Why Commercial Investors Lead the Way in Green Upgrades
What Skateboarding and Commercial Investing Have in Common
“Trends always start with commercial properties. It makes sense. You have a hundred, or thousands of units versus one family. The bottom line hits you faster and harder than in residential sales.
If you need to attract a tenant, but your old furnace is a blow-hard that increases that tenant’s energy bill, they’ll look elsewhere. When you upgrade, you look at the whole picture, not just the immediate cost. You consider the 98% efficiency over the course of your investment, the tax discounts, other incentives or rebates available.
With an eye always on the bottom line, you know this upgrade will pay for itself in five years and will be cheaper in the long run.”
These words of wisdom come from Marcus Valdez, Active Rain enthusiast, real estate associate, and pro-level skateboarder who distills his success in commercial investing to this one mantra:
Whether you are selling houses or finding renters, you have to show prospects what they can’t get anywhere else – like an Eco-Broker who can ride a handrail.
“Landlords have to be picky about their upgrades,” Marcus continues. “They consider aesthetics, but always have to keep an eye on the cap rate, expenses, cash flow. They can’t afford to buy substandard, or to turn away energy incentive programs. It just doesn’t make sense financially. Green is the right thing to do. But is also makes money.”
Choosing upgrades is no easy task. Knowing what a tenant will be seeking a couple of years from now isn’t always obvious. There are some ways to keep pace:
Look for hot trends at the home improvement stores- they stock what sells.
Showing houses helps – you start to get a gut feeling for what people like.
It’s also best to invest and manage properties in neighborhoods you are familiar with yourself.
“I look for upgrades that tell a story. Aesthetic upgrades, like granite counters and hardwood floors don’t really tell a story. But if I explain that the floors are bamboo, and that’s a renewable resource and I’m saving the forests, then my prospects feel excited about showing it off to their friends. Sure, green’s a buzz word, but I’m also improving my property in a sustainable way, so I can resell it.”
To flip homes successfully, you have to plan for quick sales. One of the easiest ways to lose money is to over-improve. Novices often underestimate the costs of upgrades, and don’t factor in the cost of servicing a mortgage for months while as they try to sell it. “I’m successful because I have my expectations in check. I go at it with the intent that I’m going to give them the best choice on the market – something that gives them the highest value back. I haven’t over-improved it by making green choices, I’ve just left it better off than it was for the next person.”
Sounds like good advice for the way we treat the environment as well.
Marcus Valdez is an investor, property manager, a real estate agent with Keller Williams Realty of Northern Colorado, and owns The Market, a skateboard and snowboarding shop in Ft. Collins, Colorado.
Check out another Eco-enthusiast with a Heart of Gold. Brad Pitt Builds Green (and Pink) in New Orleans.
Now is the time to plan for on-site chargers for your tenants electric cars. Where to go for help in Planning On-Site Chargers.
Visit our Going Green pages for other tips on how landlords can save money and help the environment.
American Apartment Owners Association offers discounts on products and services related to your commercial housing investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
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