultaneously inflating bank earnings and bonuses and without regard to future consequences IS the new normal. We are yet again trading tomorrow for today.” (Full Article here)
Whether O’Toole’s analysis is right or wrong, the fact remains, Investors can no longer choose from many available foreclosures like in the “old days” of 6 months ago. I believe there are still good deals out there, we just have to look harder for them. The larger spread from buy to sell which is available in foreclosures is what allows me to do large energy saving packages in the renovation and still sell my projects to first time buyers. So even if the good deals are harder to find, they are worth the effort. Here are three techniques that I’m using while waiting for the wave.
1. Increased attention to Short Sales. As you know these can take a long time, so it’s good to have a lot of offers in the pipeline. My broker and I have turned our attention to Short Sales and recently got one (after 5 months)
My Newest Really Ugly House
2. Remember the Ugly House. The house that I just put in escrow last week may qualify for the “Ugliest House” award. Certainly in the City, Maybe the State. My perfect plan is to buy the Worst House in the neighborhood and make it the Best House in the neighborhood. We call it our Cinderella Process. I’ll be showing pictures and talking about my latest Ugly House on the RoundTable Conference Calls every Tuesday at 6pm Pacific. Sign up on the FREE WEBINAR form and I will send you the slide deck before the Conference Call.
3. More Conventional Ways Of Finding Motivated Sellers. We’ve really gotten spoiled this last year with such easy pickings in the REO market. It’s time to dust off some of the harder ways to find those great deals. Pre foreclosure letters, signs, working with attorneys…. none of which are my specialty, but I will post here and we can learn together.
The effort is worth it and we need really good deals if we are going to Save The Planet, One House At A Time thru Energy-Wise House Flipping.
And who knows. The political winds and banking rules may change and the “Wave” may really come. Wise investors will have a little cash available for the buying party when it’s Wave Season.
June 18th, 2009
Who knew? We treat our Vets so badly?
Two weeks ago I had no clue that Veterans have such a difficult time using that supposed benefit, the VA Loan. But in the last two weeks, I’ve got an education. I’ve sold one of my Energy-Wise Renovations to a Veteran. We’ve been working with his wife all along during renovation on design and color selection etc. Now it seems that the family is not going to qualify and I’ve found out that both the credit and appraisal process for Vets is more difficult than either conventional or FHA financing. When I started asking my Realtor friends about this, they all said, “Yes, VA has always been difficult. We shudder when a buyer wants to go VA. We’ll probably spend a lot of time and then the Vet will be disqualified or the house wont appraise and we’ll have to start all over.”
It seems that my GreenEarthEquities projects will never qualify and meet the VA appraisal. With the Wow! Package, the Done! Package and the Energy Package, these homes have all new everything and need to be priced at the top of the Comparables. They are not for everyone. Some people want a fixer upper. I want to provide a nice, finished home, with everything new that wont have maintenance issues for a long time for a returning Vet. My Realtor friends say it isn’t going to happen, not with a VA Loan anyway.
That made me mad to hear that. I’m a Vet. And I enjoyed my Cal-Vet benefit purchasing my first home many years ago. I dont remember any difficulties. I think a lot of Americans agree with me that our Veterans should get preferential treatment…..And it seems that they are actually getting discriminatory treatment. I have three questions which I will be getting the answers for over the next few months
1. Is this poor treatment of our Vets system wide, or is our local situation in Central California an anomaly. (4 out of 5 Realtors I asked rolled their eyes when I asked about VA financing and confirmed the situation described by the first friend that I asked.) How about other areas of the country? Are they more Vet friendly?
2. What can be done to improve the situation for Veterans? Who are the Advocates that work to improve things for our Veterans?
3. Is the Congress and the Obama Administration aware that the VA is treating our Veterans so poorly? And that the VA program has such a bad reputation in the Real Estate Community? Will any politician stand up and be a champion for Vets? It seems that the VA is a bureaucracy that could benefit from some red tape slashing and streamlining……. (that should be politically popular these days)
Please respond if you have any good ideas or contacts. Hopefully together we can turn the VA Loan back into a blessing instead of a curse that it has become.
Bad News Travels Fast And A Little Bit Goes A Long Way.
A Diet Of This Stuff Will Make It Hard To Stay Positive And Be Creative.
Contrarians Are Different. They Think Differently And Feed Their Brains A Different Diet.
Energy Programs: What’s Next? What’s Best? What Would You Recommend?
As you know, the methods used here at GreenEarthEquities, require no government funding, stimulus or otherwise, no utility programs, and no tax breaks to operate profitably.
Just because a program has more documentation, doesn't mean it really delivers more Energy Savings or Green Jobs.
So I haven’t paid much attention to those programs as they have been developing. But last week I heard two comments that caught my attention:
One came from a program manager who said, “You’ve heard of money with strings attached? This money doesn’t have strings, It has iron re-bar and concrete controls attached….” Wow! What can you say about that? Probably the result of consultancy and bureaucracy gone wild? Definitely didn’t make me want to participate.
Then, one of the participants on last week’s round table call had been to an investor’s meeting and met an accomplished “house flipper” (not Energy-Wise, just a good businessperson) who had participated in one of the foreclosure programs in a large Northern California City who reported, “Our average renovation costs $25,000 but when we participate in the program the cost goes up to $70,000. Double Wow! It may not have been so bad, but the program in question doesn’t even deliver respectable energy savings for the bloated price tag.
These two comments in the same week, caused me to put on my Taxpayer’s Hat and say, “There’s got to be a better way!” It seems clear, Bureaucracy, if left to it’s own devices, will run amuck. So if there’s a better way to spend all this stimulus money, what is it? What would you recommend?
I’ve decided to collect and publish “best practices” about the various programs that I become aware of around the State and Nation. I will be looking for the following as I rate the various programs:
1. How well does the program deliver measurable energy savings?
2. How well does the program create new Green Jobs?
3. What percentage of the funds go to overhead as opposed to really saving energy?
4. How “User Friendly” is the program? To Consumers, and Contractors?
Join The Paperwork Slashing Revolution!
Please weigh in. Do you have a favorite program that should be emulated and promoted? Maybe an un-favorite program that should be exposed as a bloated paperwork nightmare that doesn’t spend your tax dollars to meet these objectives…
None of us are as smart as all of us. And I have purposely stayed out of the loop, being happy enough to avoid the bureaucracy of the programs. But I can see that I can no longer stay in my happy place. I must speak up. But I need your input. Earlier today I taught my “Energy Wise Renovation Of Foreclosed Homes” class at the PG&E Stockton Training Center. At the end, I put out the same request and I really did hear 2 great brand new (to me) ideas that I will be incorporating into the programs that I will be recommending.
Please add your ideas to the Comment section or email me if you would like to be a guest blogger on this site.
September 10th, 2009
Energy Incentive Money… How Would YOU spend it?
As you know, there is a flood of Federal Money descending on cities everywhere and very few are equipped to WISELY go out and spend all that money. Unfortunately, a lot of what gets cobbled together will be the result of who had the best salesman or lobbyist, or simply who got there first. Like Von Bismark is reported to have said, “to retain respect for sausages and laws, one must not watch them in the making.”
I just learned of one such program being offered in Sacramento, The Vacant Properties Program, which uses Neighborhood Stabilization Funding. The program:
Targets low income neighborhoods that might be hard to help otherwise,
Mentions Green Building with minimal PRESCRIPTIVE standards and no mention of PERFORMANCE.
Employs a unique mix of private investment guaranteed by the Federal Funding. After becoming an “Approved Builder” you can purchase an REO property that meets the Sacramento Housing & Redevelopment Agency (SHRA) guidelines. Then you put $15,000 to $60,000 of improvements in and list the property for the lower of the two:
Appraised After Repair Value (ARV) or
Costs including the Purchase Price, Building Costs & Developer Fee
After the process is completed, you get your “Developer Fee” which is $30,000. If the costs are more than the ARV, No problem, the shortfall will be forgiven and you will just get your $30,000 Development Fee anyway.
Here is a program with some major flaws (my opinion) as well as some creative use of public – private collaboration. One good aspect of the program is that the Developer is not paid until they deliver a final product. Which means that a new homeowner is in a renovated home with a sustainable mortgage. That’s better than what it was before, a boarded up foreclosed home with grafitti. So that’s a good thing….
But the program could be so much better with just a little tweaking. The program is committed to being “Prescriptive” instead of Performance Based, but even still it could be improved by
1. Requiring shell sealing with at least a test out. For those of us who test houses, we usually find this to be the biggest Energy Culprit
2. If you seal, you must ventilate “on purpose” rather than just let the leaks take care of things. Carbon Monoxide needs to be tested as well.
3. Adding Insulation Standards
4. Requiring Duct Replacement, not just sealing, engineered to Manual D then sealed and tested and covered.
If these simple things were done, the final product would be greatly improved, while retaining the simplicity that SHRA desires.
IF I WERE IN SACRAMENTO….. Yes, I would hustle on down to the Housing Authority and start getting myself qualified for the program. Just because it is not a perfect program, doesn’t mean I should stay away. I would go ahead and add the 4 items mentioned above and take the $30K. Remember the Lesser Golden Rule, “Whoever has the gold, Makes the rules.” SHRA has the gold and you might consider playing in their game.
All you guys and gals in Sacramento, let me know how it goes. For those in other towns, if you are called on to help draft programs in your city, here are at least 4 ways this program could be made better from an Energy Efficiency perspective.
Here’s the Vacant Properties Program Handbook. Take a look. It’s a lot of bureacracy, Davis Bacon, WMBE, etc but if you can handle that sort of thing, they do have some gold. You can always build better than the minimum… and still sleep at night.
My final comment. This program shares some similarity with the Solar Subsidies of the late 70’s. When the subsidies went away, so did the Solar business. This program will do some good things for some neighborhoods but when the money is gone, this is not the type of activity that will build a continuing industry. For ideas on how to do that, Click PLANET SAVERS UNIVERSITY, above.
September 6th, 2009
Next “Wave” of Foreclosures: Fact or Fiction? (Dont Hold Your Breath)
We’ve all been told that there’s another “Wave” of foreclosures coming and I’ve even done some of my own planning based on that prediction. Almost all of the people I’ve heard the next “wave theory” from were just repeating what they had heard from someone else. The more thoughtful of these pointed to the continuing rise in Notices Of Default but we all scratched our heads because the expected actual foreclosures didn’t show up on the REO market. What happened? The foreclosures seemed to get lost on their way to the MLS…
I had nothing objective to base it on but just started losing my faith in the Foreclosure Wave theory a few months ago. Then I finally found an objective explanation of why the foreclosures aren’t showing up on the expected schedule. Check out this chart which shows what happened to foreclosures after Secretary Paulson’s Troubled Asset Relief announcement last September 19th. Here it is on the chart, courtesy of Sean O’Toole of Foreclosure Truth.com.
Before and After Secretary Paulson's announcement on Sept 19, 2008
O’Toole explains, “While many will point out this was necessary to keep home loans available and interest rates low, I think it also clearly sent banks a message… you will get more for these assets from the taxpayer than you will through foreclosure. Add to that the mark-to-model rule changes from the Federal Accounting Standards Board, and a ton of politicial pressure and it should be no surprise to anyone that foreclosures have slowed. The drop in foreclosure sales defies logic given the continued increase in properties scheduled to be foreclosed on. But defying logic to do what is politically expedient while simultaneously inflating bank earnings and bonuses and without regard to future consequences IS the new normal. We are yet again trading tomorrow for today.” (Full Article here)
Whether O’Toole’s analysis is right or wrong, the fact remains, Investors can no longer choose from many available foreclosures like in the “old days” of 6 months ago. I believe there are still good deals out there, we just have to look harder for them. The larger spread from buy to sell which is available in foreclosures is what allows me to do large energy saving packages in the renovation and still sell my projects to first time buyers. So even if the good deals are harder to find, they are worth the effort. Here are three techniques that I’m using while waiting for the wave.
1. Increased attention to Short Sales. As you know these can take a long time, so it’s good to have a lot of offers in the pipeline. My broker and I have turned our attention to Short Sales and recently got one (after 5 months)
My Newest Really Ugly House
2. Remember the Ugly House. The house that I just put in escrow last week may qualify for the “Ugliest House” award. Certainly in the City, Maybe the State. My perfect plan is to buy the Worst House in the neighborhood and make it the Best House in the neighborhood. We call it our Cinderella Process. I’ll be showing pictures and talking about my latest Ugly House on the RoundTable Conference Calls every Tuesday at 6pm Pacific. Sign up on the FREE WEBINAR form and I will send you the slide deck before the Conference Call.
3. More Conventional Ways Of Finding Motivated Sellers. We’ve really gotten spoiled this last year with such easy pickings in the REO market. It’s time to dust off some of the harder ways to find those great deals. Pre foreclosure letters, signs, working with attorneys…. none of which are my specialty, but I will post here and we can learn together.
The effort is worth it and we need really good deals if we are going to Save The Planet, One House At A Time thru Energy-Wise House Flipping.
And who knows. The political winds and banking rules may change and the “Wave” may really come. Wise investors will have a little cash available for the buying party when it’s Wave Season.
June 18th, 2009
Who knew? We treat our Vets so badly?
Two weeks ago I had no clue that Veterans have such a difficult time using that supposed benefit, the VA Loan. But in the last two weeks, I’ve got an education. I’ve sold one of my Energy-Wise Renovations to a Veteran. We’ve been working with his wife all along during renovation on design and color selection etc. Now it seems that the family is not going to qualify and I’ve found out that both the credit and appraisal process for Vets is more difficult than either conventional or FHA financing. When I started asking my Realtor friends about this, they all said, “Yes, VA has always been difficult. We shudder when a buyer wants to go VA. We’ll probably spend a lot of time and then the Vet will be disqualified or the house wont appraise and we’ll have to start all over.”
It seems that my GreenEarthEquities projects will never qualify and meet the VA appraisal. With the Wow! Package, the Done! Package and the Energy Package, these homes have all new everything and need to be priced at the top of the Comparables. They are not for everyone. Some people want a fixer upper. I want to provide a nice, finished home, with everything new that wont have maintenance issues for a long time for a returning Vet. My Realtor friends say it isn’t going to happen, not with a VA Loan anyway.
That made me mad to hear that. I’m a Vet. And I enjoyed my Cal-Vet benefit purchasing my first home many years ago. I dont remember any difficulties. I think a lot of Americans agree with me that our Veterans should get preferential treatment…..And it seems that they are actually getting discriminatory treatment. I have three questions which I will be getting the answers for over the next few months
1. Is this poor treatment of our Vets system wide, or is our local situation in Central California an anomaly. (4 out of 5 Realtors I asked rolled their eyes when I asked about VA financing and confirmed the situation described by the first friend that I asked.) How about other areas of the country? Are they more Vet friendly?
2. What can be done to improve the situation for Veterans? Who are the Advocates that work to improve things for our Veterans?
3. Is the Congress and the Obama Administration aware that the VA is treating our Veterans so poorly? And that the VA program has such a bad reputation in the Real Estate Community? Will any politician stand up and be a champion for Vets? It seems that the VA is a bureaucracy that could benefit from some red tape slashing and streamlining……. (that should be politically popular these days)
Please respond if you have any good ideas or contacts. Hopefully together we can turn the VA Loan back into a blessing instead of a curse that it has become.
Next “Wave” of Foreclosures: Fact or Fiction? (Dont Hold Your Breath)
We’ve all been told that there’s another “Wave” of foreclosures coming and I’ve even done some of my own planning based on that prediction. Almost all of the people I’ve heard the next “wave theory” from were just repeating what they had heard from someone else. The more thoughtful of these pointed to the continuing rise in Notices Of Default but we all scratched our heads because the expected actual foreclosures didn’t show up on the REO market. What happened? The foreclosures seemed to get lost on their way to the MLS…
I had nothing objective to base it on but just started losing my faith in the Foreclosure Wave theory a few months ago. Then I finally found an objective explanation of why the foreclosures aren’t showing up on the expected schedule. Check out this chart which shows what happened to foreclosures after Secretary Paulson’s Troubled Asset Relief announcement last September 19th. Here it is on the chart, courtesy of Sean O’Toole of Foreclosure Truth.com.
Before and After Secretary Paulson's announcement on Sept 19, 2008
O’Toole explains, “While many will point out this was necessary to keep home loans available and interest rates low, I think it also clearly sent banks a message… you will get more for these assets from the taxpayer than you will through foreclosure. Add to that the mark-to-model rule changes from the Federal Accounting Standards Board, and a ton of politicial pressure and it should be no surprise to anyone that foreclosures have slowed. The drop in foreclosure sales defies logic given the continued increase in properties scheduled to be foreclosed on. But defying logic to do what is politically expedient while simultaneously inflating bank earnings and bonuses and without regard to future consequences IS the new normal. We are yet again trading tomorrow for today.” (Full Article here)
Whether O’Toole’s analysis is right or wrong, the fact remains, Investors can no longer choose from many available foreclosures like in the “old days” of 6 months ago. I believe there are still good deals out there, we just have to look harder for them. The larger spread from buy to sell which is available in foreclosures is what allows me to do large energy saving packages in the renovation and still sell my projects to first time buyers. So even if the good deals are harder to find, they are worth the effort. Here are three techniques that I’m using while waiting for the wave.
1. Increased attention to Short Sales. As you know these can take a long time, so it’s good to have a lot of offers in the pipeline. My broker and I have turned our attention to Short Sales and recently got one (after 5 months)
My Newest Really Ugly House
2. Remember the Ugly House. The house that I just put in escrow last week may qualify for the “Ugliest House” award. Certainly in the City, Maybe the State. My perfect plan is to buy the Worst House in the neighborhood and make it the Best House in the neighborhood. We call it our Cinderella Process. I’ll be showing pictures and talking about my latest Ugly House on the RoundTable Conference Calls every Tuesday at 6pm Pacific. Sign up on the FREE WEBINAR form and I will send you the slide deck before the Conference Call.
3. More Conventional Ways Of Finding Motivated Sellers. We’ve really gotten spoiled this last year with such easy pickings in the REO market. It’s time to dust off some of the harder ways to find those great deals. Pre foreclosure letters, signs, working with attorneys…. none of which are my specialty, but I will post here and we can learn together.
The effort is worth it and we need really good deals if we are going to Save The Planet, One House At A Time thru Energy-Wise House Flipping.
And who knows. The political winds and banking rules may change and the “Wave” may really come. Wise investors will have a little cash available for the buying party when it’s Wave Season.
June 18th, 2009
Who knew? We treat our Vets so badly?
Two weeks ago I had no clue that Veterans have such a difficult time using that supposed benefit, the VA Loan. But in the last two weeks, I’ve got an education. I’ve sold one of my Energy-Wise Renovations to a Veteran. We’ve been working with his wife all along during renovation on design and color selection etc. Now it seems that the family is not going to qualify and I’ve found out that both the credit and appraisal process for Vets is more difficult than either conventional or FHA financing. When I started asking my Realtor friends about this, they all said, “Yes, VA has always been difficult. We shudder when a buyer wants to go VA. We’ll probably spend a lot of time and then the Vet will be disqualified or the house wont appraise and we’ll have to start all over.”
It seems that my GreenEarthEquities projects will never qualify and meet the VA appraisal. With the Wow! Package, the Done! Package and the Energy Package, these homes have all new everything and need to be priced at the top of the Comparables. They are not for everyone. Some people want a fixer upper. I want to provide a nice, finished home, with everything new that wont have maintenance issues for a long time for a returning Vet. My Realtor friends say it isn’t going to happen, not with a VA Loan anyway.
That made me mad to hear that. I’m a Vet. And I enjoyed my Cal-Vet benefit purchasing my first home many years ago. I dont remember any difficulties. I think a lot of Americans agree with me that our Veterans should get preferential treatment…..And it seems that they are actually getting discriminatory treatment. I have three questions which I will be getting the answers for over the next few months
1. Is this poor treatment of our Vets system wide, or is our local situation in Central California an anomaly. (4 out of 5 Realtors I asked rolled their eyes when I asked about VA financing and confirmed the situation described by the first friend that I asked.) How about other areas of the country? Are they more Vet friendly?
2. What can be done to improve the situation for Veterans? Who are the Advocates that work to improve things for our Veterans?
3. Is the Congress and the Obama Administration aware that the VA is treating our Veterans so poorly? And that the VA program has such a bad reputation in the Real Estate Community? Will any politician stand up and be a champion for Vets? It seems that the VA is a bureaucracy that could benefit from some red tape slashing and streamlining……. (that should be politically popular these days)
Please respond if you have any good ideas or contacts. Hopefully together we can turn the VA Loan back into a blessing instead of a curse that it has become.
Solar PV System for 3405 N. Miami
Interior 3405 N. Miami, Fresno CA
Exterior 3405 N. Miami, Fresno CA
3332 N Ezie $165,000 PENDING
5967 E Fedora $160,000 Pending
3328 N Purdue SOLD
145 Gettysburg SOLD
5741 E Bernadine SOLD
5664 E Bernadine SOLD
4440 N Eddy SOLD
3915 E Townsend 135K Pending
