Ours and Others
Successful Energy Wise Residential Remodeling can be measured in several ways. Saving energy and earning profits, transforming housing and neighborhoods, promoting the Green Building industry and helping the Planet.
A Tale of Two Foreclosures (Different Investors and Results)
It was one of my first offers as I was getting into Energy Wise real estate investing. I was learning to negotiate and I asked for too much in my due diligence phase. The bank sold it to another investor…. but I was successful on the one next door for the same price. I knew everything about both houses so I watched with interest as the other investor proceeded on his project. He got done a lot faster. He patched the roof, I replaced mine. He jury rigged a used air conditioner, I put on a new one with new ductwork. He did nothing to the windows, I replaced with new vinyl dual panes. He cleaned up the worn out appliances, I replaced all of mine. You get the idea……. He did put in new carpet (FHA minimum) and painted inside and out.
The other investor’s contractor told me that the whole rehab had cost $10,000 and it became a rental. Probably makes a minimum cash flow. My Energy Wise Renovation cost more like $45,000. It sold before it was finished. Two good deals. Maybe it’s just different strokes for different folks….
But let’s project each of these concepts down the road a ways to see why I think the common preference for buying, minimal fixing and renting and holding for the market to go back up is misguided. The buy and hold strategy depends on the market going back up. Who knows when that will happen. In our area it is still going down. But for the sake of this discussion lets just say that in 5 years it will go up 50%. The other investor put in $80,000. He’s renting but lets say he could have sold it for $100,000. In 5 years he’ll sell for $150,000. Not bad. If the market regains 50% in 5 years.
Now consider my Energy Wise Flipping approach, which isn’t supposed to work in this economy. I spent 50% more but sold for 145,ooo and netted only $10,000 because “things happened.” But I was done in 90 days and have already bought the next one down the street. So I will turn the money 4 times a year. And as my team gets better, fewer things will happen, & we’re buying smarter, so that $10 will go up. But let’s say we dont get any smarter and it doesn’t. And we only turn the money 4 times a year. Just to be safe let’s say only 3 times a year. That’s $30,000 per year, $150,000 in 5 years. $150 is better than $50. I think my plan is 3 times better than his.
Which approach is a more risky gamble? The buy-rent-hold investor is really banking on real estate regaining 50% in 5 years. We can point to several times in our history when that did not happen. My fast green flip strategy, on the other hand puts $10 to $15K in the bank every 90 to 120 days. Each step I take, my sales get more secure as I am concentrating in a neighborhood. So I’m generating my own comps and appraisal validity. I like my odds better.
If you are a realtor, which type of investor would you rather have? (My realtor does both ends of my projects.) I suggest realtors stop passing on the same stale advice that they heard from some expert and start cultivating investor clients like me. Invite them to read this blog, that’s what it’s here for.
If you are an investor, what do you think of the math I presented above. I tried to be conservative. We are really faster than that. And I know my team will improve as time goes on so we’ll earn better than those numbers. We’ll get even faster too. I think all investors, especially those of us buying foreclosures, should look at Energy Wise Renovation and Resale rather than Buy, Rent, and Hope. It’s a good thing to do for our community, our nation and our planet!
If you are the neighbor, who would you like to see in your neighborhood, the quick fix, convert it to a rental guy, or an investor like me who does everything they can to raise the values and really does raise the values? Just a question. If the foreclosured home was next door to you, which of us would you prefer? If you would prefer it on your street, why not promote it on other streets that your clients invest in? I think they call that the Golden Rule.
Success Stories Achives
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Devon Hartman Interview Claremont Home Energy Retrofit Project Tonight we have a special guest interview with Devon Hartman co-founder of CHERP: Claremont Home Energy Retrofit Project. CHERP Claremont is a fantastic prototype organization bringing volunteers and professionals together who believe that "Energy is at the Heart of the Matter." Having reached their initial goal to complete energy retrofits on 1% of the single-family homes in the city of Claremont, CHERP's raised it's target to 10% while looking to duplicating itself in other cities throughout California! With many case studies to showcase, Devon's looking forward to discussing his low cost - high impact method of...Continue Reading!
Creating The Home Performance Ninja Team Of course most Americans know little about Home Performance, or CFM50’s, Blower Doors or why any of those matter. … But folks who would be reading this know and care a lot about those things. And when we gather (at ACI conferences or the various forums online) … one complaint sooner or later comes up in the conversations. How can we get crews trained to do EXCELLENT work? After all, it’s not like they are working in air conditioned offices, and they probably aren’t being paid as much as the HVAC...Continue Reading!
Getting Top Dollar Profitable Renovating Ideas You may have seen his presentations at ACI or the 3 part documentary on his own home in Home Energy Magazine. Larry is one who has really lived Building Science, and has since before it became popular. Like me, Larry did real estate and landlording several decades ago and got out of it... until recently when the "Perfect Storm" of opportunity that we have today with foreclosures, lower prices and low interest got both of us to jump back into the game. Larry brings a unique blend of Home Performance to his projects. He knows he can't do everything...Continue Reading!
York Nebraska Update Ongoing Success Story Andrew and Fred who have been renovating a tri plex in York Nebraska. And now they are looking for their next project. They will be sharing about how they are getting better and better blower door numbers and how they are doing it. Also of interest will be their experience with the 26 SEER mini split. It's a single head model, but they move some air with a Panasonic bath fan... very progressive. Click here to watch a streaming version of this webinar. To download this Webex presentation click here. To watch this audio/video presentation you’ll need to install the FREE...Continue Reading!
80 Year Old House Flipper This is our friend, Lee Siebert at 5815 E Sheilds. You may have met Lee at the last field trip. Lee liked the house and saw so much potential ($47K in "our" neighborhood where we've been selling for $160)... so we sold it to him. He's now more than half done, learning Home Performance as he goes along, and excited to get on to his next one. He's chosen to do most of the work himself and says he's lost 20 pounds. We'll have photos of work in process and interview Lee tonight. This will be...Continue Reading!
Some people have asked, "How do you find the good deals?" and I've been thinking about that recently since the last deal found me. For me, there are two types of real estate search, On Purpose, and Serendipity. On Purpose includes all the normal methods, searching the REO listings, Courthouse Steps, Direct Mail etc ... and we need to keep on doing those methods that work for us. But dont miss out on the Serendipity that can happen by Wandering Around with Curiosity and Expectation. It's good to wake up each day desiring to be a blessing and receive...Continue Reading!