Energy-Wise Renovations


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Energy-Wise Renovations

  1. 1. Original Hypotheses in <br />Foreclosure Renovation:<br />1. Full Energy packages don’t sell easily by themselves (based on 30 years of attempts with marginal success)2. Full packages will sell if combined with Wow! Remodeling<br />Questions from Skeptics, Professionals & Gurus:<br />Can you put that much money into a house and get a return on investment? And make a profit?<br />Will the consumers buy that big a package of energy saving retrofit?<br />If they will buy, can they get financing? Will the properties appraise for enough?<br />Preliminary answers at end of poster.<br />
  2. 2. Closing Escrow next week<br />Features: <br />Low E2 windows<br />R-50 Insulation<br />New HVAC system<br />R-8 Ducts, sealed & tested<br />Complete Shell Sealing<br />More…(see Energy Package)<br />
  3. 3. Purchasing Homes in <br />Close Proximity Allows:<br />1. Saving of fuel<br />and travel time<br />(green!)<br />2. We can control the “Comps” and Influence Appraisals after <br />the first one.<br />3<br />1<br />2<br />6<br />5<br />4<br />
  4. 4. The Wow! Package<br />1. Granite Counters at Kitchen & Baths<br />2. Extra Deep Stainless Steel Sink<br />3. Designer Spray Faucet<br />4. Italian glass tile backsplash<br />5. Under Counter Lighting<br />6. All wood Cabinetry<br />7. Crown Molding and Tall Baseboard<br />8. All new interior doors and trim<br />9. New Front Door with Art Glass<br />10. Tile & Travertine floors<br />11. Engineered Wood Laminate Floors<br />12. Designer tile and faucets at baths<br />13. Chair Rail, , Wainscoating & 3 tone paint<br />14. Designer Light fixtures & ceiling fans<br />Include This,<br />
  5. 5. The Done! Package<br />1. New Front and Back Lawn<br />2. Automatic Sprinklers with timer<br />3. New 30 - 50 year roof<br />4. New Roll-up Garage Door with Openers<br />5. Gutters<br />6. New 2 inch faux wood blinds<br />7. Major Professional Tree Trimming<br />8. Sewer line renovated as necessasry<br />9. All new oil rubbed bronze hardware<br />10. New Energy Star Appliances with Warrantees<br />11. New Windows and HVAC with Warrantees<br />12. Upgraded Carpet with 6 lb pad <br />13. Deciduous Trees placed for Energy Efficiency<br />And This,<br />
  6. 6. The Energy! Package<br />1. New HVAC system, Stainless Steel Heat Exchanger<br />2. Manual J sizing, usually half of previous capacity<br />3. New R-8 short mylar ducts partially buried<br />4. Manual D with tight seal and test<br />5. Extra Return Duct in Master Suite<br />6. New LoE2 windows and Patio Doors<br />7. Low E 140 at west windows<br />8. Deciduous Trees planted selectively<br />9. Shell Sealing of floor & ceiling with test<br />10. Attic Insulation to R-50 <br />11. Occupancy sensors<br />12. Gas Stove and Dryer options<br />13. Ceiling Fans at all sleeping and living rooms<br />14. Panasonic Ventilation with controls<br />So we can <br />Sell all this Everytime<br />
  7. 7. We Buy Ugly Houses (the uglier the better)<br />Ugly Step-Sister to Cinderella <br />The Cinderella Wow! Conversion<br />in our Energy Wise Renovations<br />Allows us to include Serious Energy Retrofits!<br />
  8. 8. Wannabe Remodelers<br />Many of our best buys have been homes where previous owners had ideas and started projects that remain unfinished or code violations. Stuff like this scares many investors.<br />No Problem & <br />Not that Expensive<br />
  9. 9. Oh, Honey, I love it!<br />Let’s buy this one....<br />Well, they have those Energy Stars and the carpet is made out of recycled Pepsi bottles so I guess we might as well...<br />How Green is (sometimes) Sold<br />
  10. 10. 4<br />W<br />Energy-Wise Renovator<br />The Planet<br />Community<br />The Homeowner Wins<br />With Lower Bills and Increased Comfort<br />The Community Wins<br />With New Jobs, <br />More Home Ownership & Increased Property Values<br />The Planet Wins<br />With Less Carbon Emissions<br />The Investor Wins<br />And Gets To Keep <br />A Little Green<br />Home<br />Owner<br />A True Win, Win, Win, Win Strategy!<br />
  11. 11. So, How’s It Going After 8 Months?<br />First 5 properties sold after first open house. Appraisals were OK and we have a waiting list<br />Profitability? I find it better than Contracting!<br />Fun? This ex-contractor is having a blast!<br />Flexibility? Time for important things<br />Good for the Community? Raising Property Tax Base. These houses sell for 20% above the comparables. No Incentives or (new) government programs required.<br />Green Labor Force? These jobs are the advancement and career path up for entry level weatherization workers.<br />Energy Reduction? Estimated 25-50% reduction (with no previous bills to compare and no dependence on future occupant behavior required.)<br /> With 1000 Businesses across the country doing this, we could do some serious good. <br />Wanna learn Energy Wise House Flipping? I’m so sold on this idea, I’ve begun teaching it.<br />Let’s Build <br />An Army!<br />Free Training, Learn<br />Energy-Wise House Flipping<br />Conference Calls Tue 6:00 pm PST<br />Dial in 605.475.4800 Access 795323#<br />On Site Renovation training monthly <br />
  12. 12. Tale of 2 Foreclosures - True (sad) Story<br />Purchase Price<br />Improvements $<br />Occupant<br />Energy Retrofit<br />Carbon Footprint<br />Green Jobs<br />Tax Base<br />Neighborhood<br />Business Plan?<br />$70,000<br />$50,000<br />Proud New HomeOwner<br />Everything<br />Reduced<br />Yes<br />Raised<br />Lifted Up<br />Deposit $ & Repeat<br />$70,000<br />$10,000<br />Renter<br />Zero<br />No Change<br />Zero<br />Lowered<br />Dragged Down<br />Praying for Economy<br />Which would you rather have next door to you?<br />
  13. 13. Construction Sign & Real Estate Sign better than either alone<br />
  14. 14. We buy Ugly Houses<br />
  15. 15. The more vandalism, The better (the price)<br />
  16. 16. Not too smart taggerBurt couldn’t say much in court<br />
  17. 17. We love ugly houses!<br />
  18. 18. Deferred Maintenance<br />18<br />
  19. 19. Most Investors hate all pools, especially green ones = Opportunity<br />
  20. 20. Pool Cleaned Up Nice Patio Cover for Outside Living<br />
  21. 21. Former Front Porch Project<br />
  22. 22. Kitchen in process<br />
  23. 23. More Vandalism and Rookie Remodeling<br />
  24. 24. Wannabe Remodelers<br />Many of our best buys have been the home where the owners giftings have been in other areas besides using tools. <br />But they gave it a go... And really messed things up. <br />Stuff like this scares many investors<br />
  25. 25. Unique Use of Small Space<br />Wow! Features seen only in custom homes help buyers justify the total investment (including the Energy Package.)<br />
  26. 26. Small but Classy<br />Built in Shower Shelves and accent tiles are a signature feature that buyers love.<br />Extra cost is minimal after <br />you know how to do it.<br />
  27. 27. Crown and Base Look for the joints<br />
  28. 28. Same granite and tile accent throughout<br />
  29. 29. Blinds installed is part of the “Done Package”<br />
  30. 30. Almost Finished. Warm light is from colored glass tiles<br />
  31. 31. Green is Sexy and Cool So Lead with Green, but Deliver Energy<br />Purpose for our name GreenEarthEquities<br />Suggest you do similar.<br />Use it in blogging and sites... Rise in Google <br />People dont really understand it.<br />Bullet points are more powerful than stats<br />“Our carpet is made of recycled Pepsi bottles”<br />
  32. 32. Why Be An Energy Wise House Flipper?<br />Make some money<br />Build and Preserve a Lifestyle<br />Save the Planet<br />Bless your Community <br />Feel good at the end of the day<br />All of the above<br />
  33. 33. In the 21st century, Travel Agents and Energy Wise House Flippers can work anywhere on the planet.<br />
  34. 34. The 5 Olympic Rings of Energy Wise Renovation<br />Buy It Right<br />Design It Right<br />Build It Right<br />Market It Right<br />Sell It Right<br />Pass thru all these rings and receive the Gold!<br />
  35. 35. More Choices,Which Realtor?<br />1. Work directly with REO listing agent?<br />2. Use your Buyer’s agent to present the offers to the REO listing agent?<br />Lazy and Busy people prefer #2<br />(Make sure you find a good Buyers Agent)<br />It’s more work, but #1 has advantages too<br />
  36. 36. Nobody Minds If You Beat Up The Bank!<br />No one likes smashing the dreams of retired people and single moms.<br />You dont have to. The bank’s done that already.<br />The Bank is over a barrel. They have to sell<br />If ratios exceed ‘X’, they cease being a bank<br />Dont feel bad if it feels good.<br />
  37. 37. Picking an AreaAnd Specializing<br />You will know the area best.<br />Save fuel, save time, save $ (very green)<br />You will start to build your own comps<br />After #1, All properties will appraise<br />You are improving the community<br />The neighbors will love you.<br />
  38. 38. How to Choose Your Neighborhood<br />Keep it Blue to Stay in the Green<br />Buy at 33 - 60% of the Median Home Price<br />Sell at 80 - 130% of Median Home Price<br />basis = Fresno Median $145,000 (Mar, 09)<br />First Time Buyers in this range are plentiful<br />Facilitate the American Dream<br />
  39. 39. Heat Maps, Digital<br />Trulia, HotPads, <br />LocaleTrends (better detail, more control) still not as detailed as Big Honker Map and Colored Pins, <br />Recommend Ranges 75-100, 100-125, 125-150, 150-175, 175-200, 200-250<br />Asking Prices are easier to get and OK for this purpose<br />
  40. 40. Fresno Zoomed OutThere’s lots of Yellow and Red <br />
  41. 41. Should I Become a Realtor?<br />Probably a good idea, If you are:<br />Detail oriented and like structure<br />You’ll make money both ways, just disclose<br />For non-paperwork people, hire a realtor (most recent deal had 43 pages just to buy) remember 10 to 20 offers per deal....<br />Let a good realtor do what they do best. (DJR previous preference),,, (changing with Rob ---- becoming licensed)<br />
  42. 42. Internet Real Estate Sites (starter set)<br />CyberHomes.Com<br />Maps.Live.Com<br /><br /> , Trulia.Com,<br /><br /><br /><br />
  43. 43.<br />
  44. 44. Formula for Purchase Price<br />ARV = After Repair Value<br />MAO = Maximum Allowable Offer<br />MAO = ARV * .65 - Repairs - Soft Costs<br />Note: This is Maximum. Offer less to leave room to dance.<br />
  45. 45. Ways to Offer<br />MAO formula - 10 or 20%<br />Asking price - 40% (for volume offers)<br />Look at property after dance begins (due diligence)<br />Remember this is just the first step.<br />As much as 100% of the profit comes in the dance of negotiation<br />
  46. 46. Your Digital Signature<br />PDFPen for Mac (DJR uses)<br />PrimoPDF for Windows (you dont need full Adobe Acrobat)<br />transparent signatures and initials<br />Demonstration<br />
  47. 47. Make A Lot of Offers<br />10 to 20 offers to get a sale is average<br />Fewer offers, you may be paying too much.<br />Keep going back and refreshing your offer<br />Patience is a virtue<br />Dont ever “need” a deal<br />Dont get emotionally attached to a deal<br />
  48. 48. You only need one Contingency Clause<br />Inspection clause is all you need.<br />More contingencies weaken the offer.<br />A cash offer with no contingencies, not even inspections, is a strong offer and may be accepted at a low price. (do this only if you or your agent have inspected and you are very confident)<br />
  49. 49. Cash is a Strong Offer<br />Sellers will prefer a cash offer above one contingent on financing, even at a lower sales price<br />Gather your Cash before going shopping.<br />The Cash only needs to be there by close of escrow.<br />
  50. 50. Exit Strategies, Decide before you offer<br />Retail Flip after Renovation. Is FHA the new Sub Prime?<br />Wholesale Flip (Assignment)<br />BRRR Buy, Rehab, Rent, Refinance<br />Buy and Hold (rent)<br />RTO Rent to Own, Lease Option<br />Owner Finance to open a new pool of buyers.<br />
  51. 51. Houses to Stay Away From, or discount Big<br />Busy Street<br />Commercial, Industrial next door<br />Two Bedrooms<br />One Bathroom<br />Unusable floor plan<br />War Zones, <br />
  52. 52. Houses to Stay Away From, or discount Big<br />Very small houses, under 900 sq ft.<br />Master Bedroom should be 12 x 12<br />No garage, No off street is even worse<br />High tension power lines<br />Projects, Train Tracks, Freeway<br />Functionally Obsolete, Bad Floor Plans<br />
  53. 53. Float Like a ButterflySting Like a Bee<br />In and Out Quickly is the Safe Way to flip houses<br />In and Out before the market changes radically<br />120 days from Own It to Sold It. (COE to COE) is a reasonable target.<br />Turn the money. Do another one. 3 times a year. At least 2<br />
  54. 54. Interview a Realtor<br />Most Realtors dont like to offer 10 - 20 times to get a sale<br />Most Realtors dont like REO’s Find one that does.<br />Digitally accomplished. Otherwise you will wear them and you out signing papers.<br />Do you own investment property yourself?<br />How do you feel about making really low offers?<br />
  55. 55. Hamburger helps dogs like eating their pills...<br />You wont sell much green or energy efficiency by itself. Ask me how I know that<br />Public is starting to like the Green idea<br />But not enough to pay what it costs<br />General public has never been willing to pay for energy efficiency without incentives<br />The Wow! Factor & good fundamentals allow us to install Green and get paid for it.<br />
  56. 56. GEE Sales Strategy #1<br />Two Signs, Construction is Unlimited<br />Select group previews the homes<br />Brochure shows the others in process<br />Others sell before completion. If not sold in 30 days we would move to Plan B and ensure a rapid sale. Owner finance or Lease Option - Rent to Own<br />Holding finished property is a bad idea<br />
  57. 57. GEE Sales Strategy #2<br />Provide a unique product<br />They have never seen anything like it.<br />Then there really is no competition<br />Humans mostly buy emotionally<br />We are convinced that we are rational beings<br />So give them some Bullet Point Rationality<br />To Validate the Emotional Decision they’ve already made<br />
  58. 58. GEE Buying Strategy<br />Choose the area<br />Offer, offer... Dont get emotionally involved<br />Do your due diligence inspections<br />Home, Termite, & Sewer are minimum<br />Request the Haircut<br />Be prepared to walk away<br />
  59. 59. GEE Buying Strategy #2<br />Know your costs before you buy (finalize)<br />Know your final selling price<br />Have your exit strategies before buying<br />Use escrow time to get totally ready<br />Flurry of activity on day #1, then keep it up<br />
  60. 60. How to read the ads and the listings<br />Key phrases we are looking for<br />Fixer Upper, Needs a little TLC, <br />Handyman Special, Bank Owned, <br />Corporate owned, Permits unknown, <br />Investor Special, Needs work, <br />Good Bones<br />
  61. 61. Key phrases we aren’t looking for<br />Just Remodeled<br />Picture perfect<br />Beautiful<br />Well kept<br />Recently updated<br />
  62. 62. We are looking for Ugly Houses<br />The ones no one else wants<br />Too much work for them<br />They cant visualize the end result<br />There is less competition<br />More room for profit <br />If you have the right team<br />
  63. 63. How much is this photo worth?<br />
  64. 64. Different Strokes for Different Folks!<br />
  65. 65. Wannabe and Rookie Remodelers create great opportunities for good deals! Ugly, but easy to fix.<br />
  66. 66. Ugly Good Deals #2<br />Unpermitted addition or remodeling<br />Garage conversions<br />Unfinished projects<br />Home Improvement projects by rookies<br />Pools of any kind reduce the # of buyers (liability issues)<br />The Ugly house on the Average Street<br />
  67. 67. Watch Out ForThe War Zones<br />Graffitti<br />Tennis shoes over the wires<br />Lots of Burglar Bars<br />City website will detail crimes per 1000<br />Talk to a cop<br />
  68. 68. Graffitti is easy to fix. But will it come right back? Reason we did not buy this one: No off street parking & we all got tickets at the job walk.<br />
  69. 69. Who’s On Your Team?<br />Realtor<br />Banker<br />Insurance Agent<br />Loan Broker<br />Escrow Officer<br />Inspectors, Termite, Sewer, Home<br />
  70. 70. Who’s On Your Team? #2<br />Subcontractors, HVAC, Electrical, Plumbing, Roofing, Windows, Patio Cover, Flooring, Tile, Granite, Pool, Masonry, Concrete, Locksmith, Dumpster Company, ReStore, <br />General Contractor to coordinate all the subs and get all the rest of the work done (with his labor, not yours)<br />
  71. 71. My Favorite Demographic for Energy Wise Renovation<br />30 to 50 year old homes (tract homes)<br />1000 to 1500 sqare feet 3-4 bedrooms 2 baths <br />4x12 pitch roofs, 8 foot ceilings, single story,<br />usually on a slab, usually stucco.<br />In a desirable area.... people want to live there<br />Not the lowest priced zip code in the area<br />Median home value for this Zip is about median for the whole City (93727 is $145,000, City is $145,000)<br />Includes “anchors” that attract buyers<br /> (jobs, shopping, parks etc)<br />
  72. 72. Reasons This Is A Good Place For This Type Of Investing<br />1. These homes usually have everything worn out:<br />Roofs, AC, Windows, Carpet, Paint, everything can benefit from renovation.<br />2. Newer homes dont need enough.<br />3. Older homes may need too much and become a money pit.<br />4. The tract will all be built the same. Stay in a tract and get economies of scale and knowledge of prices <br />and start controlling your own comps and appraisals.<br />
  73. 73. Reasons This Is A Good Place For This Type Of Investing<br />5. The 8 foot ceiling and slab and stucco make this an easy home to get significant energy savings<br />6. Three Bedroom Two Bath is what sells. It’s what first time home buyers want. 4 is even better<br />7. This type house, all fixed up will have great appeal to first time home buyers.<br />8. There are a lot of first time home buyers and the current administration is determined to get as many as possible into home ownership.<br />
  74. 74. Reasons For 3 Packages<br />1. Big Energy Packages for significant reductions are hard to sell unless combined with more “visible” things that first time buyers are emotionally attracted to. (Granite Counter Tops etc)<br />Thirty Years of Contracting has proven it for me<br />Customers who will buy “everything” are rare.<br />Small number of complete jobs sold by the new Home Performance Industry shows the same conclusion<br />2. Complete Packages set your homes apart. Finding Buyers has not been difficult.<br />
  75. 75. The “Cliff’s Notes” Formula ForThe 3 Package System<br />The Energy Package $20,000 (hard cost)<br />The Wow! Package $20,000 <br />The Done Package $20,000<br />Soft Costs $20,000<br />Profit $20,000<br />Total Buy-Sell Spread $100,000<br />
  76. 76. Some Examples<br />Foam at Windows and Corners. Painted Fireplace<br />Notice effect of long overhang. It has kept sun off western glass.<br />Now the deciduous tree is about to take over for the rest of the day.<br />
  77. 77. Designer Sink and Euro Faucet will set you apart from the homes in the neighborhood.<br />Counter Top is left over granite from the kitchen.<br />Some Examples<br />
  78. 78. Some Examples<br />This has evolved to be our typical kitchen. Granite Counters from 2’ & 3’ blanks, not slabs, Glass tile back splash, Deep Sink, Designer Faucet, Stainless appliances, Real Wood Cabinets (plywood backs, not OSB or particle board, Travertine Floors, Under Counter Lighting, Downlight, Efficient Ceiling Light. One error is visible here. Can you spot it?<br />
  79. 79. Same tile as kitchen backsplash for accent.<br />Inset shampoo alcove<br />These are not expensive but definitely say “Custom”<br />Some Examples<br />
  80. 80. Some Examples<br />Foam Blocks and Window & Door Trim. <br /> Garage Door with windows & Auto Opener <br /> 30 year roof was existing<br />
  81. 81. Some Examples<br />Chair Rail, Crown Molding, Panel Doors & Trim,<br />Oil Rubbed Bronze Hardware is popular now. <br /> Three tone paint, (lighter ceiling, medium high wall,<br /> darker low wall) Ceiling Fan, Outdoor patio.<br />
  82. 82. 82<br />HVAC Package A<br />Remember our Parameters for Houses<br />(Our Target houses are 1,100 to 1,500 square feet approx 45 year old Tract homes with 8 foot ceilings)<br />Tear out everything, Unit,<br /> Ducts, Registers<br />Replace with 2 ton Package <br />Roof Mount Unit<br />13 SEER AC with 80 % efficiency gas furnace, engineered and sealed R-8 flex ducts <br />and low resistance registers<br />
  83. 83. 83<br />Q. Why Always New Ducts?<br />A. Bad ductwork is usually the biggest problem in homes.<br /> Wrong sizing <br /> Wrong Register placement<br /> Poorly Sealed<br /> Poorly insulated<br />Duct Sealing addresses only one of these problems.<br />Putting Make-Up on a Corpse<br />Better to start over and do it right. Because we can.<br />(attic is accessible, unlike on some 2 story homes)<br />
  84. 84. 84<br />What’s the HVAC contractor do? (besides install the system)<br />A. Manual J calculation. Confirms 2 ton will work<br />A. Duct design with Manual D<br />Including Register Selection<br />A. Obtain the Building Permit<br />A. Duct Seal Test with Blaster<br />A. Combustion & CO testing<br />A. Envelope infiltration test with Blower Door<br />
  85. 85. 85<br />Q. Choosing The AC Contractor(cheapest bid is not the right answer)<br />A. More than any other trade, this guy needs to know what he is doing and what <br />you want to do.<br />A. Dont go cheap on this.<br />A. CBPCA training, NCT membership, BPI certification are indicators of competency<br />A. Familiarity with all these items and excitement to work with you because you want to do things right is also good.<br />If they argue about these standards, they are the wrong player for the team.<br />
  86. 86. How About Mini Splits?<br />This is the technology used by the entire rest of the planet<br />besides USA.<br />Why?<br />Americans have bought the idea that they need a lot of forced air blowing into every room.<br />Typically Mini Splits have had only one or a few indoor units.<br />New Developments allow small short duct systems to aid in distribution to satisfy Americans.<br />
  87. 87. How About Mini Splits?<br />Benefits of Mini Splits<br />1. High efficiency up to 21 SEER and more. Due to Inverter = DC technology. This variable speed motor is used on both the compressor and the fan. <br />American manufacturers have only figured out how to use ECM motors on the fan. Rumor has it that ECM motors on compressors will be the next big thing from US manufacturers. Dont expect it to be cheap.<br />
  88. 88. How About Mini Splits?<br />2. No duct loss. <br />Because there are no ducts.<br />3. Original Cost is less<br />4. Electric Heat Pump heating eliminates combustion altogether.<br />One recent Price comparison for complete new installation<br />13 SEER Package on roof $6500<br />High Efficiency Split System $8000<br />MiniSplit with minimal ducts $5500<br />
  89. 89. The Concealed Unit = Key in US<br />Here is a Concealed Unit, being installed in a hallway.<br />The small ducts feed the bedrooms and bathrooms<br />A lowered ceiling will be installed when the ductwork is complete.<br />All the ductwork is within the building envelope and covered by R-55 insulation = No duct loss!<br />Stay Tuned For Updates!<br />
  90. 90. 90<br />Q. Why don’t people know what the V stands for?<br />A. Because our houses have been so crummy and loose that they got plenty of ventilation just from the leaks.<br />A. Now that we are tightening up our houses, mechanical ventilation is essential.<br />A. Build as tight as possible, <br />then ventilate as necessary<br />V...<br />
  91. 91. 91<br />Oh, Honey, I love it!<br />Let’s buy this one....<br />You need to know all this HVAC stuff but remember, This is how your home really get’s sold (usually)<br />Well, they have those Energy Stars and the carpet is made out of recycled Pepsi bottles so I guess we might as well...<br />
  92. 92. 92<br />Dont Let Things Get:Out Of Order!(On Your Energy-Wise Renovation)<br />
  93. 93. Insulation and Shell Sealing go together!<br />Lack of Shell Sealing is one of the reasons <br />That the insulation rebate programs of the <br />70’s and 80’s were regarded as a failure<br />And cancelled by some utility companies.<br />They each stop a different kind of heat loss.<br />Insulation stops heat loss by conduction<br />Shell Sealing stops heated or cooled air from leaving thru the cracks in the air barrier.<br />
  94. 94. How to Shell Seal?<br />A. Remove the Attic Insulation at the wall plates. <br />Seal with spray foam or caulk:<br /> Holes left by electricians-plumbers<br /> Ceiling light fixture boxes<br /> Drywall joints<br /> All changes in elevation such as<br />lowered hallways, <br /> voids, chimneys, and knee walls.<br />A. If the home has a raised wood floor, <br />seal the same things under the floor.<br />A. Dont miss the under-floor biggie: <br />big holes cut in the floor to accommodate <br />tubs and shower drains. Cover with <br />Duct Board and seal in place.<br />
  95. 95. HairCut Request<br />Photos can be sent along with the HairCut Request<br />Which of the next 4 photos do you think I should send along? How much do you think I will get?<br />3405 N Miami<br />New Project in <br />Due Diligence<br />Front Entry Porch Illegal Addition Adds to the Ugly Factor. Will fit nicely in 40 yd dumpster on Day#1<br />
  96. 96. Most Bathrooms of Foreclosed Homes Look Similar To This.<br />
  97. 97. Guess What’s On The Other Side Of This Wall?<br />Is This Stachyobotrys?<br />See the CDC site<br /><br />For Remediation <br />with Bleach<br />
  98. 98. Not A Good Idea To Walk On This Roof<br />Are the Truss Chords Damaged? Or only the plywood? Big (huge) cost difference to repair. <br />
  99. 99. Price per Square Foot<br />This is regarded by some as the most important indicator of value.<br />Note GEE properties on Bernadine value is exceeding the neighborhood including even the 20 year newer neighborhood. <br />1<br />2<br />
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  109. 109. No Extra Charge For The Dead Mouse!<br />
  110. 110. 110<br />My BestOpen House Ever<br />Disclaimer:<br />I haven’t done a LOT of <br />Open Houses. <br />The methods outlined on this site generally lead to the house being sold before it is finished. <br />The “Magic Brochure” is key to these results.<br />
  111. 111. 111<br />This is from the most recent Open House from day before yesterday. <br />A more typical <br />Open House <br />No Bankers, Insurance Agents etc to impress...<br />But the same <br />type of Brochure<br />
  112. 112. 112<br />Typical Sunday Afternoon Open House... Except<br />Massive Signage<br />& 2 Realtors<br />1 knocked doors<br />10 up and 10 down both sides.<br />Results:<br />20 parties came thru<br />Much Interest<br />Realtor met 1 couple after at another address<br />
  113. 113. 113<br />NO FOOD on an open house like this.<br />This sheet sends a good psychological message to the <br />1. Buyer<br />2. Other Agents<br />3. Appraiser<br />(most important to leave a supply of these brochures on the counter)<br />
  114. 114. 114<br />Similar Format<br />Simple to just add the subsequent houses and the next ones available<br />We are actually operating similar to a tract builder doing Pre-Sales out of his model homes. We just sell each model as we go.<br />
  115. 115. 115<br />Be There!<br />It is good for you to be there <br />at the open house.<br />1. Your passion about your project can come thru to the buyers<br />2. Your Realtor will pick up little details from you, especially about the Energy Package.<br />3. It will be good for you to hear the feedback from real buyers.<br />
  116. 116. 116<br />Q. Where do I find the Money?<br />A. Banks. Small, Local Banks<br />with only a few branches. My bank has<br /> only one branch. These banks pride <br />themselves on local involvement <br />and “relationship banking” <br />The president came to our <br />first open house. <br />These banks may offer a Line of Credit <br />or may finance your project on a <br />case by case basis.<br />L.O.C. Rates are around 6%. 1-2 points <br />They will want to collateralize something, <br />house, savings, other property etc.<br />This is how I have done all projects so far.<br />
  117. 117. 117<br />A2. Banks. Big Banks. Wells Fargo offers a “Renovation Loan” that is designed for our type of work. They loan 80% of ARV for non owner occupied. (90% for owner occupied) This loan is offered at their mortgage offices, not in the regular branches. It is at favorable rates but has some fees, appraisal, inspections etc. This loan takes 30 to 45 days to process so offer accordingly.<br />The required cost breakdowns for appraisal and inspections are good exercises for beginners. <br />They will help keep you safe.<br />This loan is unique in that it is both “construction” and “take-out” in one package. Great if you have a<br /> project you want to live in. <br />
  118. 118. 118<br />A3. Hard Money Loans<br />“Hard Money” isn’t as hard as it sounds. <br />It may be the perfect solution for getting started, <br />when collateral is not available.<br />True Hard Money, doesn’t care about your credit or savings. The loan is made totally on the merit of the property. (They will take the property if you dont pay)<br />So less paperwork and inspections are required.<br />BrookView Financial caters to renovators <br />4-5 points, 15% interest.<br />Getting qualified is a good exercise.<br />(You want to graduate off of this type of funding ASAP)<br />(The prequalification letter is valuable for offering)<br />
  119. 119. 119<br />A.4 Private Money, Investor, <br />(for a portion of profits)<br />There are thousands of people who have funds that are earning 2 to 4 %. Or less.<br />50 - 50 split is typical but not mandatory<br />Grant deed can be with you or your investor.<br />Do the math. This scenario may be the worst choice for you and the best for your money partner.<br />This may be the easiest investor to find<br />Because it is easiest to explain and understand.<br />Note: If you overspend and the profit is zero<br />The profit split is zero.<br />
  120. 120. 120<br />A.5 Private Money Investor<br />(for interest only)<br />9% to 12% interest only is typical<br />Some lenders will want points<br />Investor security can be secured by placing the property in the name of the investor by grant deed.<br />Multiple investors of this type should be cultivated.<br />With multiple investors, you will shop without pressure<br />They keep their money ready<br />You find the deal<br />They wire funds to the escrow company.<br />You renovate and sell the project<br />They are paid their interest.<br />You keep the rest.<br />(If there is no “rest” they still get their percentage.)<br />(This is what I will do if I run out of bank money at 6%)<br />
  121. 121. 121<br />A6. Credit Cards.<br /> Commercial cards usually go up to $50,000. You can get several. <br />It’s a good idea to have these in the background in case other sources dry up or dont come thru.<br />Google “Commercial Credit Cards” <br />Or see<br />Look for introductory rates and <br />check writing capabilities.<br />
  122. 122. 122<br />A7. Many people have money in <br />IRA and 401k accounts<br /> that are earning 0% or less. This money is not normally available for investment in Real Estate.<br />But<br />If certain custodians are selected, <br />for “Self Directed IRA’s” <br />the money can be invested in real estate. <br />(Subject of another class)<br />Google it. And get professional advice.<br />
  123. 123. 123<br />A8. HELOC <br /> Home Equity Line of Credit.<br />You only pay for the interest you use.<br />Check around. The rates and terms vary greatly<br />Currently, Credit Unions seem to be the best source.<br />Golden One may be a good source.<br />
  124. 124. 124<br />Q. Do I need the money or the deal first?<br />A. This is a classic chicken and egg question. You need them both. Work on securing both. Whichever shows up first will speed the other’s arrival.<br />If you find the right deal <br />before your funding is totally secured:<br />1. It will heat up the search for money.<br />2. A real deal will be of more interest to the people you have been talking to than all the hypotheticals you have been talking to them about!<br />(= It Doesn’t Matter)<br />
  125. 125. 125<br />Q. Can I lose my earnest money doing this?<br />A. Yes. This is for big boys and girls. <br />Be responsible.<br />Remember to put your “get out clauses” in place <br />And be careful of your time lines.<br />Standard inspection time in California is 17 days.<br />“Approval of my partner” adds additional option <br />if you feel you need it. <br /> I have only used the inspection clause.<br />(Banks will play hardball and keep your earnest money if you go past your inspection period and then cancel)<br />
  126. 126. 126<br />A2. More protection. Use a photocopy of the check as long as you can.<br />Negotiate the time before it becomes “live”<br />To be as long as you possible.<br />A3. “upon final acceptance” can mean when all contingencies are removed. Including even <br />contingency upon financing.<br />If you negotiate it that way. <br />Everything is negotiable.<br />You have not if you ask not.<br />
  127. 127. The Energy Wise Investor’sOptions<br />1. Do all the work yourself<br />2. Do none of the work yourself<br />3. Somewhere in the middle. <br />(Do some work if you are qualified, <br />and want to.)<br />My choice has been to do no work with tools, even though I would enjoy it.<br />
  128. 128. 128<br />Questions That<br />Need Answers!<br />I have no clue about Pascals: How much do I need to know?<br />Don’t I need a<br /> lot of cash ?<br />Do I need to be a Contractor ?<br />I dont think it will work in my area.<br />Do I need to become a Realtor?<br />How about my “Bruised” Credit?<br />Is it Too Late?<br />Design: What’s That? I think green and blue go good together<br />I’ve never worked in Construction. What about me?<br />Creative Financing? Cant you go to jail for that?<br />
  129. 129. 129<br />7 Skills Of The Energy-Wise House Flipping Investor<br />1. Home Performance, Energy Basics:<br />2. Real Estate Basics<br />3. Financing Basics<br />4. Construction Basics<br />5. Design & Decorating Basics<br />6. Working with Contractors<br />7. Building & Working With a Team<br />
  130. 130. 130<br />Q. How Much Expertise Is Required In These Areas?<br />A. Full Journeyman or Practitioner Expertise is not needed in any of the 7 Skills.<br />If you have advanced skills in any of the areas, that’s an extra bonus for you.<br /> (unless you focus too intently on your specialty and neglect your main job which is:<br />Facilitator and <br />Team Leader<br />
  131. 131. 131<br />Remember your other #1 job <br />Finding the Next Deal!<br />You’ll never retire from just one deal nor will you build a solid team which is giving you “wholesale pricing” and top performance unless you keep them consistently busy.<br />
  132. 132. 132<br />Q. Is there anything more important than these 7 Skills?<br />A. Yes. There are several “Mind Sets” or “Paradigms” that are essential. There are also a set of learnable Habits that can be mastered. Failure to embrace these Mindsets, Paradigms and Habits will result in failure of the enterprise, or most probably a Failure to Launch and the enterprise will never get started.<br />132<br />
  133. 133. 133<br />MindSet #1I Can Do It. Of Course I Can Do It!<br />This is a belief that started a long time ago and colors the way you look at life. Its corollaries are:<br />I can do anything I put my mind to.<br />I’ll do whatever it takes.<br />I’ll get up early and stay up late. I dont care. After I decide to go for it, I will not be denied. I may work for weeks or months without pay or evidence of success but it will all be worth it.<br />133<br />
  134. 134. 134<br />MindSet #2Profits vs Paychecks<br />This is a hard one for some people who have worked for a regular paycheck for a long time.<br />I remember a friend who had gotten his Contractor’s License and then I helped him get a Contract to do some work. He got into it a ways and the customer wanted something re-done. My friend said, “I cant do that, I wouldn’t be making any money.”<br /> He had “gotten the gear” of a business person, but not the mindset of profits rather than paychecks. Sadly he is still an unhappy, unemployed employee, thinking about doing this business.<br />
  135. 135. The Market Has Changed!(End of 2009)<br />1. There is a Feeding Frenzy<br />Especially on REOs<br />2. Banks are now receiving full price offers and above full price<br />3. Multiple Offers on all REO sales<br />This is Way Different than it was 3 months ago....<br />
  136. 136. Questions We Must Ask<br />1. Is this just local?<br />2. Is this a blip on a continuing slide or the beginning of the <br />big ride back up?<br />3. Is it “Too Late” to find good deals?<br />4. Have the formulas changed?<br />5. What other strategies should be considered with this new market?<br />
  137. 137. Remember:Principles Dont Change!<br />1. Principles are Universal<br /> like Gravity<br />2. Beware of anyone who has dicovered a “New Principle” (and is selling CD’s and Seminars about it)<br />3. Strategies Change<br />Principles Remain Constant.<br />4. Let’s sort thru our teaching,<br />Separate the Principles from the Strategies and....<br />
  138. 138. Sell Price - Buy Price = $100K(simple is always best)<br />Breakdown of Dave’s Simple Formula<br />Wow Package = $20,000<br />Energy Package = $20,000<br />Done Package = $20,000<br />=> Gross Margin = $40,000<br />Costs = (Utilities, Insurance, Interest, Commission, Marketing, Closing Costs and Oops! Factor) <br />= $20,000<br />Target Net = $20,000<br />
  139. 139. Sell Price - Buy Price = $100K<br />Q. With the changing market, can we still find deals like this? with $100k spread so we can get in and out and earn our profit?<br />A. Yes, Just last week I got an offer accepted in my target neighborhood for the lowest price I’ve ever paid.<br />If the project doesn’t have close to this spread after final negotiations, it is best to just pass on it.<br />
  140. 140. 27 Principles That Haven’t Changed<br />1. Find an area and stay in it. Improving the neighborhood as you go. <br />Creating your own comps<br />Assisting Appraisers to justify their appraisals.<br />2. In and Out Quickly<br />3. Minimize hourly labor to control your costs.<br />4. Know your exit before you enter.<br />
  141. 141. Principles That Haven’t Changed<br />5. Pre Sold is Good<br />6. Staging works if you need it.<br />7. The Wow! Sells the house.<br />Energy Geeks get used to it.<br />8. Stay in the Blue to <br />collect the Green.<br />(Blue Collar Neighborhoods that appeal to first time buyers work well for our strategy)<br />9. Stay out of War Zones<br />
  142. 142. Oh,Honey, <br /> I love it! Let’s <br />buy this one!<br />Well, OK. It’s got those Energy Stars and Everything I’ve ever heard of…. <br />One Way To Sell Green!<br />
  143. 143. Principles That Haven’t Changed<br />10. A good realtor is essential on the front end. Among other things they will provide accurate CMA reports so you can know what your sell price is before you begin.<br />If your realtor doesn’t want to run CMA reports per your requests, they are not the right realtor for you.<br />11. This work is simple <br />(But not Easy)<br />
  144. 144. Principles That Haven’t Changed<br />12. We are looking for Ugly Houses<br />The Uglier the Better<br />Even more so now with the current feeding frenzy among investors.<br />13. Dont go cheap on the Wow! or assume that buyers can visualize what you are visualizing.<br />14. Use your first project as a show room to sell your second one.<br />15. The System Is The Solution<br />eliminate surprises.<br />
  145. 145. Principles That Haven’t Changed<br />16. 5 Olympic Rings<br />Buy, Design, Build, Market, Sell it Right. Do all 5 and you win the gold.<br />A miss step at any point can<br /> rob you of your gold.<br />17. You really can sell your projects without a realtor’s services. (Last week’s interview with Ron Roberts)<br />( and pocket most of the savings)<br />18. Have multiple exit strategies. <br />You may need them.<br />
  146. 146. Principles That Haven’t Changed<br />19. Dont quit your day job. <br />This is a perfect opportunity to do on the side.<br />A good routine is to stop by on your way to or from work, or both, and communicate with your contractors by email and cell phone with an occaisional face to face visit.<br />20. Original Buying Formula Still Holds.<br />Max Price = ARV * .70 - Repairs<br />(After Repaired Value)<br />It wont work in every neighborhood<br />find one that it will work in.<br />
  147. 147. Principles That Haven’t Changed<br />21. After you get a project in escrow, dont forget your “due diligence” (Inspections and further negotiations = The HairCut)<br />22. Dont waste time signing offers<br />Get digital.<br />23. Plan on offering a lot. Babe Ruth struck out more than anyone.<br />24. Dont get emotionally involved in a project during negotiation. Keep it a math problem<br />
  148. 148. Principles That Haven’t Changed<br />25. Cash is King. And Quick is a close second. Dont load up your offers with lots of contingencies and “get out” clauses. You only need one.<br />26. Eliminate your competition by producing a unique product. This includes the Wow!, Done & Energy Packages. There really is nothing like it in our market. So the houses sell quickly.<br />27. Build the Plane in Flight!<br />A moving car is easier to steer.<br />Get Started.<br />
  149. 149. Maybe The Market Hasn’t Changed That Much.... And Isn’t Going To Anytime Soon. <br />Check Out The Next Slide. <br />The Bottom Line Is In Yellow.<br />Does This Mean That Energy Wise House Flipping <br />Will Continue To Be A Viable Business <br />For The Foreseeable Future?<br />Is It A Business For You?<br />
  150. 150. Sept 24, 2009<br />The Foreclosure Pain May Drag on for Years By James R. Hagerty<br />Delays in dealing with home foreclosures are stretching out the pain for the U.S.  housing market, as we reported in Wednesday’s Journal. That has stirred lots of debate over whether it is better for the nation to face the pain of millions of foreclosures immediately –  to get it over with fast — or to draw the process out over several years in hopes that the economy and housing demand will recover.<br />It looks like we’re taking the latter course, for better or worse.<br />The foreclosure process takes about twice as long as it used to for a variety of reasons, including efforts to modify loans to keep borrowers in homes, staffing shortages at loan servicers, bankruptcy filings and a “strategic rationale” by lenders hoping that home prices will recover, .......<br />While efforts to modify loans will help some borrowers, she says, they mostly will amount to “kicking the can down the road.”..............<br />Henry Fishkind, an Orlando-based housing economist, says some banks tell him they “are holding back [foreclosed-home] inventory” to avoid depressing prices any more than necessary. “It’s in their interest” to avoid flooding the market, and regulators haven’t forced them to do so, he says. That suggests that the backlog of homes headed for foreclosure will be stretched out over several years. That will be less disruptive to the housing market, Dr. Fishkind says but may mean that it takes longer for financial institutions to shed dud assets and regain the health required to extend new credit.<br />In some of the former bubble markets, including Florida, (& California, adds DJR) the problem will be aggravated by looming defaults on option adjustable-rate mortgages ............<br />Is This Glass Half Full or Half Empty?<br />Is This Good News or Bad News?<br />
  151. 151. Energy Wise Renovation of Foreclosed Homes Is In The Confluence of:Real Estate - Building Performance - Remodeling<br />3 Disciplines<br />Remodeling<br />&<br />1<br />Sweet Spot<br />Green &<br />Building <br />Performance<br />Real<br />Estate<br />
  152. 152. NOTICE:The Sweet Spot Is Outside Of The Mainstream ofRemodeling, Real Estate, & Building Performance<br />Sweet <br />Spot<br />Remodeling<br />Green &<br />Building <br />Performance<br />Real<br />Estate<br />
  153. 153. Each Of These DisciplinesHave Essential Information BUT:<br />Sweet <br />Spot<br />Remodeling<br />Green &<br />Building <br />Performance<br />Real<br />Estate<br />Energy-Wise Renovating <br />House Flipping Investors<br />Must Find the <br />SWEET SPOT<br />In Each Discipline<br />And DISREGARD the<br />Inappropriate<br /> “Common Wisdom”<br /> of Each!<br />
  154. 154. Sweet <br />Spot<br />Remodeling<br />Green &<br />Building <br />Performance<br />Real<br />Estate<br />Summary<br />In Sum, because you are an Investor, not a Contractor<br />& Because you are blending <br />3 disciplines, not just one,<br />You are free of many constraints, and can do the right thing because you know it is the right thing to do.<br />But as you exercise your freedom, Just know, you may be branded a HERETIC by your mainstream friends.<br />
  155. 155. Sweet <br />Spot<br />Remodeling<br />Green &<br />Building <br />Performance<br />Real<br />Estate<br />Summary<br />It’s OK<br />They dont burn us <br />at the stake anymore.<br />
  156. 156. Deliver More For Less?<br />Delivering More For Less:<br />It sounds like a violation of the Second Law of Thermodynamics<br />Or a Crazy Sales Pitch<br />Actually It’s neither<br />It’s just about all the things you Dont Have To Do when you work on Foreclosed Homes <br />(That are Empty and You Own)<br />See The Comparison on the next slide. Compare the percentages to your current business model<br />
  157. 157. Cost & Benefit Analysis<br />Conventioal Contracting To Residential Customer<br />Why would you want <br />to do this?<br />Energy-Wise Renovation of Foreclosure by Investor<br />When You Could <br />Do This?<br />
  158. 158. What’s Missing?<br />These Parts of “NORMAL” Contracting are missing from <br />Energy Wise House Flipping<br />Big Overhead including:<br />Marketing, up to 25%<br />Sales Commissions 10%+<br />Working in customer’s homes<br />Working with “Programs”<br />Computer Modeling or Ratings*<br />Partial Home Performance Projects*<br />Problem Homeowner Headaches*<br />Lawsuits*<br />Labor Board Complaints*<br />*How Can This Be? >>><br />
  159. 159. * The Rest Of The Story<br /> No Programs, Incentives, Rebates or Tax Credits Required.<br />Computer Modeling & Ratings <br />are unnecessary - get in the way.<br />No Partial Jobs. All Projects are as complete as I want them to be.<br />No Problem Homeowners because the homes are always empty.<br />No legal problems because no <br /> “new home” promises are made<br />No Labor problems because there<br /> is no “labor” in this method. (Labor works for the Subcontractor)<br />
  160. 160. Some Choose To Be Different<br />If you choose to become an Energy Wise Renovating, House Flipping Investor who works on your own properties and does the right thing because its the right thing to do......<br />You will be one of a very small Army.<br />(the regular House Flipping <br />Army is much larger)<br />These concepts have not been tried and found lacking. They have <br />mainly just not been tried<br />I have tried them and <br />they have proven to be <br />Ideas Who’s Time Has Come<br />
  161. 161. For Years There’s Been One Way:Maybe It’s Time For a New Way?Think about it.<br />
  162. 162. All The Testing & Certification You Need.... And None That You Dont<br />Disclaimer:<br />The Ideas presented here are for a noble experiment:<br />“Delivering Excellent Home Performance Projects using only our own properties, purchased right and renovated with the concepts developed on this site and implemented purely<br /> in the American<br /> Free Enterprise System.<br />They may not be appropriate for “Home Performance Contracting” as <br />normally practiced<br />
  163. 163. Contractor, Rater, or Energy-Wise Investor?<br />The “Rules” and Best Practices for these disciplines are different.<br />An assumption that is true in one discipline can be false or irrelevant in another area.<br />Most of the assumptions that you’ve heard are designed for contractors and their symbiotic cousins, the raters,contracting with homeowners in incentive driven programs.<br />(and they are mostly true <br />in that context)<br />
  164. 164. Quick Review Of G.E.E. Principles<br />1. Work only on our own properties, <br />2. Select an area and stay in it.<br />3. Sell to first time home buyers<br />4. Complete 3 package system:<br /> Energy, Wow! & Done<br />5. Sub-Contract Everything<br />6. Systemize Everything<br />7. Negotiate Hard @purchase<br />8. Control the Comps, see#2<br />9. Influence the appraisal, see #2<br />10. Demand Wholesale Pricing<br />11. In & Out Quickly<br />12. Do everything short of Renewables, almost everytime.<br />13. $100K spread 20-20-20-20-20<br />
  165. 165. Energy Guarantees<br />Because of Base Load and Lifestyle issues that we dont control, these can turn a happy customer into an unhappy customer. We choose to stay away<br />Instead we offer to<br /> pay 1/2 of the Utility Bills for 2 years.<br />This is enough to leave all the competition behind and there is nothing to argue about. They turn in the bills. I write a check. It’s a good way to stay involved<br /> with my customer. <br />And collect referrals etc. <br />
  166. 166. Multiple Streams Of Income<br />I am not suggesting that people torch their day job and burn their bridges to start a new life ONLY working on their own projects.<br />(I still have the residue of a <br />day job or two)<br />But dont miss the beauty of Multiple Streams of Income.<br />When one dries up, another will keep you supplied.<br />
  167. 167. Can I Hybridize These Concepts?<br />Absolutely...It’s America.<br />The beauty of working with no incentive programs (and the costs and constraints that come with them) is that you can add any of these things back in to your formula when you decide that it will benefit you. <br />Be cautious, however. Give away enough of your freedom or compromise on “Do Everything Everytime” and what you will have will be a totally different business.<br />You will no longer be doing the right thing because it’s the right thing to do<br />
  168. 168. What Could Go Wrong?<br />Along with the money of programs, comes the control and <br />additional overhead.<br />The biggest blessing I’ve found in EnergyWise Renovation as an Investor is the Freedom to Do Good & Complete Home Performance.<br />If you modify too far from the concepts presented here, you may find yourself no longer doing the right thing because it’s the right thing to do. Instead you’ll be doing it to fit into some program or just to keep the overhead paid.<br />I dont wish that for you, <br />my friend.<br />
  169. 169. Fixing Problems<br />Being Creative<br />Outside The Box<br />= Fun<br />3405 E Fedora<br />Worn Out T-111 Plywood Siding ($51,500)<br />3 Ton Condenser On Roof<br />
  170. 170. We’ll see how foam blocks forced into the cavity between the batt and the plate work...<br />You probably have never seen this tried. I hadn’t either.<br />One of the benefits of working with foreclosed homes is that you can try things. (like this whole job with the Ducted Mini Split) I’ll let you know the CFMs <br />of infiltration at the Test Out at the end.<br />
  171. 171. Solution to the worn out plywood.<br />Additional 1 inch of foam plus stucco<br />
  172. 172. Weeps must be left free to weep and flashing must slope down and away.<br />
  173. 173. Stucco being<br />Applied over<br />1 inch foam<br />Sheeting.<br />
  174. 174. Checking The Charge<br />Note 3 and 4 ton units on neighbor’s homes.<br />
  175. 175. Close Up Of Motor, Blower & Electronics<br />
  176. 176. Remember you have to provide a condensate<br />Drain to the outside. (or pump, which we dont like because they have a tendency to fail sooner or later)<br />
  177. 177. Proud Papa in the Inventor’s Workshop<br />
  178. 178. Rogelio Covarrubias <br />Job Superintendent, checking out the SEER Rating or the Fujitsu heat pump.<br />
  179. 179. Smooth “Hard Pipe” and gentle square to round transitions minimize friction loss and deliver maximum air to the rooms.<br />This was our main concern but these short, smooth ducts were our solution.<br />
  180. 180. 2 Ways To Double The Cost Of Your Project!<br />
  181. 181. But Wait! Why Would I Want To Do Something Like That?<br />Maybe to stimulate the economy?<br />Maybe because you hadn’t <br />run the numbers?<br />Maybe because <br />“we’ve always <br />done it that way”<br />Whatever the reason<br />Thousands of jobs cost double what they could be produced for if they were approached differently<br />Curious?<br />That’s the Heroin, <br />Right There<br />
  182. 182. #1. Participate In A Federal or Utility Funded Program<br />Recently I asked two contractors who participate in Federally Funded Renovation Programs,<br />What are your costs if you did the same job inside and then outside of the program?<br />One said, $70,000 in the program<br />$30,000 without the program<br />The other said $40,000 with it<br />& $20,000 without the program<br />Not a big study, but these are real contractors!<br />
  183. 183. #2 Contract With A Customer <br />90% of Construction Work is done by contracting with customers.<br /> The Model generally includes:<br />1. 15-25% Marketing Costs<br />2. 10% Sales Commission<br />3. 10% Extra Work Around Customer, (masking, booties etc)<br />4. 10% Extra Paperwork and Administration to deal with Customer and programs, rebates, warrantees etc. <br />IE 50% of the $ spent is not getting work done but just getting ready and supporting getting the work done.<br />Work Goes A Little Slower Working In Mrs Jones’s House<br />
  184. 184. Those Aren’t The Only Solutions<br />The Concept of <br />Multiple Streams of Income<br />Has become popular and essential in recent years because of the the instability of things we formerly believed to be stable.<br />Contractors can have multiple streams too....<br />
  185. 185. OK, I’m Convinced. So How Do I Get Started?<br />Top 10 Action Points<br />1. Knowledge Is Power<br />Educate Yourself.<br />Bibliography:<br />a. Flip by Davis & Volani<br />b. Real Estate & Investing Seminars & Books.<br />(very expensive ones are available cheap on eBay)<br />
  186. 186. Getting Started #2<br />2. Home Performance Classes @ Utilities<br />3.<br />(over 1000 pages of content on the blend of Real Estate, Remodeling & Home Performance) (free)<br />4. Subscribe to Home Energy Magazine, CPBCA & Build It Green Newsletters etc.<br />Click Here &<br />Read The <br />BlogPosts<br />
  187. 187. Getting Started #3<br />5. Learn the Internet Tools, Google Earth, Bing, Cyberhomes, Localetrends, ForeclosureRadar, etc see next week’s slides for a more complete list.<br />6. Start Building Your Team<br />a. Find The Right Realtor. (this may take several attempts. See Planetsavers University for tips on interviewing & other team members)<br />
  188. 188. Getting Started #4<br />7. Sign up with your Realtor to receive automatic filtered listings in your email. (some MLS systems call it a “portal”)<br />8. Learn To Use The Comparative Market Analysis (CMA)<br />9. Pick your neighborhoods and become an expert on real estate there. Track listing and sales prices. <br />Visit Open Houses<br />
  189. 189. Getting Started #5<br />10. Begin lining up you finances so you will be ready to make a Cash offer. This may mean a Small Local Bank line of credit (my choice) or a Private Investor or a Hard Money Lender. Wells Fargo Mortgage (not bank) has a “Renovation Loan that may be worth considering. <br />
  190. 190. “Paper Trade” Before Using Live Ammunition<br />Did you notice that most of the Top 10 Getting Started List was free or only a few dollars for a book or subscription?<br />You can go a long ways toward ensuring your successBEFORE you buy your first house<br />Education is costly, <br />But Ignorance is even<br /> more costly<br />
  191. 191. The Four Pillars, Like The Legs Of The Eiffel Tower, All Are Necessary<br />1. Envelope<br />2. Comfort System<br />3. Health & Safety<br />4. Water<br />
  192. 192. #1. Build A Tight, Well Insulated Envelope & Prove It.<br />1. All Six Sides<br />2. Especially The Joints<br />3. Includes Windows & Doors<br />4. Minimize Thermal <br />Bridges & Bypasses<br />Proof is Blower Door<br />& Infra-Red Camera<br />Final Proof is Utility Bill<br />
  193. 193. #2. Build An Efficient Comfort System & Prove It.<br />1. Properly Designed Ducts Tight & Well Insulated<br />2. Properly selected & installed & tuned equipment.<br />Proof is Manual J, Manual D, Duct Blaster, Delivered BTU’s<br />& even room temperatures<br />= comfort & efficiency<br />Final Proof is Utility Bill<br />
  194. 194. #3. Ensure Health And Safety& Prove It<br />1. CO testing (minimum)<br />2. Filtration (more than Rock Stopper Standard Filters)<br />3 Ventilate On Purpose<br />Build It Tight - Vent It Right<br />Proof Is CO & other IAQ tests<br />& existence of Mechanical <br />Ventilation System<br />Final Proof is Health & Safety<br />(less illness etc)<br />
  195. 195. #4 Heat & Use Water Efficiently& Prove It<br />1. Heat Water Efficiently<br />2. Minimize Waste of Water<br />Inside, (Showers, Dish & Clothes Washing etc)<br />Outside, (Landscaping)<br />Proof is Utility Bills & Water Bill<br />(Water Is The Next Crisis)<br />Energy Wise Investors Can Be Way Ahead Of Contractors<br />Who seem to have to wait for Government Programs.<br />Just Decide & Start Doing It!<br />
  196. 196. Q. How Much BS (building science) Do I Need To Be Successful?<br />A. There is a ton of Science and a Lifetime of Learning behind each of these 4 Basics of Home Performance.<br />The Good News For Energy Wise House Flipping Investors--<br />You Must Only Understand These Basics and How They Interact.<br />There are scientists, technicians and subcontractors for the details.<br />
  197. 197. Q. What If I Dont Get It Perfect?<br />A1. Dont Worry About It. <br />Nobody Gets It Perfect!<br />A2. Perfection is a Moving Target<br />A3. Anything you do will <br />be an improvement<br />But on the other hand....<br />
  198. 198. Dont Worry........Too Much.<br />Let’s assume there are 33 items per package that would all be done perfectly to get a 100% A+<br />If that were true you could still <br />miss 10 and get an A-<br />But some items are <br />CATASTROPHIC<br />Lets focus on 3.....<br />
  199. 199. Dont Cut These Corners<br />1. HVAC Sizing, Design & Tuning<br />2. HVAC Ductwork Sizing, Design, Sealing & Insulation<br />3. Sealing before insulation<br />Also #3 can be tested by your HVAC Contractor if it is done by Insulation Contractor<br />= HVAC = Not the place to skimp.<br />Does NOT mean spend big on <br />High SEER Equipment!<br /> (.....Discussion)<br />
  200. 200. The New Package That We Must Add In 2010<br />Water!<br />It’s the “Next Oil” or <br />The “Next Crisis In General”<br />Is the “Desert Look” the only way to save water?<br />Do you think your buyers would buy the project in the next slide?<br />
  201. 201.<br />
  202. 202. Another Part Of The Water Package<br />Water!<br />This Toilet is advertised to save 23,000 gallons per year!<br />
  203. 203. All 3 Work Together<br />3 Package Strategy:<br />ENERGY<br />WOW!<br />DONE<br />Let’s Review The 3 Packages<br />(See PlanetSavers U on site)<br />
  204. 204. Like Feeding A Pill To A Dog<br />Everything Green and Energy Efficient<br />is the Pill.<br />The Granite Counters and Travertine is the <br />Dog Food. ... Dont try it without the Dog Food!<br />
  205. 205. The “Done!” Package<br />3 Package Strategy:<br />ENERGY<br />WOW!<br />DONE<br />Remember<br />They All Work Together!<br />
  206. 206. 1. New Grass, <br />front and back<br />(Buffalo Grass &<br />Drip Irrigation for<br />Low Water Usage)<br />2. New Sprinklers<br /> front and back<br />3. Automatic<br />Sprinkler Clock<br />
  207. 207. 4 New Roll Up <br />Garage Door <br />with windows<br />5. New Garage <br />Door Opener<br /> with controls.<br />.<br />
  208. 208. 6. New Electrical Switches, Plugs & Covers<br />7. Outdoor Living Option Covered Patio<br />8. New or Renovated Fence and Gates<br />9. Other Landscaping<br />
  209. 209. 10. New 30-50 year<br />comp roof<br />11. New <br />(possibly relocated) <br />water heater<br />12. New 100 amp <br />service<br />
  210. 210. 13. Grounding <br />of all wiring. <br />14. Gutters as<br /> Necessary<br />15. Proper drainage <br />away from house.<br />
  211. 211. 16. Dash Coat <br />or complete <br />exterior paint<br />17. Premium Carpets<br /> over 6 lb pad<br />
  212. 212. The “Energy” Package<br />3 Package Strategy:<br />ENERGY<br />WOW!<br />DONE<br />Remember<br />They All Work Together!<br />This Week:<br />
  213. 213. The Energy Package<br />The Energy Package is presented in the form of a List.<br />This would typically be perceived by our industry as “Prescriptive”<br />(In some circles that is almost a swear word.)<br />We use a Prescriptive List with Performance Criteria.<br />It’s a Hybrid Prescriptive-Performance approach.<br />...Capturing the best of both the Performance and Prescriptive approaches<br />Good “performance” from<br />This 1200 sf <br />“prescriptive” home<br />
  214. 214. The Hybrid Approach(Prescriptive Selection WithPerformance Test Out)<br />Benefits of Prescriptive Methods:<br />Fast, Easy Selection of<br /> Scope of Work.<br />No money spent on testing and certifying means more to spend on caulking etc. (real home performance)<br />Works best on easy cookie cutter tract homes.<br />
  215. 215. The Hybrid Approach(Prescriptive Selection WithPerformance Test Out)<br />Benefits of Performance Testing.<br />(Especially testing OUT)<br />Selective Test Out proves that<br />Specific performance targets have been delivered.<br />Full Diagnostics are needed throughout on Architectural Wonders, and Historical Homes<br />(difficult & complicated)<br />On Easy Homes, We Simply Do The Right Thing and Test Out<br />Like This...<br />
  216. 216. For Example:<br />There’s a lot behind that 680 on the DG 700. It means<br />1. The tightness targets have been met and exceeded for the 1200 square foot home. (1 CFM 50 per square foot is a normal target)<br />2. The home is so tight that it needs Ventilation “On Purpose” = a mechanical ventilation scheme.<br />3. We can rest assured that the inputs to our Manual J load calcs are correct or better and the equipment will perform.<br />It didn’t matter that the items were chosen and installed prescriptively<br />
  217. 217. The Energy! Package<br />13 SEER 80% <br />or MiniSplit <br />Heat Pump.<br />See discussion <br />on Facebook <br />Fan Page<br />1. New HVAC system, Stainless Steel <br />Heat Exchanger<br />(Exception: If the unit is less than 7 years<br />old and not grossly oversized.)<br />2. Manual J sizing, usually half <br />of previous capacity<br />Equipment tested to deliver at least<br />95% of BTU’s listed on the Name Plate<br />3. New R-8 short mylar ducts<br /> buried in more insulation<br />New Low Static Registers<br />
  218. 218. The Energy! Package<br />4. Manual D with tight <br />seal and test *<br />(3% target vs 6% standard)<br />Flex duct stretched tight<br />New Low Static Registers<br />5. Extra Return Duct <br />in Master Suite<br />Additional Door Undercuts <br />in other bedrooms<br />*Mandatory by HVAC<br />Contractor with <br />Building Permit<br />
  219. 219. The Energy! Package<br />6. New LoE2 windows <br />and Patio Doors<br />U Factor of .30 <br />Non Metallic Spacer <br />is a differentiator<br />7. Low E 140 at <br />west windows<br />Solar Screens on the West<br />8. Deciduous Trees planted selectively<br />Chinese Elm & Chinese <br />Pistachio are favorites<br />
  220. 220. The Energy! Package<br />9. Shell Sealing of floor & <br />ceiling with test (1 cfm50 per square foot is maximum)<br />10. Attic Insulation (cellulose)<br /> to R-50 <br />11. Occupancy sensors<br />& Motion Sensors<br />12. Gas Stove and Dryer options<br />(Needs <br />A LOT<br /> More!)<br />
  221. 221. The Energy! Package<br />13. Ceiling Fans at all <br />sleeping and living rooms<br />14. Panasonic Ventilation <br />with controls<br />(for sure if leakage is under 1/ sq ft)<br />(Runs 24 - 7 No owner controls)<br />If leakier, Panasonic Bath Fan with Tamarack Controller is minimum<br />15. Owners Manual to operate their new home<br />Panasonic FV-04VE1 WhisperComfort Spot Energy Recovery Ventilator <br />(Marketed as “Spot” ventilators but at 20 or 40 cfm, they can do small homes.) djr<br />
  222. 222. The Energy! Package<br />16. The “We Pay Half” program makes for a compelling offer. This costs us less than participating in all the various ratings and certifications. It keeps us in touch with our customer and keeps them referring their friends. We offer this on most homes. Here is from the brochure of our most recent sale <br />
  223. 223. The HVAC Contractor<br />You will notice that most of the items in the Energy Package are or can be done by the HVAC Contractor<br />(Size and select the equipment and the ducts and registers<br />Test out the ducts, delivered BTUs, whole house infiltration and CO Safety)<br />Dont skimp here. <br />You get what you pay for<br />Look for CBPCA trained, BPI certified<br />They should LOVE<br />Home Performance...Like Gary<br />...Not be forced into it<br />
  224. 224. The “Wow!” Package<br />3 Package Strategy:<br />ENERGY<br />WOW!<br />DONE<br />Remember<br />They All Work Together!<br />This Week:<br />
  225. 225. Wow! Package Drill Down<br />1. Granite Counters at <br />Kitchen & Baths<br />2 & 3 foot blanks<br />Not from “Slabs”<br />It’s what buyers want<br />2. Extra Deep <br />Stainless Steel Sink<br />8 or 9 inches<br />2 basins, not 1 or 3<br />3. Designer Spray Faucet<br />
  226. 226. 4. Italian glass tile backsplash<br />Or granite backsplash<br />5. Under Counter Lighting<br />Especially with glass tile<br />6. All wood Maple Cabinetry<br />No Particle Board = <br />Less VOC’s<br />7. Crown Molding &Tall Base<br />Crown at Din Rm, Liv Rm, MBR<br />Sometimes Chair Rail <br />at Dining Room<br />
  227. 227. 8. All new panel doors<br /> & stepped trim<br />9. New Front Door <br />with Art Glass<br />Look for Sale Prices<br />10. Tile & Travertine floors<br />Travertine if special pricing.<br />11. Engineered Wood <br />Laminate Floors<br />Buyers aren’t excited so<br />Only by request<br />
  228. 228. 12. Designer tile and <br />faucets at baths<br />Hardie Backer behind<br />13. Chair Rail, Wainscoating<br /> & 3 tone paint<br />Typically 1/4 color @ ceiling<br />1/2 color @ top<br />Full color @ bottom<br />14. Designer Light fixtures & ceiling fans<br />(With CFLS &<br /> Occupancy Sensors)<br />
  229. 229. 15. All New Stainless <br />Steel Appliances<br />16. Newly Textured Ceilings<br /> (no more popcorn)<br />17. Carpet & Pad with quality<br /> you can feel.<br />2 grades up from FHA<br />6 or 8 lb pad vs 4lb std<br />18. Sculptured Exterior Trim at Windows & Doors<br />
  230. 230.
  231. 231.
  232. 232.
  233. 233. Find Your Niche<br />Scatter Gun<br />Vs<br />Laser Accuracy<br />Clear Definition of your target will maximize your success!<br />Dont Buy Just Anything<br />
  234. 234. Neighborhood<br />1. People want to live there. (Not Detroit right now.... Or some areas of your city)<br />CMA from Realtor<br />Neighbors are spending money on renovations<br />Find It, Claim It, Master It, Stay There<br />& Reap The Benefits Of Your Focus!<br />
  235. 235. Desirability Factors<br />1. School Reputation<br />2. Anchors such as Parks, & Shopping Centers<br />3. Close to Jobs<br />4. Transitioning Up, <br />Not Down<br />My Neighborhood<br /><br />Fresno County School<br />Test Scores<br />
  236. 236. Target House Specs<br />1. 3 or 4 Bedrooms<br />(2 Bedrooms wont have the “spread” you are looking for<br />2. 2 Baths<br />(1 Baths wont have the spread or the quick sale)<br />
  237. 237. Target House Specs<br />3. 30 to 50 year old Tract Homes<br />(Older will have more difficult problems, Newer wont have enough problems for you to build value and deserve your price)<br />Before<br />
  238. 238. Target House Specs<br />4. 1000 to 1500 sq ft<br />5. Pools are OK<br />(most investors dont like them = better deals)<br />6. The more beat up the better (for you)<br />
  239. 239. Target House Specs<br />7. The “Worst house on a good block”<br /> is a good thing <br />to look for<br />One or two Board ups <br />Is good. <br />More is suspect<br />
  240. 240. Stay Away From<br />1. War Zones, lots of graffiti, other hints of gang activity.<br />2. Busy Streets<br />4 lanes<br />3. Obsolete Floor Plans<br />(thru a bathroom to get to a bedroom)<br />
  241. 241. Stay Away From<br />4. Too small a Master Bedroom. <br /> 12x12 is good. Much less will limit buyers as new bedroom furniture wont fit.<br />5. Flight Paths, Freeways & Hi Tension Lines<br />
  242. 242. Define Your Buyer<br />First Time Buyer.<br />Hopefully FHA<br />Priced where payments will be only a little more than rent.<br />=$150K to $250K<br />Sell price<br /> estimates rents<br /> publishes exact rents<br />
  243. 243. Define Your Buyer<br />If you are moving into the large pool of buyers with “bruised credit” with owner assisted financing, (Lease option etc.) Define your acceptable bruises before you offer for sale.<br />Stay away from emotional decisions.<br />See “8 Exit Strategies” &<br />“Know The End<br />From The Beginning”<br />In PlanetSavers U at<br /><br />
  244. 244. Management Tools:The Checkbook Method<br />1. You and your managing partner, (General Contractor <br />or Project Manager) <br />are both signatory on a joint checking account.<br />2. Thru Electronic Banking, you watch as he or she spends the money. All expenses go thru the check book<br />3. You put more money in via transfer as it is needed.<br />4. At the end, all the accounting is done. Your CPA will love you.<br />
  245. 245. Correct Motivation<br />When He or She is dependent on a share of the profit, <br />and actually handwriting the checks,<br />They are very careful with the Checkbook<br />
  246. 246. Q. What does the GC do (either himself or with his employees?)<br />A1. Everything not done by subcontractors. <br />Some examples might be: (some of these might be subs)<br />Board-Up and Re-Keying,<br />Demolition and haul to Re Store<br />Finish Carpentry, doors, casing, base, crown etc<br />Cabinet install, Hardware install<br />Appliance Install,* Mirrors, Fixtures<br />And mainly supervise all the subcontractors.<br />
  247. 247. Q. If subs do everything, what do I do?<br />A1. Maintain the Energy-Wise aspect of your operation. Many will tempt you to take shortcuts.<br />A2. Be finding the next project.<br />A3. Market to get them sold quickly.<br />A4. Continuing Education. On Real Estate, Remodeling and Energy Efficiency.<br />A5. If you want to, you can help your community thru consulting with politicians & non profits. Habitat etc.<br />
  248. 248. Don’t Yield To Temptation:<br />Avoid The <br />“Grey Market” Economy<br />Make Sure Your Subs Have:<br />1. Contractors License<br />2. Workers Comp Insurance<br />3. Liability Insurance<br />Reasons:<br />1. Liability: Lose Everything...<br />2. Crackdowns Coming<br />3. Unfair to those who play fair.<br />
  249. 249. Contractors, Not Employees<br />Your Contractors Are Responsible<br />For their employees:<br />1. Workers Comp Insurance<br />2. Legality for work<br />(Citizenship, Green Card, etc)<br />You dont want this contractor’s headache. Leave it for the Contractors!<br />
  250. 250. Negotiate “Wholesale” Pricing<br />Contractor Gets:<br />1. Consistent Flow <br />of Work<br />2. No Sales or Marketing Expense<br />3. No Customer Handholding<br />4. Smooth Teamwork<br />5. Referrals<br />Investor Gets:<br />1. Wholesale Pricing<br />2. Minimum Supervision Required<br />3. Speed, priority service<br />
  251. 251. Somebody Has To KnowHome Performance!<br />1. You are the best choice.<br />Enroll in classes, read books, etc<br />2. The more Home Performance your contractor knows, <br />the better for you.<br />3. Once you know enough Home Performance, you can specify the performance you require.<br />4. Especially HVAC, <br />Shell, Insulation, & <br />Window Contractors<br />
  252. 252. “Naked” Capitalism?<br />1. Minimum Government Involvement.<br />2. Minimum Program Involvement.<br />3. Use All “Wholesale” Vendors and Suppliers<br />4. Minimize Overhead <br />5. Focus On Adding Hard Value.<br />6. Find Your Own Money.<br />7. Find Your Own Buyers.<br />8. Buy Smart<br />Stay NIMBLE!<br />No NSP programs<br />For example....<br />
  253. 253. A Green Heart:<br />How Green?<br />What Color of Green?<br />How Committed?<br />Origin Of A Green Heart?<br />Is It Essential? <br />Can I Fake It?<br />Fake It Till I Make It?<br />Can I “Sort Of” Believe?<br />
  254. 254. Observations:<br />?<br />Many in the Home Performance Industry dont live in <br />Performing Homes...<br />Most, 99%+ in Real Estate and Real Estate Investing are motivated <br />primarily by profit and ROI. <br />Many Contractors do only <br />what will sell, basically <br />“follow the money”<br />These probably need a Greener Heart to succeed in the Energy Wise House Flipping Business .....Why?<br />(Disclosure On The Next Slide)<br />
  255. 255. Why Is A Green Heart Necessary?<br />Disclosure: You need a “Higher Calling” to stay the course when you could make more money faster with less effort if you just did <br />“Lipstick On A Pig”<br />Full Disclosure: In other words. <br />I make less money, <br />and put in more effort<br />and ittakes longer<br />than the TV show flippers who have raised putting Lipstick on a Pig <br />to an art form.<br />So, Why Would You Want To Do This?<br />
  256. 256. But On The Other Hand:<br />Regular House Flipping<br />(Lipstick on a Pig) does:<br />Nothing for the environment<br />No Green Jobs<br />Drags a Neighobrhood Down<br />No Reduction of Foreign Oil<br />No Resources Saved<br />Occupants uncomfortable, & paying too much<br />Same for standard Buy & Hold<br />Create Rentals Approach<br />& Creates a Nation of Renters<br />& Lowers the Tax Base<br />(98% of All <br />Investment<br />Advice!)<br />
  257. 257. Top 10 Motivations Of The Green Heart<br />1. Lower Carbon Emissions<br />2. Provide Efficient, Safe,<br />Comfortable Housing<br />3. Improve Neighborhoods<br />4. Improve The Tax Base<br />5. Provide Green Jobs<br />6. It’s The Right Thing To Do<br />7. Lower Reliance on Foreign Oil<br />8. Create Home Ownership vs A Nation Of Renters<br />9. Conserve Resources<br />10. Satisfaction & Fun Of Doing Good<br />So, Why Wouldn’t You Want To Do This?<br />
  258. 258. Temptations To Avoid<br />1 Choose a lower specification<br />example: R 38 vs R 55<br />2. “It’s good enough”<br />3. Keeping things that need to go.<br />4. Skipping repairs that <br />need to happen<br />2 Greatest Home Performance Sins: <br />1. Skipping or shortcutting<br /> the Shell Seal. <br />2. Failing to Re do the duct system.<br />(Right sized, right placed & sealed)<br />Dont just seal the existing <br />
  259. 259. Dont Quit Your Day Job!*<br />Energy Wise House Flipping can easily be done part time. (If you follow the advice on this site & create a great team)<br />2 - 4 projects per year <br />is an easy pace. <br />Get an assistant only when <br />you need one<br />* But if your heart demands it, <br />you will surely succeed<br />“Burn the ships”<br />Hernando Cortez 1519<br />
  260. 260. Many Beliefs, Same ConclusionCaring For Our Planet & People<br />You may believe all the ice is melting and New York will soon be under 10 feet of water. And Green Renovation of Foreclosed Homes is one thing you can do to make a difference.<br />Welcome to the Team!<br />You may simply believe<br />that God said, <br />“Take care of the place”<br />And Green Renovation Appeals To You<br />Welcome to the Team!<br />
  261. 261. Belief - Desire - Action<br />Faith<br />Action Zone<br />Conviction<br />Predisposed To Action<br />Certainty<br />Getting Ready For Change<br />Confidence<br />Belief<br />Assurance<br />Status Quo<br />Possibility<br />Comfort Zone<br />No Change Possible<br />Doubt<br />Disbelief<br />Fear<br />Intense Desire<br />Wishful Thinking<br />Burning Desire<br />Passion<br />Dispassionate<br />Indifferent<br />Disinterested<br />Vague Want<br />Curious<br />Desire<br />Cold<br />Desire<br />
  262. 262. How Do I Know I <br />Have A Green Heart?<br />I’d rather surf the net for new Home Performance ideas than watch American Idol.<br />I get up early and stay up late to study and learn more about this.<br />My friends say I obsess about Home Performance.<br />Home Energy is my<br /> favorite magazine<br />That far away look in my eyes when the class gets boring is me planning my next Flip!<br />
  263. 263. How Do I Know I <br />Have A Green Heart?<br />I’m negotiating about a wind generator on top of my house<br />I want a heat pump water heater for my birthday<br />Each project will be better than the last. I’m a learner<br />I’m excited about my new<br /> 2 stage toilet<br />And Buffalo Grass<br />I think caulking and foam is sexy<br />I obsess about Ducted<br /> Mini Split Heat Pumps<br />And Many More....You’ll Know.<br />
  264. 264. I’ve Learned Some Things<br />Maybe I really can make this work with hourly employees. It’s easier and they’re nice guys...<br />Most of them, I already knew, I just thought maybe I could get away with breaking my own rules. Some of them are new.<br />The main rule <br />I tried to break....<br />PS you dont have to learn this the hard way!<br />
  265. 265. Lessons From The First 10<br />1. No Hourly Labor. Use Subcontractor Only<br />2. Keep Your General Contractor Partner thinking like you<br />with 2 techniques:<br />A. Pay thru a profit split.<br />B. Check Writing thru the project’s separate account.<br />He spends. I watch thru electronic banking and fund <br />when necessary. Check duplicates make <br />accounting easy.<br />
  266. 266. Lessons From The First 10<br />3. Wholesale Pricing from subs and suppliers. Always try to beat Home Depot.<br />4. Good Team of Independent Contractors. Mature, Grown Up Adults. Licensed & Insured.<br />5. Make a Budget & <br />Stick with it.<br />
  267. 267. With The Market Changes...Is Energy Wise House Flipping Still A Good Idea?<br />YES!!!<br />Maybe Even Better!<br />It will just take a few adjustments to the formula:<br />I signed an offer and sent it off tonight. It felt good to be back on the hunt!<br />Here’s My Plan... <br />
  268. 268. Q. How Could It Get Any Better?<br />A. With the boatloads of money coming down the pipeline there will be opportunities like never before. <br /> I’ll be watching this closely & may use some of it. <br />Be Careful. It’s hard to stand out & command a premium when you’re running with the pack!<br />FREE Money Never Is.<br />Note: Other Personality Types may be <br />more suited to paperwork <br />
  269. 269. Plan For This Over Heated Market<br />20-20-20-20-20 Review<br />$20k Energy Package<br />$20K Wow! Package<br />$20K Done! Package<br />$20K Soft Costs<br />$20K Profit<br />Assume: I was looking for $100K spread from buy to sell.<br />Assume: I can now get only $90 in the overheated market.<br />I am unwilling to give up my $20<br />I am unwilling to compromise on the Energy Package.<br />Something’s gotta give...<br />At least three things <br />can be squeezed.<br />
  270. 270. Plan For Overheated Market<br />1. Reduce the Done<br />(landscape front yard only, etc)<br />2. Reduce the Wow!<br />(less crown molding, 4 lb pad)<br />Reduce the Soft Costs<br />(sell them myself, finish faster, reduce carry costs)<br />This could add up to $20-30K saved! I only needed to<br />make up $10K. <br />What to do with all these<br /> “excess savings?”<br />20-20-20-20-20 Review<br />$20k Energy Package<br />$20K Wow! Package<br />$20K Done! Package<br />$20K Soft Costs<br />$20K Profit<br />
  271. 271. It’s A Perfect Time For A....Zero Energy House.<br />Savings From:<br />Done, Wow & Soft Costs, <br />Go To<br /> Increase The<br /> EnergyPackage*<br />& Add Solar <br />= Net Zero<br />Actually we will only target close to Net Zero <br />(maybe a $5-25 utility bill?)<br />0<br />Yahoo! This Is <br />Going To Be Fun!<br />
  272. 272. The Perfect Candidate For Zero Energy House Renovation<br />1. South Facing Roof without big tree shade problems.<br />2. Some Re-Usable Items to keep the cost down. Not quite as trashed as I used to look for.<br />3. Worn Out Wood Siding is excellent. Perfect candidate for new insulation and stucco. <br />4. Built in the 80’s avoids the new lead requirements.<br />If Zero Energy Renovations Interest You, Join Rogelio and I at the Zero Energy PG&E class on July 20th in Auburn<br />0%<br />Yahoo! This Is <br />Going To Be Fun!<br />
  273. 273. Energy Efficiency: What’s It Worth?<br />So What!<br />It’s Energy<br />Efficient!<br />To A Buyer?<br />To A Seller?<br />To An Appraiser?<br />To The Bank?<br />To Our Planet?<br />All Different<br />What’s an Energy Wise Investor To Do?<br />Our Hands Are Tied!<br />We Haven’t Been Trained!<br />Appraisal Industry<br />Please Help Us!<br />
  274. 274. ROI, What’s That Got To Do With It?<br />Framing the Discussion around Return On Investment (only)<br />(ROI) = Bad Idea #2<br />If I want to be comfortable*, or safe*, or healthier*, or proud of my home* or my contribution*, I dont ask, “What’s my return on my investment? We dont ask the ROI of a flat screen, or granite counters. Buyers value these because they want them. Value is established by buyer and seller agreeing. It should be the same for Energy Savers.<br />* comes along with Energy Improvements<br />ROI is not irrelevant but <br />It is only ONE component of value<br />
  275. 275. Using<br />Cost Estimator is “online” software based on the HomeTech pricing system that has been a standard for Remodelers for over 25 years. <br />Everything is stored “in the cloud” so if you are in an area with difficult internet service, you should choose a different system<br />
  276. 276. Benefits of “Online” Software<br />1. I cant lose it.<br />2. No updates to install<br />3. I can work anywhere on the planet with an internet connection<br />4. Easy collaboration. All team members have the same data instantly<br />5. Customizable<br />
  277. 277. Any Good Estimating System Will Help You Make Money<br />Mainly by producing professional looking cost estimate reports that are used in negotiations with Sellers to justify your offering price.<br />These are produced automatically with one click so they can easily accompany every offer & haircut request.<br />
  278. 278. Any Good Estimating System Will Help You Not Lose Money<br />Mainly by forcing you to consider every item on a complete list of possible costs. <br />The builder’s nightmare<br /> is to get the job <br />and then realize, <br />“Oh, no! <br /> I forgot the________!”<br />
  279. 279. Time For A New Brand?<br />Or Just An Expanded Menu?<br />
  280. 280. Many Buyers Wont Buy What’s Good For Them & The Planet<br />Review<br />Of Model<br />Just as this dog wont eat a lifesaving pill that will be good for him, (without some hamburger) The typical homebuyer wont spend all that it costs to do complete Energy Saving Renovation.<br />..... Unless it is included with a Classy & Complete Remodel<br />Hence the<br /> Wow! Done! & Energy Packages<br />Is this “Bait & Switch” or good marketing? .... You decide.<br />Granite =<br />Hamburger<br />
  281. 281. The Wow! Package<br />Review<br />1. Granite Counters at Kitchen & Baths<br />2. Extra Deep Stainless Steel Sink<br />3. Designer Spray Faucet<br />4. Italian glass tile backsplash<br />5. Under Counter Lighting<br />6. All wood Cabinetry<br />7. Crown Molding and Tall Baseboard<br />8. All new interior doors and trim<br />9. New Front Door with Art Glass<br />10. Tile & Travertine floors<br />11. Engineered Wood Laminate Floors<br />12. Designer tile and faucets at baths<br />13. Chair Rail, , Wainscoating & 3 tone paint<br />14. Designer Light fixtures & ceiling fans<br />Include This,<br />
  282. 282. Review<br />The Done! Package<br />All Three<br />Required<br />1. New Front and Back Lawn<br />2. Automatic Sprinklers with timer<br />3. New 30 - 50 year roof<br />4. New Roll-up Garage Door with Openers<br />5. Gutters<br />6. New 2 inch faux wood blinds<br />7. Major Professional Tree Trimming<br />8. Sewer line renovated as necessary<br />9. All new oil rubbed bronze hardware<br />10. New Energy Star Appliances with Warrantees<br />11. New Windows and HVAC with Warrantees<br />12. Upgraded Carpet with 6 lb pad <br />13. Deciduous Trees placed for Energy Efficiency<br />And This,<br />
  283. 283. The Energy! Package<br />Review<br />1. New HVAC system, Stainless Steel Heat Exchanger<br />2. Manual J sizing, usually half of previous capacity<br />3. New R-8 short mylar ducts partially buried<br />4. Manual D with tight seal and test<br />5. Extra Return Duct in Master Suite<br />6. New LoE2 windows and Patio Doors<br />7. Low E 140 at west windows<br />8. Deciduous Trees planted selectively<br />9. Shell Sealing of floor & ceiling with test<br />10. Attic Insulation to R-50 <br />11. Occupancy sensors<br />12. Gas Stove and Dryer options<br />13. Ceiling Fans at all sleeping and living rooms<br />14. Panasonic Ventilation with controls<br />So we can <br />Sell all this Everytime<br />
  284. 284. Q. Why Add To The Menu? If It Ain’t Broke...<br />A. The Market has changed and is going to change a lot more very soon.<br />1. Much less inventory<br />= More competion<br />= Less great deals<br />2. Buyers are getting more educated about Green<br />= New Opportunity<br />
  285. 285. Q. Will Buyers Pay The Price For Complete Energy Packages?<br />A. It would be great if the buying public really valued Green and Saving The Planet as we do. <br />So far, It’s just not (generally) the case*. People like the idea, but when confronted with the cost and asked to write a check.... The interest cools off quickly, & “partial jobs” are the result<br />* Recent poll of Home Performance Contractors<br />
  286. 286. So We Still Need Hamburger!<br />The 3 Package Model works well and we will continue to use it. We have developed some techniques that work well to go along with it. Like doing our own open houses, using our 4 page brochure, CraigsList, co-op advertising, selling them ourselves and using Lease Options. <br />BUT.....<br />
  287. 287. New Hypothesis: Net Zero With Solar PV Can Be The New Wow!<br />This Hypothesis will be tested and reported on this site over the next several months.<br />Cliff’s Notes Version:<br />1. Homes that dont need much Done or Wow!<br />2. Do a small amount of Wow!<br />3. Do the Energy Package<br />4. Add Solar PV<br />
  288. 288. Buy Low, Add Value, Sell High<br />Review<br />Buy Low:<br />We’ll still seek out the best pricing we can get.<br />But we wont limit ourselves to the really beat up housing stock.<br />We may even buy “unfinished” projects that lipstick flippers have started<br />This will greatly increase the size of our universe of possibilities. <br />(prototype Book Cover)<br />
  289. 289. Buy Low, Add Value, Sell High<br />Review<br />Add Value:<br />We’ll add the Energy Package. <br />Plus Solar PV<br />And a small amount of Wow! That may be needed <br />to get it to sell.<br />Total Benefit to the Planet from this approach will be even greater than with the <br />3 package system!<br />(Energy Package <br />Plus Solar)<br />
  290. 290. Buy Low, Add Value, Sell High<br />Review<br />Add Value:<br />Note: These projects will be faster and easier than our <br />3 Package projects with <br />the classy remodeling.<br />& may net the same profit<br />But The Home Performance Energy Package MUSTwork as a System or you will simply be a Marketeer, using the language of Green to lie to your customers<br />Boo! Hiss!<br />
  291. 291. Buy Low, Add Value, Sell High<br />Review<br />Sell High:<br />Selling always requires<br />Making The <br />Invisible Visible<br />Add the Solar Story<br /> to the 4 page brochure<br />& other marketing channels <br />to reach the buyers who will<br />value our product!<br />
  292. 292. Q. Why Wont Everyone Do This?<br />A. This wont work for Greenwashers who dont get the Energy Package right.<br />They will need twice the<br />size PV system.<br />This will work for us because our heat loads are so low that it doesn’t take much to go the rest of the way to <br />“Near Net Zero”<br />There will always be those who try to abuse the system. Dont worry about them. Just do the right thing!<br />
  293. 293. Calendar it NOW!<br />
  294. 294. Picking Your Team<br />PlanetSaving as an Energy Wise House Flipping Investor is not an Individual Sport!<br />It Takes A Team<br />Unless you want to stay small & working on the jobs.<br />In that case you are <br />“buying yourself a job.”<br />Not a bad thing<br />Just know it going in.<br />
  295. 295. Pro’s & Con’s Of Staying Small<br />Pro’s<br />1. No boss, or partner to have communication problems with<br />2. Less stress (maybe)<br />3. Can start on a shoestring.<br />Con’s<br />1. You always have to work if things are to get done. <br />Great if you love it.<br />Wonderful benefit of either style of investing:<br />You can experiment in your own laboratory!<br />
  296. 296. The Team Players <br />1. Spouse or S.O. (Forget this one at your peril)<br />2. Realtor to purchase<br />3. Realtor to sell<br />4. General Contractor or<br />5. Project Manager<br />6. Lender or <br />7. Money Partner<br />8. Loan Broker<br />9. Energy Related Subs<br />10. Wow! & Done Subs<br />11. Due Diligence Team<br />12. Insurance Broker<br />13. Escrow Officer<br />
  297. 297. Spouse or SO<br />Contracting is a hard way to make a living. I have often said the reason for our survival for 3 decades was two people working our tails off. Most of my friends who started in the 70’s with us didn’t make it with the business and marriage both intact unless both were working in the business.<br />Investing is easier than contracting in my opinion. This is why I recommend Multiple Streams of Income to my Contractor Friends.<br />(It was a Safety Award. No one shot themselves with a nail gun or fell off a roof! Typical worries of Contractors)<br />
  298. 298. Realtor (For Purchase)<br />The Right Realtor provides a valuable service. <br />1. Helping you determine the ARV - After Repair Value. This is essential so you will know what to offer.<br />2. One main tool a Realtor can provide is the CMA Comparative Market Analysis.<br />3. Banks list 95% of the foreclosures with Realtors.<br />
  299. 299. Interview Questions:<br />1. Do you own investment properties yourself?<br />2. How do you feel about submitting an offer at 55% of the asking price?<br />3. How about submitting 20 offers before we get one?<br />4. Are you digital? Can I sign everything digitally?<br />5. Eco Broker? Or at least Green Friendly. <br />Life’s too short to have to fight your team mates<br />
  300. 300. Realtor To Sell<br />If you choose to sell with a Realtor, you will want one who will do aggressive open houses and is well positioned as a selling realtor. <br /> This MAY be the one<br /> who you buy thru. <br />You may also decide to sell the property yourself. This has advantages and disadvantages. <br />(discussion)<br />
  301. 301. General Contractor<br />The General Contractor schedules the other contractors, orders all the materials and does some of the work (more or less)<br /> It is important that he have a Green Heart or at least understand and respect yours.<br />No need to have your team dragging you down.<br />
  302. 302. Interview Questions:<br />1. Confirm all licenses, liability and Workers Comp insurance.<br />2. List of references ... And really call them.<br />3. CSLB check <br />4. Also check BBB<br />5. Ask about a difficult client and how they handled it.<br />6. They (along with all subs) accept your contract and your payment schedule<br />7. Do they love Green and EE or are you just a job to them?<br />
  303. 303. Project Manager<br />Does the job of the General Contractor.<br />One way to do this legally is to share ownership of the property. The partnership operates as “Owner Builder”<br />If compensation is on a percentage profit split, motivation stays strong.<br />
  304. 304. Lender<br />The lender who finances your acquisition and renovation. <br />My preference is a line of credit from a small bank<br /> (Less paperwork, 6.5%)<br />Also Wells Fargo Mortgage (not bank) has an 80% of ARV program which should finance all of your costs. They require appraisal and approval of your plans and inspections to pay the draws<br />
  305. 305. Money Partner<br />Maybe who shares your<br />Green Heart. <br />Any money partner<br />will be better than <br />“hard money” <br />You can pay them:<br />1. A guaranteed interest rate<br />2. A profit split<br />
  306. 306. Loan Broker<br />Here you are looking for flexibility. For example most lenders can only accept FICO scores down to 620. But there are programs out there that will go to 580. That opens up more possibilities.<br />Another example is assisting with owner financing such as lease options with refinance.<br />
  307. 307. Energy Contractors<br />This is mainly the HVAC Contractor. He should be CBPCA trained and BPI certified AND accredited. Green Point Rating is also valuable. Also the Window and Insulation contractors need Home Performance Training. One of these needs to do the shell seal and Blower Door Testing. You are not looking for the cheapest in these trades. You want the best and it costs a little more....<br />
  308. 308. Wow! & Done Contractors<br />You can negotiate more aggressively with these contractors. You still want good work but it isn’t as important as the<br />Energy Team.<br />You do want <br />“Wholesale Pricing” <br />but most important here is their ability to respond timely and work with the <br />rest of the team.<br />
  309. 309. Due Diligence Team<br />Termite Inspector<br />Roof Inspector - Roofer<br />Sewer Inspector- Plumber<br />Electrician<br />Home Inspector<br />General Contractor<br />My Home Inspector was formerly a Building Inspector and knows the codes very well.<br />It’s good to have an “open house” with all of these <br />at the same time. (Realtor has to give access)<br />
  310. 310. Insurance Broker<br />Set up with the Insurance Broker so that it is only a phone call to insure a new project. Typically I buy a year’s policy. Then I receive a refund upon sale. <br />It’s good to get an Umbrella Policy by the time you are into your third project.<br />
  311. 311. Escrow Officer<br />The Seller usually chooses, so on all your purchases you will be getting to know different escrow officers and companies.<br />For your sales, you get to choose. I like to stay with one who learns how I work. <br />(and helps me stay on track)<br />This is especially important if you start selling your own projects with Lease Options <br />& Refinancing etc.<br />
  312. 312. With The Right TeamPlanet Saving Can Be A Lot Of Fun<br />If the team doesn’t work together<br />You’re going to get wet!<br />See the guy in the back with <br />the oars?<br />That’s You!<br />
  313. 313. Top 10 List For Energy Wise Home Renovation<br />
  314. 314. The “Biggest HP Sin” = Failure To Address The Building Envelope<br />Possible Reasons:<br />1. This is Hot Dirty Work<br />(Or Cold Dirty Work)<br />(in tight places with spiders)<br />2. The Importance was not understood by Contractors or especially Installers<br />3. It was not easily measurable by program managers and grant writers<br />
  315. 315. Everything Is Disproportionate About The Building Envelope!<br />Lower Cost <br />Harder Work<br />More Savings<br /> Harder to Inspect<br />(Relative to the other ingredients of the Home Performance Package)<br />Bottom Line: <br />This Is NOT The Place To Skimp!<br />
  316. 316. Shell Seal The Attic<br />This is probably the biggest savings opportunity for the cost involved. It is most often skipped because removing decades old insulation to access these areas is no ones favorite work. <br />But if you ever expect to get to Net Zero, this part is absolutely essential.<br />
  317. 317. Seal The Floor<br />Seal the floor the same as the floor of the attic. Especially look for big holes like at the tub, toilet<br />and shower. Caulk and Foam all the smaller cracks.<br />Covering the ground with 6 mil poly has been shown to save way more than it costs. = a good decision.<br />
  318. 318. Attic, Floor, Wall Insulation<br />More is better. You do expect the house to last 100 years, dont you? Specify accordingly.<br />Minimize eave ventilation by placing it elsewhere<br />Consider re-insulating walls with exterior rigid insulation<br />Sealing the crawl space is a good idea. Sell your building official first.<br />
  319. 319. The Comfort System<br />Mini Split Heat Pumps<br />With SEER to 26<br />Performance to 0 F<br />& Zero Duct Loss<br />& Ducted Options<br />You cant beat ‘em <br />You just have to ditch your American <br />HVAC Supplier<br />
  320. 320. Appliances& Lighting<br />Incandescents are so<br /> last century. <br />Avoid can lights except <br />to save a marriage. IC & AT if you must have them<br />CFLs are on their way out. <br />LED’s are gaining market share<br />Not all Energy Star Appliances are created equal. Read the Labels<br /> and Compare.<br />Consider a TED for biofeedback<br />The Energy Detective<br />Controls may save more than the appliances they control<br /> (photo & motion <br />& power strips)<br />
  321. 321. Safety & Indoor Air Quality<br />About 400 people die each year of Carbon Monoxide Poisoning.<br />Make SURE you dont contribute to this statistic.<br />CO testing should be done by your licensed & trained HVAC contractor<br />
  322. 322. Ventilation On Purpose<br />Seal It Tight & <br />Vent It Right<br />That means Mechanically on purpose.<br />Minimum is good bath fans on timers.<br />Better is HRV - ERV<br />
  323. 323. Water<br />Water as Liquid<br />Sealing<br />Grading<br />French Drain<br />Water as Vapor<br />Vapor Barriers<br />Vapor can dry to the outside or the inside.<br />Make sure you have plan.<br />
  324. 324. Water<br />Heating Water<br />Condensing Water Heater<br />Heat Pump Water Heater<br />Solar Water Heater<br /><br />Water Heat<br /> Recovery Pipe<br />
  325. 325. Water<br />Saving Water<br />Two Stage Toilets<br />Low Flow Showers, Sinks<br />Low Usage Clothes & <br />Dish Washers<br />Low Water Landscape<br />Buffalo Grass &<br /> Native Plants<br />Drip Irrigation<br />Rainwater catchment<br />Buffalo Grass Developed at UC Davis<br />Must be planted as plugs or stolons.<br />
  326. 326. So There Is One Man’s Top 10I Hope It Makes You Think!<br />Thinking about YOUR house:<br />What would you add to the list?<br />What wouldn’t make your Top 10?<br />Put dollar estimates next to <br />each of the