This document outlines an approach to purchasing foreclosed homes, completing full energy retrofits and renovations, and quickly reselling the homes for a profit. It begins by addressing common questions and doubts about investing significant funds into home renovations. It then details the "Wow!", "Done!", and "Energy!" packages that are completed on each home to add value and efficiency. Strategies are provided for choosing target neighborhoods, making offers, negotiating purchases, completing renovations efficiently, and marketing the homes through unique signage and sales approaches. The goal is to purchase, renovate, and resell homes within 120 days to quickly recoup investments and move on to additional properties.

1. Original Hypotheses in Foreclosure Renovation: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! RemodelingQuestions from Skeptics, Professionals & Gurus:Can you put that much money into a house and get a return on investment? And make a profit?Will the consumers buy that big a package of energy saving retrofit?If they will buy, can they get financing? Will the properties appraise for enough?Preliminary answers at end of poster.

2. Closing Escrow next weekFeatures: Low E2 windowsR-50 InsulationNew HVAC systemR-8 Ducts, sealed & testedComplete Shell SealingMore…(see Energy Package)

3. Purchasing Homes in Close Proximity Allows:1. Saving of fueland travel time(green!)2. We can control the “Comps” and Influence Appraisals after the first one.312654

4. The Wow! Package1. Granite Counters at Kitchen & Baths2. Extra Deep Stainless Steel Sink3. Designer Spray Faucet4. Italian glass tile backsplash5. Under Counter Lighting6. All wood Cabinetry7. Crown Molding and Tall Baseboard8. All new interior doors and trim9. New Front Door with Art Glass10. Tile & Travertine floors11. Engineered Wood Laminate Floors12. Designer tile and faucets at baths13. Chair Rail, , Wainscoating & 3 tone paint14. Designer Light fixtures & ceiling fansInclude This,

5. The Done! Package1. New Front and Back Lawn2. Automatic Sprinklers with timer3. New 30 - 50 year roof4. New Roll-up Garage Door with Openers5. Gutters6. New 2 inch faux wood blinds7. Major Professional Tree Trimming8. Sewer line renovated as necessasry9. All new oil rubbed bronze hardware10. New Energy Star Appliances with Warrantees11. New Windows and HVAC with Warrantees12. Upgraded Carpet with 6 lb pad 13. Deciduous Trees placed for Energy EfficiencyAnd This,

6. The Energy! Package1. New HVAC system, Stainless Steel Heat Exchanger2. Manual J sizing, usually half of previous capacity3. New R-8 short mylar ducts partially buried4. Manual D with tight seal and test5. Extra Return Duct in Master Suite6. New LoE2 windows and Patio Doors7. Low E 140 at west windows8. Deciduous Trees planted selectively9. Shell Sealing of floor & ceiling with test10. Attic Insulation to R-50 11. Occupancy sensors12. Gas Stove and Dryer options13. Ceiling Fans at all sleeping and living rooms14. Panasonic Ventilation with controlsSo we can Sell all this Everytime

7. We Buy Ugly Houses (the uglier the better)Ugly Step-Sister to Cinderella The Cinderella Wow! Conversionin our Energy Wise RenovationsAllows us to include Serious Energy Retrofits!

8. Wannabe RemodelersMany 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.No Problem & Not that Expensive

9. Oh, Honey, I love it!Let’s buy this one....Well, they have those Energy Stars and the carpet is made out of recycled Pepsi bottles so I guess we might as well...How Green is (sometimes) Sold

10. 4WEnergy-Wise RenovatorThe PlanetCommunityThe Homeowner WinsWith Lower Bills and Increased ComfortThe Community WinsWith New Jobs, More Home Ownership & Increased Property ValuesThe Planet WinsWith Less Carbon EmissionsThe Investor WinsAnd Gets To Keep A Little GreenHomeOwnerA True Win, Win, Win, Win Strategy!

11. So, How’s It Going After 8 Months?First 5 properties sold after first open house. Appraisals were OK and we have a waiting listProfitability? I find it better than Contracting!Fun? This ex-contractor is having a blast!Flexibility? Time for important thingsGood for the Community? Raising Property Tax Base. These houses sell for 20% above the comparables. No Incentives or (new) government programs required.Green Labor Force? These jobs are the advancement and career path up for entry level weatherization workers.Energy Reduction? Estimated 25-50% reduction (with no previous bills to compare and no dependence on future occupant behavior required.) With 1000 Businesses across the country doing this, we could do some serious good. Wanna learn Energy Wise House Flipping? I’m so sold on this idea, I’ve begun teaching it.Let’s Build An Army!Free Training, LearnEnergy-Wise House FlippingConference Calls Tue 6:00 pm PSTDial in 605.475.4800 Access 795323#On Site Renovation training monthly

12. Tale of 2 Foreclosures - True (sad) StoryPurchase PriceImprovements $OccupantEnergy RetrofitCarbon FootprintGreen JobsTax BaseNeighborhoodBusiness Plan?$70,000$50,000Proud New HomeOwnerEverythingReducedYesRaisedLifted UpDeposit $ & Repeat$70,000$10,000RenterZeroNo ChangeZeroLoweredDragged DownPraying for EconomyWhich would you rather have next door to you?

13. Construction Sign & Real Estate Sign better than either alone

14. We buy Ugly Houses

15. The more vandalism, The better (the price)

16. Not too smart taggerBurt couldn’t say much in court

17. We love ugly houses!

18. Deferred Maintenance18

19. Most Investors hate all pools, especially green ones = Opportunity

20. Pool Cleaned Up Nice Patio Cover for Outside Living

21. Former Front Porch Project

22. Kitchen in process

23. More Vandalism and Rookie Remodeling

24. Wannabe RemodelersMany of our best buys have been the home where the owners giftings have been in other areas besides using tools. But they gave it a go... And really messed things up. Stuff like this scares many investors

25. Unique Use of Small SpaceWow! Features seen only in custom homes help buyers justify the total investment (including the Energy Package.)

26. Small but ClassyBuilt in Shower Shelves and accent tiles are a signature feature that buyers love.Extra cost is minimal after you know how to do it.

27. Crown and Base Look for the joints

28. Same granite and tile accent throughout

29. Blinds installed is part of the “Done Package”

30. Almost Finished. Warm light is from colored glass tiles

31. Green is Sexy and Cool So Lead with Green, but Deliver EnergyPurpose for our name GreenEarthEquitiesSuggest you do similar.Use it in blogging and sites... Rise in Google People dont really understand it.Bullet points are more powerful than stats“Our carpet is made of recycled Pepsi bottles”

32. Why Be An Energy Wise House Flipper?Make some moneyBuild and Preserve a LifestyleSave the PlanetBless your Community Feel good at the end of the dayAll of the above

33. In the 21st century, Travel Agents and Energy Wise House Flippers can work anywhere on the planet.

34. The 5 Olympic Rings of Energy Wise RenovationBuy It RightDesign It RightBuild It RightMarket It RightSell It RightPass thru all these rings and receive the Gold!

35. More Choices,Which Realtor?1. Work directly with REO listing agent?2. Use your Buyer’s agent to present the offers to the REO listing agent?Lazy and Busy people prefer #2(Make sure you find a good Buyers Agent)It’s more work, but #1 has advantages too

36. Nobody Minds If You Beat Up The Bank!No one likes smashing the dreams of retired people and single moms.You dont have to. The bank’s done that already.The Bank is over a barrel. They have to sellIf ratios exceed ‘X’, they cease being a bankDont feel bad if it feels good.

37. Picking an AreaAnd SpecializingYou will know the area best.Save fuel, save time, save $ (very green)You will start to build your own compsAfter #1, All properties will appraiseYou are improving the communityThe neighbors will love you.

38. How to Choose Your NeighborhoodKeep it Blue to Stay in the GreenBuy at 33 - 60% of the Median Home PriceSell at 80 - 130% of Median Home Pricebasis = Fresno Median $145,000 (Mar, 09)First Time Buyers in this range are plentifulFacilitate the American Dream

39. Heat Maps, DigitalTrulia, HotPads, LocaleTrends (better detail, more control) still not as detailed as Big Honker Map and Colored Pins, Recommend Ranges 75-100, 100-125, 125-150, 150-175, 175-200, 200-250Asking Prices are easier to get and OK for this purpose

40. Fresno Zoomed OutThere’s lots of Yellow and Red

41. Should I Become a Realtor?Probably a good idea, If you are:Detail oriented and like structureYou’ll make money both ways, just discloseFor non-paperwork people, hire a realtor (most recent deal had 43 pages just to buy) remember 10 to 20 offers per deal....Let a good realtor do what they do best. (DJR previous preference),,, (changing with Rob ---- becoming licensed)

42. Internet Real Estate Sites (starter set)CyberHomes.ComMaps.Live.ComGoogleEarth.comHotPads.com , Trulia.Com, Localetrends.comRentoMeter.comOcwen.combiggerpockets.com/bank-reo.html

43. CyberHomes.com

44. Formula for Purchase PriceARV = After Repair ValueMAO = Maximum Allowable OfferMAO = ARV * .65 - Repairs - Soft CostsNote: This is Maximum. Offer less to leave room to dance.

45. Ways to OfferMAO formula - 10 or 20%Asking price - 40% (for volume offers)Look at property after dance begins (due diligence)Remember this is just the first step.As much as 100% of the profit comes in the dance of negotiation

46. Your Digital SignaturePDFPen for Mac (DJR uses)PrimoPDF for Windows (you dont need full Adobe Acrobat)transparent signatures and initialsDemonstration

47. Make A Lot of Offers10 to 20 offers to get a sale is averageFewer offers, you may be paying too much.Keep going back and refreshing your offerPatience is a virtueDont ever “need” a dealDont get emotionally attached to a deal

48. You only need one Contingency ClauseInspection clause is all you need.More contingencies weaken the offer.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)

49. Cash is a Strong OfferSellers will prefer a cash offer above one contingent on financing, even at a lower sales priceGather your Cash before going shopping.The Cash only needs to be there by close of escrow.

50. Exit Strategies, Decide before you offerRetail Flip after Renovation. Is FHA the new Sub Prime?Wholesale Flip (Assignment)BRRR Buy, Rehab, Rent, RefinanceBuy and Hold (rent)RTO Rent to Own, Lease OptionOwner Finance to open a new pool of buyers.

51. Houses to Stay Away From, or discount BigBusy StreetCommercial, Industrial next doorTwo BedroomsOne BathroomUnusable floor planWar Zones,

52. Houses to Stay Away From, or discount BigVery small houses, under 900 sq ft.Master Bedroom should be 12 x 12No garage, No off street is even worseHigh tension power linesProjects, Train Tracks, FreewayFunctionally Obsolete, Bad Floor Plans

53. Float Like a ButterflySting Like a BeeIn and Out Quickly is the Safe Way to flip housesIn and Out before the market changes radically120 days from Own It to Sold It. (COE to COE) is a reasonable target.Turn the money. Do another one. 3 times a year. At least 2

54. Interview a RealtorMost Realtors dont like to offer 10 - 20 times to get a saleMost Realtors dont like REO’s Find one that does.Digitally accomplished. Otherwise you will wear them and you out signing papers.Do you own investment property yourself?How do you feel about making really low offers?

55. Hamburger helps dogs like eating their pills...You wont sell much green or energy efficiency by itself. Ask me how I know thatPublic is starting to like the Green ideaBut not enough to pay what it costsGeneral public has never been willing to pay for energy efficiency without incentivesThe Wow! Factor & good fundamentals allow us to install Green and get paid for it.

56. GEE Sales Strategy #1Two Signs, Construction is UnlimitedSelect group previews the homesBrochure shows the others in processOthers 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 OwnHolding finished property is a bad idea

57. GEE Sales Strategy #2Provide a unique productThey have never seen anything like it.Then there really is no competitionHumans mostly buy emotionallyWe are convinced that we are rational beingsSo give them some Bullet Point RationalityTo Validate the Emotional Decision they’ve already made

58. GEE Buying StrategyChoose the areaOffer, offer... Dont get emotionally involvedDo your due diligence inspectionsHome, Termite, & Sewer are minimumRequest the HaircutBe prepared to walk away

59. GEE Buying Strategy #2Know your costs before you buy (finalize)Know your final selling priceHave your exit strategies before buyingUse escrow time to get totally readyFlurry of activity on day #1, then keep it up

60. How to read the ads and the listingsKey phrases we are looking forFixer Upper, Needs a little TLC, Handyman Special, Bank Owned, Corporate owned, Permits unknown, Investor Special, Needs work, Good Bones

61. Key phrases we aren’t looking forJust RemodeledPicture perfectBeautifulWell keptRecently updated

62. We are looking for Ugly HousesThe ones no one else wantsToo much work for themThey cant visualize the end resultThere is less competitionMore room for profit If you have the right team

63. How much is this photo worth?

64. Different Strokes for Different Folks!

65. Wannabe and Rookie Remodelers create great opportunities for good deals! Ugly, but easy to fix.

66. Ugly Good Deals #2Unpermitted addition or remodelingGarage conversionsUnfinished projectsHome Improvement projects by rookiesPools of any kind reduce the # of buyers (liability issues)The Ugly house on the Average Street

67. Watch Out ForThe War ZonesGraffittiTennis shoes over the wiresLots of Burglar BarsCity website will detail crimes per 1000Talk to a cop

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.

69. Who’s On Your Team?RealtorBankerInsurance AgentLoan BrokerEscrow OfficerInspectors, Termite, Sewer, Home

70. Who’s On Your Team? #2Subcontractors, HVAC, Electrical, Plumbing, Roofing, Windows, Patio Cover, Flooring, Tile, Granite, Pool, Masonry, Concrete, Locksmith, Dumpster Company, ReStore, General Contractor to coordinate all the subs and get all the rest of the work done (with his labor, not yours)

71. My Favorite Demographic for Energy Wise Renovation30 to 50 year old homes (tract homes)1000 to 1500 sqare feet 3-4 bedrooms 2 baths 4x12 pitch roofs, 8 foot ceilings, single story,usually on a slab, usually stucco.In a desirable area.... people want to live thereNot the lowest priced zip code in the areaMedian home value for this Zip is about median for the whole City (93727 is $145,000, City is $145,000)Includes “anchors” that attract buyers (jobs, shopping, parks etc)

72. Reasons This Is A Good Place For This Type Of Investing1. These homes usually have everything worn out:Roofs, AC, Windows, Carpet, Paint, everything can benefit from renovation.2. Newer homes dont need enough.3. Older homes may need too much and become a money pit.4. The tract will all be built the same. Stay in a tract and get economies of scale and knowledge of prices and start controlling your own comps and appraisals.

73. Reasons This Is A Good Place For This Type Of Investing5. The 8 foot ceiling and slab and stucco make this an easy home to get significant energy savings6. Three Bedroom Two Bath is what sells. It’s what first time home buyers want. 4 is even better7. This type house, all fixed up will have great appeal to first time home buyers.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.

74. Reasons For 3 Packages1. 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)Thirty Years of Contracting has proven it for meCustomers who will buy “everything” are rare.Small number of complete jobs sold by the new Home Performance Industry shows the same conclusion2. Complete Packages set your homes apart. Finding Buyers has not been difficult.

75. The “Cliff’s Notes” Formula ForThe 3 Package SystemThe Energy Package $20,000 (hard cost)The Wow! Package $20,000 The Done Package $20,000Soft Costs $20,000Profit $20,000Total Buy-Sell Spread $100,000

76. Some ExamplesFoam at Windows and Corners. Painted FireplaceNotice effect of long overhang. It has kept sun off western glass.Now the deciduous tree is about to take over for the rest of the day.

77. Designer Sink and Euro Faucet will set you apart from the homes in the neighborhood.Counter Top is left over granite from the kitchen.Some Examples

78. Some ExamplesThis 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?

79. Same tile as kitchen backsplash for accent.Inset shampoo alcoveThese are not expensive but definitely say “Custom”Some Examples

80. Some ExamplesFoam Blocks and Window & Door Trim. Garage Door with windows & Auto Opener 30 year roof was existing

81. Some ExamplesChair Rail, Crown Molding, Panel Doors & Trim,Oil Rubbed Bronze Hardware is popular now. Three tone paint, (lighter ceiling, medium high wall, darker low wall) Ceiling Fan, Outdoor patio.

82. 82HVAC Package ARemember our Parameters for Houses(Our Target houses are 1,100 to 1,500 square feet approx 45 year old Tract homes with 8 foot ceilings)Tear out everything, Unit, Ducts, RegistersReplace with 2 ton Package Roof Mount Unit13 SEER AC with 80 % efficiency gas furnace, engineered and sealed R-8 flex ducts and low resistance registers

83. 83Q. Why Always New Ducts?A. Bad ductwork is usually the biggest problem in homes. Wrong sizing Wrong Register placement Poorly Sealed Poorly insulatedDuct Sealing addresses only one of these problems.Putting Make-Up on a CorpseBetter to start over and do it right. Because we can.(attic is accessible, unlike on some 2 story homes)

84. 84What’s the HVAC contractor do? (besides install the system)A. Manual J calculation. Confirms 2 ton will workA. Duct design with Manual DIncluding Register SelectionA. Obtain the Building PermitA. Duct Seal Test with BlasterA. Combustion & CO testingA. Envelope infiltration test with Blower Door

85. 85Q. Choosing The AC Contractor(cheapest bid is not the right answer)A. More than any other trade, this guy needs to know what he is doing and what you want to do.A. Dont go cheap on this.A. CBPCA training, NCT membership, BPI certification are indicators of competencyA. Familiarity with all these items and excitement to work with you because you want to do things right is also good.If they argue about these standards, they are the wrong player for the team.

86. How About Mini Splits?This is the technology used by the entire rest of the planetbesides USA.Why?Americans have bought the idea that they need a lot of forced air blowing into every room.Typically Mini Splits have had only one or a few indoor units.New Developments allow small short duct systems to aid in distribution to satisfy Americans.

87. How About Mini Splits?Benefits of Mini Splits1. 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. 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.

88. How About Mini Splits?2. No duct loss. Because there are no ducts.3. Original Cost is less4. Electric Heat Pump heating eliminates combustion altogether.One recent Price comparison for complete new installation13 SEER Package on roof $6500High Efficiency Split System $8000MiniSplit with minimal ducts $5500

89. The Concealed Unit = Key in USHere is a Concealed Unit, being installed in a hallway.The small ducts feed the bedrooms and bathroomsA lowered ceiling will be installed when the ductwork is complete.All the ductwork is within the building envelope and covered by R-55 insulation = No duct loss!Stay Tuned For Updates!

90. 90Q. Why don’t people know what the V stands for?A. Because our houses have been so crummy and loose that they got plenty of ventilation just from the leaks.A. Now that we are tightening up our houses, mechanical ventilation is essential.A. Build as tight as possible, then ventilate as necessaryV...

91. 91Oh, Honey, I love it!Let’s buy this one....You need to know all this HVAC stuff but remember, This is how your home really get’s sold (usually)Well, they have those Energy Stars and the carpet is made out of recycled Pepsi bottles so I guess we might as well...

92. 92Dont Let Things Get:Out Of Order!(On Your Energy-Wise Renovation)

93. Insulation and Shell Sealing go together!Lack of Shell Sealing is one of the reasons That the insulation rebate programs of the 70’s and 80’s were regarded as a failureAnd cancelled by some utility companies.They each stop a different kind of heat loss.Insulation stops heat loss by conductionShell Sealing stops heated or cooled air from leaving thru the cracks in the air barrier.

94. How to Shell Seal?A. Remove the Attic Insulation at the wall plates. Seal with spray foam or caulk: Holes left by electricians-plumbers Ceiling light fixture boxes Drywall joints All changes in elevation such aslowered hallways, voids, chimneys, and knee walls.A. If the home has a raised wood floor, seal the same things under the floor.A. Dont miss the under-floor biggie: big holes cut in the floor to accommodate tubs and shower drains. Cover with Duct Board and seal in place.

95. HairCut RequestPhotos can be sent along with the HairCut RequestWhich of the next 4 photos do you think I should send along? How much do you think I will get?3405 N MiamiNew Project in Due DiligenceFront Entry Porch Illegal Addition Adds to the Ugly Factor. Will fit nicely in 40 yd dumpster on Day#1

96. Most Bathrooms of Foreclosed Homes Look Similar To This.

97. Guess What’s On The Other Side Of This Wall?Is This Stachyobotrys?See the CDC sitehttp://www.cdc.gov/MOLD/stachy.htmFor Remediation with Bleach

98. Not A Good Idea To Walk On This RoofAre the Truss Chords Damaged? Or only the plywood? Big (huge) cost difference to repair.

99. Price per Square FootThis is regarded by some as the most important indicator of value.Note GEE properties on Bernadine value is exceeding the neighborhood including even the 20 year newer neighborhood. 12

109. No Extra Charge For The Dead Mouse!

110. 110My BestOpen House EverDisclaimer:I haven’t done a LOT of Open Houses. The methods outlined on this site generally lead to the house being sold before it is finished. The “Magic Brochure” is key to these results.

111. 111This is from the most recent Open House from day before yesterday. A more typical Open House No Bankers, Insurance Agents etc to impress...But the same type of Brochure

112. 112Typical Sunday Afternoon Open House... ExceptMassive Signage& 2 Realtors1 knocked doors10 up and 10 down both sides.Results:20 parties came thruMuch InterestRealtor met 1 couple after at another address

113. 113NO FOOD on an open house like this.This sheet sends a good psychological message to the 1. Buyer2. Other Agents3. Appraiser(most important to leave a supply of these brochures on the counter)

114. 114Similar FormatSimple to just add the subsequent houses and the next ones availableWe are actually operating similar to a tract builder doing Pre-Sales out of his model homes. We just sell each model as we go.

115. 115Be There!It is good for you to be there at the open house.1. Your passion about your project can come thru to the buyers2. Your Realtor will pick up little details from you, especially about the Energy Package.3. It will be good for you to hear the feedback from real buyers.

116. 116Q. Where do I find the Money?A. Banks. Small, Local Bankswith only a few branches. My bank has only one branch. These banks pride themselves on local involvement and “relationship banking” The president came to our first open house. These banks may offer a Line of Credit or may finance your project on a case by case basis.L.O.C. Rates are around 6%. 1-2 points They will want to collateralize something, house, savings, other property etc.This is how I have done all projects so far.

117. 117A2. 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.The required cost breakdowns for appraisal and inspections are good exercises for beginners. They will help keep you safe.This loan is unique in that it is both “construction” and “take-out” in one package. Great if you have a project you want to live in.

118. 118A3. Hard Money Loans“Hard Money” isn’t as hard as it sounds. It may be the perfect solution for getting started, when collateral is not available.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)So less paperwork and inspections are required.BrookView Financial caters to renovators 4-5 points, 15% interest.Getting qualified is a good exercise.(You want to graduate off of this type of funding ASAP)(The prequalification letter is valuable for offering)

119. 119A.4 Private Money, Investor, (for a portion of profits)There are thousands of people who have funds that are earning 2 to 4 %. Or less.50 - 50 split is typical but not mandatoryGrant deed can be with you or your investor.Do the math. This scenario may be the worst choice for you and the best for your money partner.This may be the easiest investor to findBecause it is easiest to explain and understand.Note: If you overspend and the profit is zeroThe profit split is zero.

120. 120A.5 Private Money Investor(for interest only)9% to 12% interest only is typicalSome lenders will want pointsInvestor security can be secured by placing the property in the name of the investor by grant deed.Multiple investors of this type should be cultivated.With multiple investors, you will shop without pressureThey keep their money readyYou find the dealThey wire funds to the escrow company.You renovate and sell the projectThey are paid their interest.You keep the rest.(If there is no “rest” they still get their percentage.)(This is what I will do if I run out of bank money at 6%)

121. 121A6. Credit Cards. Commercial cards usually go up to $50,000. You can get several. It’s a good idea to have these in the background in case other sources dry up or dont come thru.Google “Commercial Credit Cards” Or see Cardratings.comLook for introductory rates and check writing capabilities.

122. 122A7. Many people have money in IRA and 401k accounts that are earning 0% or less. This money is not normally available for investment in Real Estate.ButIf certain custodians are selected, for “Self Directed IRA’s” the money can be invested in real estate. (Subject of another class)Google it. And get professional advice.

123. 123A8. HELOC Home Equity Line of Credit.You only pay for the interest you use.Check around. The rates and terms vary greatlyCurrently, Credit Unions seem to be the best source.Golden One may be a good source.

124. 124Q. Do I need the money or the deal first?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.If you find the right deal before your funding is totally secured:1. It will heat up the search for money.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!(= It Doesn’t Matter)

125. 125Q. Can I lose my earnest money doing this?A. Yes. This is for big boys and girls. Be responsible.Remember to put your “get out clauses” in place And be careful of your time lines.Standard inspection time in California is 17 days.“Approval of my partner” adds additional option if you feel you need it. I have only used the inspection clause.(Banks will play hardball and keep your earnest money if you go past your inspection period and then cancel)

126. 126A2. More protection. Use a photocopy of the check as long as you can.Negotiate the time before it becomes “live”To be as long as you possible.A3. “upon final acceptance” can mean when all contingencies are removed. Including even contingency upon financing.If you negotiate it that way. Everything is negotiable.You have not if you ask not.

127. The Energy Wise Investor’sOptions1. Do all the work yourself2. Do none of the work yourself3. Somewhere in the middle. (Do some work if you are qualified, and want to.)My choice has been to do no work with tools, even though I would enjoy it.

128. 128Questions ThatNeed Answers!I have no clue about Pascals: How much do I need to know?Don’t I need a lot of cash ?Do I need to be a Contractor ?I dont think it will work in my area.Do I need to become a Realtor?How about my “Bruised” Credit?Is it Too Late?Design: What’s That? I think green and blue go good togetherI’ve never worked in Construction. What about me?Creative Financing? Cant you go to jail for that?

129. 1297 Skills Of The Energy-Wise House Flipping Investor1. Home Performance, Energy Basics:2. Real Estate Basics3. Financing Basics4. Construction Basics5. Design & Decorating Basics6. Working with Contractors7. Building & Working With a Team

130. 130Q. How Much Expertise Is Required In These Areas?A. Full Journeyman or Practitioner Expertise is not needed in any of the 7 Skills.If you have advanced skills in any of the areas, that’s an extra bonus for you. (unless you focus too intently on your specialty and neglect your main job which is:Facilitator and Team Leader

131. 131Remember your other #1 job Finding the Next Deal!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.

132. 132Q. Is there anything more important than these 7 Skills?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.132

133. 133MindSet #1I Can Do It. Of Course I Can Do It!This is a belief that started a long time ago and colors the way you look at life. Its corollaries are:I can do anything I put my mind to.I’ll do whatever it takes.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.133

134. 134MindSet #2Profits vs PaychecksThis is a hard one for some people who have worked for a regular paycheck for a long time.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.” 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.

135. The Market Has Changed!(End of 2009)1. There is a Feeding FrenzyEspecially on REOs2. Banks are now receiving full price offers and above full price3. Multiple Offers on all REO salesThis is Way Different than it was 3 months ago....

136. Questions We Must Ask1. Is this just local?2. Is this a blip on a continuing slide or the beginning of the big ride back up?3. Is it “Too Late” to find good deals?4. Have the formulas changed?5. What other strategies should be considered with this new market?

137. Remember:Principles Dont Change!1. Principles are Universal like Gravity2. Beware of anyone who has dicovered a “New Principle” (and is selling CD’s and Seminars about it)3. Strategies ChangePrinciples Remain Constant.4. Let’s sort thru our teaching,Separate the Principles from the Strategies and....

138. Sell Price - Buy Price = $100K(simple is always best)Breakdown of Dave’s Simple FormulaWow Package = $20,000Energy Package = $20,000Done Package = $20,000=> Gross Margin = $40,000Costs = (Utilities, Insurance, Interest, Commission, Marketing, Closing Costs and Oops! Factor) = $20,000Target Net = $20,000

139. Sell Price - Buy Price = $100KQ. 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?A. Yes, Just last week I got an offer accepted in my target neighborhood for the lowest price I’ve ever paid.If the project doesn’t have close to this spread after final negotiations, it is best to just pass on it.

140. 27 Principles That Haven’t Changed1. Find an area and stay in it. Improving the neighborhood as you go. Creating your own compsAssisting Appraisers to justify their appraisals.2. In and Out Quickly3. Minimize hourly labor to control your costs.4. Know your exit before you enter.

141. Principles That Haven’t Changed5. Pre Sold is Good6. Staging works if you need it.7. The Wow! Sells the house.Energy Geeks get used to it.8. Stay in the Blue to collect the Green.(Blue Collar Neighborhoods that appeal to first time buyers work well for our strategy)9. Stay out of War Zones

142. Oh,Honey, I love it! Let’s buy this one!Well, OK. It’s got those Energy Stars and Everything I’ve ever heard of…. One Way To Sell Green!

143. Principles That Haven’t Changed10. 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.If your realtor doesn’t want to run CMA reports per your requests, they are not the right realtor for you.11. This work is simple (But not Easy)

144. Principles That Haven’t Changed12. We are looking for Ugly HousesThe Uglier the BetterEven more so now with the current feeding frenzy among investors.13. Dont go cheap on the Wow! or assume that buyers can visualize what you are visualizing.14. Use your first project as a show room to sell your second one.15. The System Is The Solutioneliminate surprises.

145. Principles That Haven’t Changed16. 5 Olympic RingsBuy, Design, Build, Market, Sell it Right. Do all 5 and you win the gold.A miss step at any point can rob you of your gold.17. You really can sell your projects without a realtor’s services. (Last week’s interview with Ron Roberts)( and pocket most of the savings)18. Have multiple exit strategies. You may need them.

146. Principles That Haven’t Changed19. Dont quit your day job. This is a perfect opportunity to do on the side.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.20. Original Buying Formula Still Holds.Max Price = ARV * .70 - Repairs(After Repaired Value)It wont work in every neighborhoodfind one that it will work in.

147. Principles That Haven’t Changed21. After you get a project in escrow, dont forget your “due diligence” (Inspections and further negotiations = The HairCut)22. Dont waste time signing offersGet digital.23. Plan on offering a lot. Babe Ruth struck out more than anyone.24. Dont get emotionally involved in a project during negotiation. Keep it a math problem

148. Principles That Haven’t Changed25. 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.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.27. Build the Plane in Flight!A moving car is easier to steer.Get Started.

149. Maybe The Market Hasn’t Changed That Much.... And Isn’t Going To Anytime Soon. Check Out The Next Slide. The Bottom Line Is In Yellow.Does This Mean That Energy Wise House Flipping Will Continue To Be A Viable Business For The Foreseeable Future?Is It A Business For You?

150. WSJ.com Sept 24, 2009The Foreclosure Pain May Drag on for Years By James R. HagertyDelays 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.It looks like we’re taking the latter course, for better or worse.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, .......While efforts to modify loans will help some borrowers, she says, they mostly will amount to “kicking the can down the road.”..............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.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 ............Is This Glass Half Full or Half Empty?Is This Good News or Bad News?

151. Energy Wise Renovation of Foreclosed Homes Is In The Confluence of:Real Estate - Building Performance - Remodeling3 DisciplinesRemodeling&1Sweet SpotGreen &Building PerformanceRealEstate

152. NOTICE:The Sweet Spot Is Outside Of The Mainstream ofRemodeling, Real Estate, & Building PerformanceSweet SpotRemodelingGreen &Building PerformanceRealEstate

153. Each Of These DisciplinesHave Essential Information BUT:Sweet SpotRemodelingGreen &Building PerformanceRealEstateEnergy-Wise Renovating House Flipping InvestorsMust Find the SWEET SPOTIn Each DisciplineAnd DISREGARD theInappropriate “Common Wisdom” of Each!

154. Sweet SpotRemodelingGreen &Building PerformanceRealEstateSummaryIn Sum, because you are an Investor, not a Contractor& Because you are blending 3 disciplines, not just one,You are free of many constraints, and can do the right thing because you know it is the right thing to do.But as you exercise your freedom, Just know, you may be branded a HERETIC by your mainstream friends.

155. Sweet SpotRemodelingGreen &Building PerformanceRealEstateSummaryIt’s OKThey dont burn us at the stake anymore.

156. Deliver More For Less?Delivering More For Less:It sounds like a violation of the Second Law of ThermodynamicsOr a Crazy Sales PitchActually It’s neitherIt’s just about all the things you Dont Have To Do when you work on Foreclosed Homes (That are Empty and You Own)See The Comparison on the next slide. Compare the percentages to your current business model

157. Cost & Benefit AnalysisConventioal Contracting To Residential CustomerWhy would you want to do this?Energy-Wise Renovation of Foreclosure by InvestorWhen You Could Do This?

158. What’s Missing?These Parts of “NORMAL” Contracting are missing from Energy Wise House FlippingBig Overhead including:Marketing, up to 25%Sales Commissions 10%+Working in customer’s homesWorking with “Programs”Computer Modeling or Ratings*Partial Home Performance Projects*Problem Homeowner Headaches*Lawsuits*Labor Board Complaints**How Can This Be? >>>

159. * The Rest Of The Story No Programs, Incentives, Rebates or Tax Credits Required.Computer Modeling & Ratings are unnecessary - get in the way.No Partial Jobs. All Projects are as complete as I want them to be.No Problem Homeowners because the homes are always empty.No legal problems because no “new home” promises are madeNo Labor problems because there is no “labor” in this method. (Labor works for the Subcontractor)

160. Some Choose To Be DifferentIf 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......You will be one of a very small Army.(the regular House Flipping Army is much larger)These concepts have not been tried and found lacking. They have mainly just not been triedI have tried them and they have proven to be Ideas Who’s Time Has Come

161. For Years There’s Been One Way:Maybe It’s Time For a New Way?Think about it.

162. All The Testing & Certification You Need.... And None That You DontDisclaimer:The Ideas presented here are for a noble experiment:“Delivering Excellent Home Performance Projects using only our own properties, purchased right and renovated with the concepts developed on this site and implemented purely in the American Free Enterprise System.They may not be appropriate for “Home Performance Contracting” as normally practiced

163. Contractor, Rater, or Energy-Wise Investor?The “Rules” and Best Practices for these disciplines are different.An assumption that is true in one discipline can be false or irrelevant in another area.Most of the assumptions that you’ve heard are designed for contractors and their symbiotic cousins, the raters,contracting with homeowners in incentive driven programs.(and they are mostly true in that context)

164. Quick Review Of G.E.E. Principles1. Work only on our own properties, 2. Select an area and stay in it.3. Sell to first time home buyers4. Complete 3 package system: Energy, Wow! & Done5. Sub-Contract Everything6. Systemize Everything7. Negotiate Hard @purchase8. Control the Comps, see#29. Influence the appraisal, see #210. Demand Wholesale Pricing11. In & Out Quickly12. Do everything short of Renewables, almost everytime.13. $100K spread 20-20-20-20-20

165. Energy GuaranteesBecause of Base Load and Lifestyle issues that we dont control, these can turn a happy customer into an unhappy customer. We choose to stay awayInstead we offer to pay 1/2 of the Utility Bills for 2 years.This is enough to leave all the competition behind and there is nothing to argue about. They turn in the bills. I write a check. It’s a good way to stay involved with my customer. And collect referrals etc.

166. Multiple Streams Of IncomeI am not suggesting that people torch their day job and burn their bridges to start a new life ONLY working on their own projects.(I still have the residue of a day job or two)But dont miss the beauty of Multiple Streams of Income.When one dries up, another will keep you supplied.

167. Can I Hybridize These Concepts?Absolutely...It’s America.The beauty of working with no incentive programs (and the costs and constraints that come with them) is that you can add any of these things back in to your formula when you decide that it will benefit you. Be cautious, however. Give away enough of your freedom or compromise on “Do Everything Everytime” and what you will have will be a totally different business.You will no longer be doing the right thing because it’s the right thing to do

168. What Could Go Wrong?Along with the money of programs, comes the control and additional overhead.The biggest blessing I’ve found in EnergyWise Renovation as an Investor is the Freedom to Do Good & Complete Home Performance.If you modify too far from the concepts presented here, you may find yourself no longer doing the right thing because it’s the right thing to do. Instead you’ll be doing it to fit into some program or just to keep the overhead paid.I dont wish that for you, my friend.

169. Fixing ProblemsBeing CreativeOutside The Box= Fun3405 E FedoraWorn Out T-111 Plywood Siding ($51,500)3 Ton Condenser On Roof

170. We’ll see how foam blocks forced into the cavity between the batt and the plate work...You probably have never seen this tried. I hadn’t either.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 of infiltration at the Test Out at the end.

171. Solution to the worn out plywood.Additional 1 inch of foam plus stucco

172. Weeps must be left free to weep and flashing must slope down and away.

173. Stucco beingApplied over1 inch foamSheeting.

174. Checking The ChargeNote 3 and 4 ton units on neighbor’s homes.

175. Close Up Of Motor, Blower & Electronics

176. Remember you have to provide a condensateDrain to the outside. (or pump, which we dont like because they have a tendency to fail sooner or later)

177. Proud Papa in the Inventor’s Workshop

178. Rogelio Covarrubias Job Superintendent, checking out the SEER Rating or the Fujitsu heat pump.

179. Smooth “Hard Pipe” and gentle square to round transitions minimize friction loss and deliver maximum air to the rooms.This was our main concern but these short, smooth ducts were our solution.

180. 2 Ways To Double The Cost Of Your Project!

181. But Wait! Why Would I Want To Do Something Like That?Maybe to stimulate the economy?Maybe because you hadn’t run the numbers?Maybe because “we’ve always done it that way”Whatever the reasonThousands of jobs cost double what they could be produced for if they were approached differentlyCurious?That’s the Heroin, Right There

182. #1. Participate In A Federal or Utility Funded ProgramRecently I asked two contractors who participate in Federally Funded Renovation Programs,What are your costs if you did the same job inside and then outside of the program?One said, $70,000 in the program$30,000 without the programThe other said $40,000 with it& $20,000 without the programNot a big study, but these are real contractors!

183. #2 Contract With A Customer 90% of Construction Work is done by contracting with customers. The Model generally includes:1. 15-25% Marketing Costs2. 10% Sales Commission3. 10% Extra Work Around Customer, (masking, booties etc)4. 10% Extra Paperwork and Administration to deal with Customer and programs, rebates, warrantees etc. IE 50% of the $ spent is not getting work done but just getting ready and supporting getting the work done.Work Goes A Little Slower Working In Mrs Jones’s House

184. Those Aren’t The Only SolutionsThe Concept of Multiple Streams of IncomeHas become popular and essential in recent years because of the the instability of things we formerly believed to be stable.Contractors can have multiple streams too....

185. OK, I’m Convinced. So How Do I Get Started?Top 10 Action Points1. Knowledge Is PowerEducate Yourself.Bibliography:a. Flip by Davis & Volanib. Real Estate & Investing Seminars & Books.(very expensive ones are available cheap on eBay)

186. Getting Started #22. Home Performance Classes @ Utilities3. GreenEarthEquities.com(over 1000 pages of content on the blend of Real Estate, Remodeling & Home Performance) (free)4. Subscribe to Home Energy Magazine, CPBCA & Build It Green Newsletters etc.Click Here &Read The BlogPosts

187. Getting Started #35. Learn the Internet Tools, Google Earth, Bing, Cyberhomes, Localetrends, ForeclosureRadar, etc see next week’s slides for a more complete list.6. Start Building Your Teama. Find The Right Realtor. (this may take several attempts. See Planetsavers University for tips on interviewing & other team members)

188. Getting Started #47. Sign up with your Realtor to receive automatic filtered listings in your email. (some MLS systems call it a “portal”)8. Learn To Use The Comparative Market Analysis (CMA)9. Pick your neighborhoods and become an expert on real estate there. Track listing and sales prices. Visit Open Houses

189. Getting Started #510. 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.

190. “Paper Trade” Before Using Live AmmunitionDid you notice that most of the Top 10 Getting Started List was free or only a few dollars for a book or subscription?You can go a long ways toward ensuring your successBEFORE you buy your first houseEducation is costly, But Ignorance is even more costly

191. The Four Pillars, Like The Legs Of The Eiffel Tower, All Are Necessary1. Envelope2. Comfort System3. Health & Safety4. Water

192. #1. Build A Tight, Well Insulated Envelope & Prove It.1. All Six Sides2. Especially The Joints3. Includes Windows & Doors4. Minimize Thermal Bridges & BypassesProof is Blower Door& Infra-Red CameraFinal Proof is Utility Bill

193. #2. Build An Efficient Comfort System & Prove It.1. Properly Designed Ducts Tight & Well Insulated2. Properly selected & installed & tuned equipment.Proof is Manual J, Manual D, Duct Blaster, Delivered BTU’s& even room temperatures= comfort & efficiencyFinal Proof is Utility Bill

194. #3. Ensure Health And Safety& Prove It1. CO testing (minimum)2. Filtration (more than Rock Stopper Standard Filters)3 Ventilate On PurposeBuild It Tight - Vent It RightProof Is CO & other IAQ tests& existence of Mechanical Ventilation SystemFinal Proof is Health & Safety(less illness etc)

195. #4 Heat & Use Water Efficiently& Prove It1. Heat Water Efficiently2. Minimize Waste of WaterInside, (Showers, Dish & Clothes Washing etc)Outside, (Landscaping)Proof is Utility Bills & Water Bill(Water Is The Next Crisis)Energy Wise Investors Can Be Way Ahead Of ContractorsWho seem to have to wait for Government Programs.Just Decide & Start Doing It!

196. Q. How Much BS (building science) Do I Need To Be Successful?A. There is a ton of Science and a Lifetime of Learning behind each of these 4 Basics of Home Performance.The Good News For Energy Wise House Flipping Investors--You Must Only Understand These Basics and How They Interact.There are scientists, technicians and subcontractors for the details.

197. Q. What If I Dont Get It Perfect?A1. Dont Worry About It. Nobody Gets It Perfect!A2. Perfection is a Moving TargetA3. Anything you do will be an improvementBut on the other hand....

198. Dont Worry........Too Much.Let’s assume there are 33 items per package that would all be done perfectly to get a 100% A+If that were true you could still miss 10 and get an A-But some items are CATASTROPHICLets focus on 3.....

199. Dont Cut These Corners1. HVAC Sizing, Design & Tuning2. HVAC Ductwork Sizing, Design, Sealing & Insulation3. Sealing before insulationAlso #3 can be tested by your HVAC Contractor if it is done by Insulation Contractor= HVAC = Not the place to skimp.Does NOT mean spend big on High SEER Equipment! (.....Discussion)

200. The New Package That We Must Add In 2010Water!It’s the “Next Oil” or The “Next Crisis In General”Is the “Desert Look” the only way to save water?Do you think your buyers would buy the project in the next slide?

201. tony@prairie-gardens.com

202. Another Part Of The Water PackageWater!This Toilet is advertised to save 23,000 gallons per year!

203. All 3 Work Together3 Package Strategy:ENERGYWOW!DONELet’s Review The 3 Packages(See PlanetSavers U on site)

204. Like Feeding A Pill To A DogEverything Green and Energy Efficientis the Pill.The Granite Counters and Travertine is the Dog Food. ... Dont try it without the Dog Food!

205. The “Done!” Package3 Package Strategy:ENERGYWOW!DONERememberThey All Work Together!

206. 1. New Grass, front and back(Buffalo Grass &Drip Irrigation forLow Water Usage)2. New Sprinklers front and back3. AutomaticSprinkler Clock

207. 4 New Roll Up Garage Door with windows5. New Garage Door Opener with controls..

208. 6. New Electrical Switches, Plugs & Covers7. Outdoor Living Option Covered Patio8. New or Renovated Fence and Gates9. Other Landscaping

209. 10. New 30-50 yearcomp roof11. New (possibly relocated) water heater12. New 100 amp service

210. 13. Grounding of all wiring. 14. Gutters as Necessary15. Proper drainage away from house.

211. 16. Dash Coat or complete exterior paint17. Premium Carpets over 6 lb pad

212. The “Energy” Package3 Package Strategy:ENERGYWOW!DONERememberThey All Work Together!This Week:

213. The Energy PackageThe Energy Package is presented in the form of a List.This would typically be perceived by our industry as “Prescriptive”(In some circles that is almost a swear word.)We use a Prescriptive List with Performance Criteria.It’s a Hybrid Prescriptive-Performance approach....Capturing the best of both the Performance and Prescriptive approachesGood “performance” fromThis 1200 sf “prescriptive” home

214. The Hybrid Approach(Prescriptive Selection WithPerformance Test Out)Benefits of Prescriptive Methods:Fast, Easy Selection of Scope of Work.No money spent on testing and certifying means more to spend on caulking etc. (real home performance)Works best on easy cookie cutter tract homes.

215. The Hybrid Approach(Prescriptive Selection WithPerformance Test Out)Benefits of Performance Testing.(Especially testing OUT)Selective Test Out proves thatSpecific performance targets have been delivered.Full Diagnostics are needed throughout on Architectural Wonders, and Historical Homes(difficult & complicated)On Easy Homes, We Simply Do The Right Thing and Test OutLike This...

216. For Example:There’s a lot behind that 680 on the DG 700. It means1. The tightness targets have been met and exceeded for the 1200 square foot home. (1 CFM 50 per square foot is a normal target)2. The home is so tight that it needs Ventilation “On Purpose” = a mechanical ventilation scheme.3. We can rest assured that the inputs to our Manual J load calcs are correct or better and the equipment will perform.It didn’t matter that the items were chosen and installed prescriptively

217. The Energy! Package13 SEER 80% or MiniSplit Heat Pump.See discussion on Facebook Fan Page1. New HVAC system, Stainless Steel Heat Exchanger(Exception: If the unit is less than 7 yearsold and not grossly oversized.)2. Manual J sizing, usually half of previous capacityEquipment tested to deliver at least95% of BTU’s listed on the Name Plate3. New R-8 short mylar ducts buried in more insulationNew Low Static Registers

218. The Energy! Package4. Manual D with tight seal and test *(3% target vs 6% standard)Flex duct stretched tightNew Low Static Registers5. Extra Return Duct in Master SuiteAdditional Door Undercuts in other bedrooms*Mandatory by HVACContractor with Building Permit

219. The Energy! Package6. New LoE2 windows and Patio DoorsU Factor of .30 Non Metallic Spacer is a differentiator7. Low E 140 at west windowsSolar Screens on the West8. Deciduous Trees planted selectivelyChinese Elm & Chinese Pistachio are favorites

220. The Energy! Package9. Shell Sealing of floor & ceiling with test (1 cfm50 per square foot is maximum)10. Attic Insulation (cellulose) to R-50 11. Occupancy sensors& Motion Sensors12. Gas Stove and Dryer options(Needs A LOT More!)

221. The Energy! Package13. Ceiling Fans at all sleeping and living rooms14. Panasonic Ventilation with controls(for sure if leakage is under 1/ sq ft)(Runs 24 - 7 No owner controls)If leakier, Panasonic Bath Fan with Tamarack Controller is minimum15. Owners Manual to operate their new homePanasonic FV-04VE1 WhisperComfort Spot Energy Recovery Ventilator (Marketed as “Spot” ventilators but at 20 or 40 cfm, they can do small homes.) djr

222. The Energy! Package16. 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

223. The HVAC ContractorYou will notice that most of the items in the Energy Package are or can be done by the HVAC Contractor(Size and select the equipment and the ducts and registersTest out the ducts, delivered BTUs, whole house infiltration and CO Safety)Dont skimp here. You get what you pay forLook for CBPCA trained, BPI certifiedThey should LOVEHome Performance...Like Gary...Not be forced into it

224. The “Wow!” Package3 Package Strategy:ENERGYWOW!DONERememberThey All Work Together!This Week:

225. Wow! Package Drill Down1. Granite Counters at Kitchen & Baths2 & 3 foot blanksNot from “Slabs”It’s what buyers want2. Extra Deep Stainless Steel Sink8 or 9 inches2 basins, not 1 or 33. Designer Spray Faucet

226. 4. Italian glass tile backsplashOr granite backsplash5. Under Counter LightingEspecially with glass tile6. All wood Maple CabinetryNo Particle Board = Less VOC’s7. Crown Molding &Tall BaseCrown at Din Rm, Liv Rm, MBRSometimes Chair Rail at Dining Room

227. 8. All new panel doors & stepped trim9. New Front Door with Art GlassLook for Sale Prices10. Tile & Travertine floorsTravertine if special pricing.11. Engineered Wood Laminate FloorsBuyers aren’t excited soOnly by request

228. 12. Designer tile and faucets at bathsHardie Backer behind13. Chair Rail, Wainscoating & 3 tone paintTypically 1/4 color @ ceiling1/2 color @ topFull color @ bottom14. Designer Light fixtures & ceiling fans(With CFLS & Occupancy Sensors)

229. 15. All New Stainless Steel Appliances16. Newly Textured Ceilings (no more popcorn)17. Carpet & Pad with quality you can feel.2 grades up from FHA6 or 8 lb pad vs 4lb std18. Sculptured Exterior Trim at Windows & Doors

233. Find Your NicheScatter GunVsLaser AccuracyClear Definition of your target will maximize your success!Dont Buy Just Anything

234. Neighborhood1. People want to live there. (Not Detroit right now.... Or some areas of your city)CMA from RealtorNeighbors are spending money on renovationsFind It, Claim It, Master It, Stay There& Reap The Benefits Of Your Focus!

235. Desirability Factors1. School Reputation2. Anchors such as Parks, & Shopping Centers3. Close to Jobs4. Transitioning Up, Not DownMy NeighborhoodLocaleTrends.comFresno County SchoolTest Scores

236. Target House Specs1. 3 or 4 Bedrooms(2 Bedrooms wont have the “spread” you are looking for2. 2 Baths(1 Baths wont have the spread or the quick sale)

237. Target House Specs3. 30 to 50 year old Tract Homes(Older will have more difficult problems, Newer wont have enough problems for you to build value and deserve your price)Before

238. Target House Specs4. 1000 to 1500 sq ft5. Pools are OK(most investors dont like them = better deals)6. The more beat up the better (for you)

239. Target House Specs7. The “Worst house on a good block” is a good thing to look forOne or two Board ups Is good. More is suspect

240. Stay Away From1. War Zones, lots of graffiti, other hints of gang activity.2. Busy Streets4 lanes3. Obsolete Floor Plans(thru a bathroom to get to a bedroom)

241. Stay Away From4. Too small a Master Bedroom. 12x12 is good. Much less will limit buyers as new bedroom furniture wont fit.5. Flight Paths, Freeways & Hi Tension Lines

242. Define Your BuyerFirst Time Buyer.Hopefully FHAPriced where payments will be only a little more than rent.=$150K to $250KSell priceForeclosureRadar.com estimates rentsRentometer.com publishes exact rents

243. Define Your BuyerIf 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.Stay away from emotional decisions.See “8 Exit Strategies” &“Know The EndFrom The Beginning”In PlanetSavers U atGreenEarthEquities.com

244. Management Tools:The Checkbook Method1. You and your managing partner, (General Contractor or Project Manager) are both signatory on a joint checking account.2. Thru Electronic Banking, you watch as he or she spends the money. All expenses go thru the check book3. You put more money in via transfer as it is needed.4. At the end, all the accounting is done. Your CPA will love you.

245. Correct MotivationWhen He or She is dependent on a share of the profit, and actually handwriting the checks,They are very careful with the Checkbook

246. Q. What does the GC do (either himself or with his employees?)A1. Everything not done by subcontractors. Some examples might be: (some of these might be subs)Board-Up and Re-Keying,Demolition and haul to Re StoreFinish Carpentry, doors, casing, base, crown etcCabinet install, Hardware installAppliance Install,* Mirrors, FixturesAnd mainly supervise all the subcontractors.

247. Q. If subs do everything, what do I do?A1. Maintain the Energy-Wise aspect of your operation. Many will tempt you to take shortcuts.A2. Be finding the next project.A3. Market to get them sold quickly.A4. Continuing Education. On Real Estate, Remodeling and Energy Efficiency.A5. If you want to, you can help your community thru consulting with politicians & non profits. Habitat etc.

248. Don’t Yield To Temptation:Avoid The “Grey Market” EconomyMake Sure Your Subs Have:1. Contractors License2. Workers Comp Insurance3. Liability InsuranceReasons:1. Liability: Lose Everything...2. Crackdowns Coming3. Unfair to those who play fair.

249. Contractors, Not EmployeesYour Contractors Are ResponsibleFor their employees:1. Workers Comp Insurance2. Legality for work(Citizenship, Green Card, etc)You dont want this contractor’s headache. Leave it for the Contractors!

250. Negotiate “Wholesale” PricingContractor Gets:1. Consistent Flow of Work2. No Sales or Marketing Expense3. No Customer Handholding4. Smooth Teamwork5. ReferralsInvestor Gets:1. Wholesale Pricing2. Minimum Supervision Required3. Speed, priority service

251. Somebody Has To KnowHome Performance!1. You are the best choice.Enroll in classes, read books, etc2. The more Home Performance your contractor knows, the better for you.3. Once you know enough Home Performance, you can specify the performance you require.4. Especially HVAC, Shell, Insulation, & Window Contractors

252. “Naked” Capitalism?1. Minimum Government Involvement.2. Minimum Program Involvement.3. Use All “Wholesale” Vendors and Suppliers4. Minimize Overhead 5. Focus On Adding Hard Value.6. Find Your Own Money.7. Find Your Own Buyers.8. Buy SmartStay NIMBLE!No NSP programsFor example....

253. A Green Heart:How Green?What Color of Green?How Committed?Origin Of A Green Heart?Is It Essential? Can I Fake It?Fake It Till I Make It?Can I “Sort Of” Believe?

254. Observations:?Many in the Home Performance Industry dont live in Performing Homes...Most, 99%+ in Real Estate and Real Estate Investing are motivated primarily by profit and ROI. Many Contractors do only what will sell, basically “follow the money”These probably need a Greener Heart to succeed in the Energy Wise House Flipping Business .....Why?(Disclosure On The Next Slide)

255. Why Is A Green Heart Necessary?Disclosure: You need a “Higher Calling” to stay the course when you could make more money faster with less effort if you just did “Lipstick On A Pig”Full Disclosure: In other words. I make less money, and put in more effortand ittakes longerthan the TV show flippers who have raised putting Lipstick on a Pig to an art form.So, Why Would You Want To Do This?

256. But On The Other Hand:Regular House Flipping(Lipstick on a Pig) does:Nothing for the environmentNo Green JobsDrags a Neighobrhood DownNo Reduction of Foreign OilNo Resources SavedOccupants uncomfortable, & paying too muchSame for standard Buy & HoldCreate Rentals Approach& Creates a Nation of Renters& Lowers the Tax Base(98% of All InvestmentAdvice!)

257. Top 10 Motivations Of The Green Heart1. Lower Carbon Emissions2. Provide Efficient, Safe,Comfortable Housing3. Improve Neighborhoods4. Improve The Tax Base5. Provide Green Jobs6. It’s The Right Thing To Do7. Lower Reliance on Foreign Oil8. Create Home Ownership vs A Nation Of Renters9. Conserve Resources10. Satisfaction & Fun Of Doing GoodSo, Why Wouldn’t You Want To Do This?

258. Temptations To Avoid1 Choose a lower specificationexample: R 38 vs R 552. “It’s good enough”3. Keeping things that need to go.4. Skipping repairs that need to happen2 Greatest Home Performance Sins: 1. Skipping or shortcutting the Shell Seal. 2. Failing to Re do the duct system.(Right sized, right placed & sealed)Dont just seal the existing

259. Dont Quit Your Day Job!*Energy Wise House Flipping can easily be done part time. (If you follow the advice on this site & create a great team)2 - 4 projects per year is an easy pace. Get an assistant only when you need one* But if your heart demands it, you will surely succeed“Burn the ships”Hernando Cortez 1519

260. Many Beliefs, Same ConclusionCaring For Our Planet & PeopleYou 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.Welcome to the Team!You may simply believethat God said, “Take care of the place”And Green Renovation Appeals To YouWelcome to the Team!

261. Belief - Desire - ActionFaithAction ZoneConvictionPredisposed To ActionCertaintyGetting Ready For ChangeConfidenceBeliefAssuranceStatus QuoPossibilityComfort ZoneNo Change PossibleDoubtDisbeliefFearIntense DesireWishful ThinkingBurning DesirePassionDispassionateIndifferentDisinterestedVague WantCuriousDesireColdDesire

262. How Do I Know I Have A Green Heart?I’d rather surf the net for new Home Performance ideas than watch American Idol.I get up early and stay up late to study and learn more about this.My friends say I obsess about Home Performance.Home Energy is my favorite magazineThat far away look in my eyes when the class gets boring is me planning my next Flip!

263. How Do I Know I Have A Green Heart?I’m negotiating about a wind generator on top of my houseI want a heat pump water heater for my birthdayEach project will be better than the last. I’m a learnerI’m excited about my new 2 stage toiletAnd Buffalo GrassI think caulking and foam is sexyI obsess about Ducted Mini Split Heat PumpsAnd Many More....You’ll Know.

264. I’ve Learned Some ThingsMaybe I really can make this work with hourly employees. It’s easier and they’re nice guys...Most of them, I already knew, I just thought maybe I could get away with breaking my own rules. Some of them are new.The main rule I tried to break....PS you dont have to learn this the hard way!

265. Lessons From The First 101. No Hourly Labor. Use Subcontractor Only2. Keep Your General Contractor Partner thinking like youwith 2 techniques:A. Pay thru a profit split.B. Check Writing thru the project’s separate account.He spends. I watch thru electronic banking and fund when necessary. Check duplicates make accounting easy.

266. Lessons From The First 103. Wholesale Pricing from subs and suppliers. Always try to beat Home Depot.4. Good Team of Independent Contractors. Mature, Grown Up Adults. Licensed & Insured.5. Make a Budget & Stick with it.

267. With The Market Changes...Is Energy Wise House Flipping Still A Good Idea?YES!!!Maybe Even Better!It will just take a few adjustments to the formula:I signed an offer and sent it off tonight. It felt good to be back on the hunt!Here’s My Plan...

268. Q. How Could It Get Any Better?A. With the boatloads of money coming down the pipeline there will be opportunities like never before. I’ll be watching this closely & may use some of it. Be Careful. It’s hard to stand out & command a premium when you’re running with the pack!FREE Money Never Is.Note: Other Personality Types may be more suited to paperwork

269. Plan For This Over Heated Market20-20-20-20-20 Review$20k Energy Package$20K Wow! Package$20K Done! Package$20K Soft Costs$20K ProfitAssume: I was looking for $100K spread from buy to sell.Assume: I can now get only $90 in the overheated market.I am unwilling to give up my $20I am unwilling to compromise on the Energy Package.Something’s gotta give...At least three things can be squeezed.

270. Plan For Overheated Market1. Reduce the Done(landscape front yard only, etc)2. Reduce the Wow!(less crown molding, 4 lb pad)Reduce the Soft Costs(sell them myself, finish faster, reduce carry costs)This could add up to $20-30K saved! I only needed tomake up $10K. What to do with all these “excess savings?”20-20-20-20-20 Review$20k Energy Package$20K Wow! Package$20K Done! Package$20K Soft Costs$20K Profit

271. It’s A Perfect Time For A....Zero Energy House.Savings From:Done, Wow & Soft Costs, Go To Increase The EnergyPackage*& Add Solar = Net ZeroActually we will only target close to Net Zero (maybe a $5-25 utility bill?)0Yahoo! This Is Going To Be Fun!

272. The Perfect Candidate For Zero Energy House Renovation1. South Facing Roof without big tree shade problems.2. Some Re-Usable Items to keep the cost down. Not quite as trashed as I used to look for.3. Worn Out Wood Siding is excellent. Perfect candidate for new insulation and stucco. 4. Built in the 80’s avoids the new lead requirements.If Zero Energy Renovations Interest You, Join Rogelio and I at the Zero Energy PG&E class on July 20th in Auburn0%Yahoo! This Is Going To Be Fun!

273. Energy Efficiency: What’s It Worth?So What!It’s EnergyEfficient!To A Buyer?To A Seller?To An Appraiser?To The Bank?To Our Planet?All DifferentWhat’s an Energy Wise Investor To Do?Our Hands Are Tied!We Haven’t Been Trained!Appraisal IndustryPlease Help Us!

274. ROI, What’s That Got To Do With It?Framing the Discussion around Return On Investment (only)(ROI) = Bad Idea #2If 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.* comes along with Energy ImprovementsROI is not irrelevant but It is only ONE component of value

275. Using CostEstimator.comCost Estimator is “online” software based on the HomeTech pricing system that has been a standard for Remodelers for over 25 years. Everything is stored “in the cloud” so if you are in an area with difficult internet service, you should choose a different system

276. Benefits of “Online” Software1. I cant lose it.2. No updates to install3. I can work anywhere on the planet with an internet connection4. Easy collaboration. All team members have the same data instantly5. Customizable

277. Any Good Estimating System Will Help You Make MoneyMainly by producing professional looking cost estimate reports that are used in negotiations with Sellers to justify your offering price.These are produced automatically with one click so they can easily accompany every offer & haircut request.

278. Any Good Estimating System Will Help You Not Lose MoneyMainly by forcing you to consider every item on a complete list of possible costs. The builder’s nightmare is to get the job and then realize, “Oh, no! I forgot the________!”

279. Time For A New Brand?Or Just An Expanded Menu?

280. Many Buyers Wont Buy What’s Good For Them & The PlanetReviewOf ModelJust 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...... Unless it is included with a Classy & Complete RemodelHence the Wow! Done! & Energy PackagesIs this “Bait & Switch” or good marketing? .... You decide.Granite =Hamburger

281. The Wow! PackageReview1. Granite Counters at Kitchen & Baths2. Extra Deep Stainless Steel Sink3. Designer Spray Faucet4. Italian glass tile backsplash5. Under Counter Lighting6. All wood Cabinetry7. Crown Molding and Tall Baseboard8. All new interior doors and trim9. New Front Door with Art Glass10. Tile & Travertine floors11. Engineered Wood Laminate Floors12. Designer tile and faucets at baths13. Chair Rail, , Wainscoating & 3 tone paint14. Designer Light fixtures & ceiling fansInclude This,

282. ReviewThe Done! PackageAll ThreeRequired1. New Front and Back Lawn2. Automatic Sprinklers with timer3. New 30 - 50 year roof4. New Roll-up Garage Door with Openers5. Gutters6. New 2 inch faux wood blinds7. Major Professional Tree Trimming8. Sewer line renovated as necessary9. All new oil rubbed bronze hardware10. New Energy Star Appliances with Warrantees11. New Windows and HVAC with Warrantees12. Upgraded Carpet with 6 lb pad 13. Deciduous Trees placed for Energy EfficiencyAnd This,

283. The Energy! PackageReview1. New HVAC system, Stainless Steel Heat Exchanger2. Manual J sizing, usually half of previous capacity3. New R-8 short mylar ducts partially buried4. Manual D with tight seal and test5. Extra Return Duct in Master Suite6. New LoE2 windows and Patio Doors7. Low E 140 at west windows8. Deciduous Trees planted selectively9. Shell Sealing of floor & ceiling with test10. Attic Insulation to R-50 11. Occupancy sensors12. Gas Stove and Dryer options13. Ceiling Fans at all sleeping and living rooms14. Panasonic Ventilation with controlsSo we can Sell all this Everytime

284. Q. Why Add To The Menu? If It Ain’t Broke...A. The Market has changed and is going to change a lot more very soon.1. Much less inventory= More competion= Less great deals2. Buyers are getting more educated about Green= New Opportunity

285. Q. Will Buyers Pay The Price For Complete Energy Packages?A. It would be great if the buying public really valued Green and Saving The Planet as we do. 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* Recent poll of Home Performance Contractors

286. So We Still Need Hamburger!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. BUT.....

287. New Hypothesis: Net Zero With Solar PV Can Be The New Wow!This Hypothesis will be tested and reported on this site over the next several months.Cliff’s Notes Version:1. Homes that dont need much Done or Wow!2. Do a small amount of Wow!3. Do the Energy Package4. Add Solar PV

288. Buy Low, Add Value, Sell HighReviewBuy Low:We’ll still seek out the best pricing we can get.But we wont limit ourselves to the really beat up housing stock.We may even buy “unfinished” projects that lipstick flippers have startedThis will greatly increase the size of our universe of possibilities. (prototype Book Cover)

289. Buy Low, Add Value, Sell HighReviewAdd Value:We’ll add the Energy Package. Plus Solar PVAnd a small amount of Wow! That may be needed to get it to sell.Total Benefit to the Planet from this approach will be even greater than with the 3 package system!(Energy Package Plus Solar)

290. Buy Low, Add Value, Sell HighReviewAdd Value:Note: These projects will be faster and easier than our 3 Package projects with the classy remodeling.& may net the same profitBut 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 customersBoo! Hiss!

291. Buy Low, Add Value, Sell HighReviewSell High:Selling always requiresMaking The Invisible VisibleAdd the Solar Story to the 4 page brochure& other marketing channels to reach the buyers who willvalue our product!

292. Q. Why Wont Everyone Do This?A. This wont work for Greenwashers who dont get the Energy Package right.They will need twice thesize PV system.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 “Near Net Zero”There will always be those who try to abuse the system. Dont worry about them. Just do the right thing!

293. Calendar it NOW!

294. Picking Your TeamPlanetSaving as an Energy Wise House Flipping Investor is not an Individual Sport!It Takes A TeamUnless you want to stay small & working on the jobs.In that case you are “buying yourself a job.”Not a bad thingJust know it going in.

295. Pro’s & Con’s Of Staying SmallPro’s1. No boss, or partner to have communication problems with2. Less stress (maybe)3. Can start on a shoestring.Con’s1. You always have to work if things are to get done. Great if you love it.Wonderful benefit of either style of investing:You can experiment in your own laboratory!

296. The Team Players 1. Spouse or S.O. (Forget this one at your peril)2. Realtor to purchase3. Realtor to sell4. General Contractor or5. Project Manager6. Lender or 7. Money Partner8. Loan Broker9. Energy Related Subs10. Wow! & Done Subs11. Due Diligence Team12. Insurance Broker13. Escrow Officer

297. Spouse or SOContracting 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.Investing is easier than contracting in my opinion. This is why I recommend Multiple Streams of Income to my Contractor Friends.(It was a Safety Award. No one shot themselves with a nail gun or fell off a roof! Typical worries of Contractors)

298. Realtor (For Purchase)The Right Realtor provides a valuable service. 1. Helping you determine the ARV - After Repair Value. This is essential so you will know what to offer.2. One main tool a Realtor can provide is the CMA Comparative Market Analysis.3. Banks list 95% of the foreclosures with Realtors.

299. Interview Questions:1. Do you own investment properties yourself?2. How do you feel about submitting an offer at 55% of the asking price?3. How about submitting 20 offers before we get one?4. Are you digital? Can I sign everything digitally?5. Eco Broker? Or at least Green Friendly. Life’s too short to have to fight your team mates

300. Realtor To SellIf 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. This MAY be the one who you buy thru. You may also decide to sell the property yourself. This has advantages and disadvantages. (discussion)

301. General ContractorThe General Contractor schedules the other contractors, orders all the materials and does some of the work (more or less) It is important that he have a Green Heart or at least understand and respect yours.No need to have your team dragging you down.

302. Interview Questions:1. Confirm all licenses, liability and Workers Comp insurance.2. List of references ... And really call them.3. CSLB check 4. Also check BBB5. Ask about a difficult client and how they handled it.6. They (along with all subs) accept your contract and your payment schedule7. Do they love Green and EE or are you just a job to them?

303. Project ManagerDoes the job of the General Contractor.One way to do this legally is to share ownership of the property. The partnership operates as “Owner Builder”If compensation is on a percentage profit split, motivation stays strong.

304. LenderThe lender who finances your acquisition and renovation. My preference is a line of credit from a small bank (Less paperwork, 6.5%)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

305. Money PartnerMaybe who shares yourGreen Heart. Any money partnerwill be better than “hard money” You can pay them:1. A guaranteed interest rate2. A profit split

306. Loan BrokerHere 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.Another example is assisting with owner financing such as lease options with refinance.

307. Energy ContractorsThis 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....

308. Wow! & Done ContractorsYou can negotiate more aggressively with these contractors. You still want good work but it isn’t as important as theEnergy Team.You do want “Wholesale Pricing” but most important here is their ability to respond timely and work with the rest of the team.

309. Due Diligence TeamTermite InspectorRoof Inspector - RooferSewer Inspector- PlumberElectricianHome InspectorGeneral ContractorMy Home Inspector was formerly a Building Inspector and knows the codes very well.It’s good to have an “open house” with all of these at the same time. (Realtor has to give access)

310. Insurance BrokerSet 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. It’s good to get an Umbrella Policy by the time you are into your third project.

311. Escrow OfficerThe Seller usually chooses, so on all your purchases you will be getting to know different escrow officers and companies.For your sales, you get to choose. I like to stay with one who learns how I work. (and helps me stay on track)This is especially important if you start selling your own projects with Lease Options & Refinancing etc.

312. With The Right TeamPlanet Saving Can Be A Lot Of FunIf the team doesn’t work togetherYou’re going to get wet!See the guy in the back with the oars?That’s You!

313. Top 10 List For Energy Wise Home Renovation

314. The “Biggest HP Sin” = Failure To Address The Building EnvelopePossible Reasons:1. This is Hot Dirty Work(Or Cold Dirty Work)(in tight places with spiders)2. The Importance was not understood by Contractors or especially Installers3. It was not easily measurable by program managers and grant writers

315. Everything Is Disproportionate About The Building Envelope!Lower Cost Harder WorkMore Savings Harder to Inspect(Relative to the other ingredients of the Home Performance Package)Bottom Line: This Is NOT The Place To Skimp!

316. Shell Seal The AtticThis 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. But if you ever expect to get to Net Zero, this part is absolutely essential.

317. Seal The FloorSeal the floor the same as the floor of the attic. Especially look for big holes like at the tub, toiletand shower. Caulk and Foam all the smaller cracks.Covering the ground with 6 mil poly has been shown to save way more than it costs. = a good decision.

318. Attic, Floor, Wall InsulationMore is better. You do expect the house to last 100 years, dont you? Specify accordingly.Minimize eave ventilation by placing it elsewhereConsider re-insulating walls with exterior rigid insulationSealing the crawl space is a good idea. Sell your building official first.

319. The Comfort SystemMini Split Heat PumpsWith SEER to 26Performance to 0 F& Zero Duct Loss& Ducted OptionsYou cant beat ‘em You just have to ditch your American HVAC Supplier

320. Appliances& LightingIncandescents are so last century. Avoid can lights except to save a marriage. IC & AT if you must have themCFLs are on their way out. LED’s are gaining market shareNot all Energy Star Appliances are created equal. Read the Labels and Compare.Consider a TED for biofeedbackThe Energy DetectiveControls may save more than the appliances they control (photo & motion & power strips)

321. Safety & Indoor Air QualityAbout 400 people die each year of Carbon Monoxide Poisoning.Make SURE you dont contribute to this statistic.CO testing should be done by your licensed & trained HVAC contractor

322. Ventilation On PurposeSeal It Tight & Vent It RightThat means Mechanically on purpose.Minimum is good bath fans on timers.Better is HRV - ERV

323. WaterWater as LiquidSealingGradingFrench DrainWater as VaporVapor BarriersVapor can dry to the outside or the inside.Make sure you have plan.

324. WaterHeating WaterCondensing Water HeaterHeat Pump Water HeaterSolar Water Heaterwww.renewability.com/power_pipe/index.htmlWater Heat Recovery Pipe

325. WaterSaving WaterTwo Stage ToiletsLow Flow Showers, SinksLow Usage Clothes & Dish WashersLow Water LandscapeBuffalo Grass & Native PlantsDrip IrrigationRainwater catchmentBuffalo Grass Developed at UC DavisMust be planted as plugs or stolons.

326. So There Is One Man’s Top 10I Hope It Makes You Think!Thinking about YOUR house:What would you add to the list?What wouldn’t make your Top 10?Put dollar estimates next to each of these.Does cost change the Top 10?This is the Tension where the Energy Wise House Flipper LivesIt’s a good thing

327. What’s So Great About Zero?What kind of zero?Zero Electric Bill?Gas?Zero Imported Energy From Utility Co?Propane? Wood?Renewables? Solar, Wind?One Option for Renovators;Convert to all ElectricShoot for Net Zero with Grid-Tied Solar PV

328. Benefits of Zero1. MeasurableWithout a Target, How will you know if you are doing anything good?2. Easy To Understand3. Easy To SellYou really can sell Zero to Home Buyers without complicated Ratings

329. Zero Or Near Zero?Which is the smarter target?Due to some of the most expensive rates in the country in multi tiered billing*It REALLY makes sense to ensure that houses dont pay for “expensive” kilowatts.NEAR Net Zero may be the best choice

330. How Much Does It Cost? Estimates for GEE properties:1. Windows U=.30 $30002. Minisplit Heatpump with new ducts, $75003. Appliances incl Washer, Dryer, Refrigerator, $ 45004. Lighting & Controls $10005. Shell & Insulate $30006. Ventilation System $10007. Solar PV & DHW after credits and rebates $15,0008. Etc. $2000

331. Where Does $37,000 Fit In The Cost Breakdown?Most Investors that you are competing with do very little of this $37K list. Solutions:1. Start with built in equity.(find really good deals)2. Smart Selection of finishes3. Wholesale pricing4. Make the Invisible Visible5. True Believers for buyers.6. Consider “Buy & Hold”

332. Q. How Can I Buy And Hold If I Have Limited Funds?A. B-R-R-R StrategyBuyRenovateRe-FinanceRent70 -75% Refinance Loans are easily available. =Returns your cash for the next project.(Are you ready to be a landlord?)

333. Get A Renovation LoanRenovation Loans are available at Wells Fargo.80% of appraised value of the completed project. (ARV)Combo construction and long term financing loan.Returns all your capital to do the next project!Wells Fargo Mortgage, not Bank(No Recommendation or Affiliation)

334. Other Programs For Renovators1. EEM Energy Efficient Mortgages For Energy Efficient Upgrades.2. 203K loans. For any upgrades, but it works better for final owners than investors.3. AB-811, PACE funding. Brand new option. Should work well for adding Solar. The cost is added to the tax bill of the property.Subsidized Low Rate For Early Adopters?

335. The Best Places That “Zero Energy” Makes Sense1. Good Sun (or Wind)2. Expensive Energy3. Credits and Rebates4. Severe Climate, (hot or cold)(Move your projects inland)

336. Places Where It’s Harder To Make The Case For Zero Energy 1. Central Europe*(where Passive House originated and is thriving)Has very little sunshine2. Places with much lower utility bills.When economics wont convince, only the “True Believers, and Pioneers will proceed. But there are getting to be more and more of us.* 25% of all new construction in Austria meets Passive House standards....90% less energy than a “code” house

337. When Shopping For A Project:These built in features make a home easier to achieve Net Zero.Square or Rectangular FloorPlans.Stucco ExteriorsSlab FloorsFlat CeilingsMinimum Western GlassWest & East Protected by Garage or trees or ???High Priced Utilities

338. Good Projects #21. The worst house in a GOOD Neighborhood.2. Not the largest house in the neighborhood3. Some upgrades that you will be able to use4. Some reason to make the competitors stay away5. Solar availability

339. You’ll Need Plan B If:1. You spent too much2. You mis-judged the neigborhood.3. The Economy Changes4. The Market Changes5. Your Life Changes6. Your Philosophy Changes7. Your Options Change

340. Review Of 8 Exit StrategiesAt GreenEarthEquities.comType 90728 in the search boxFor the 8 Exit Strategies.***Know how you will get out...Before you get in.This should include at least:Plan A, Plan B, &Knowing when to change plans.Summary on the next page

341. 1. Buy & Wholesale Flip2. Buy, Renovate & Retail To Homeowner3. Buy, Renovate, Retail Flip With Discount Equity4. Buy, Rehab, Seller Finance & Mortgage Note5. Buy, Rehab, Rent, Cash Flow & Investor Flip6. Buy, Rehab, Rent, Package & Sell to Investor7. Buy, Rehab, Sell with Lease Option.8. Buy, Rehab, Re-Finance Equity & RentNot enough room for Energy PackageMy Favorite in last year’s Seller’s MarketNot enough room for Energy PackageTakes more money than most of us haveThis can move a hard to sell house.5 home minimumOpens up a bigger pool of buyers who aren’t as demanding of concessions (may need to combine with #8 to get your cash back)A good choice if Plan A (#2) doesn’t work. You get your money back and keep going

342. Blessed Are The FlexibleFor they shall not get stuck with bad plans that aren’t working.Know when to hold ‘emWhen to fold ‘em(& change strategies)One Plan might be to 1. do the renovation. 2. Market it for sale for a month, If it doesn’t sell, 3. Change strategies, Re-finance and rent ..... ?

343. Flip vs Buy & HoldBenefits of Energy Wise Flipping (For those who care about Green and the Environment and Carbon Footprints)(Most Investors dont)Eliminate more blightMore Green JobsImprove NeighborhoodsIncrease Tax BaseMore Carbon ReductionLess Reliance on Foreign Oil.

344. Spent Too Much OrMis-Judged The Neighborhood?If you find potential buyers saying, “Great house, but not quite the neighborhood we’re looking for”... It may be time to switch plans from #2 to #8.It will require refinancing for you to stay in the game

345. Changing Directions:Original Plan:Retail Flip Strategy # 2Changes:1. We mis-judged the neighborhood.75% of potential buyers discounted us for “neighborhood” This home appraised $7000 under asking price (our first one)2. It’s become more of a buyer’s market

346. Challenges Of Changing:Line of Credit Money is great for flipping but not for holdingSolution: #8 BRRR (Refinance)Refinance Details5.25% 30 years70 - 75% financeThis gets all or most of our cash back to do the next project.

347. Maximum FlexibilityWith the Refinance in place we are not locked in to any option. We can:1. Rent It.2. Lease-Option It3. Sell ItThe low appraisal makes it less likely we’ll sell it nowEspecially since it is renting for a healthy cash flow.

348. CraigsList To Rent, Lease Or SellCraigsList has sections for Rentals and Sales.Both Work Well.You must keep your ads separate You’ll need membership in a credit bureau or way to check credit and rent history.Thanks, Craig Newmark!

349. Other Options:1. We could have LOWERED THE PRICE and sold for cash.Not totally out of the question but definitely not a first option.We have found that people with “A” credit seem to demand more concessions. This is also more common when the property is listed on MLS.Oh,No!

350. Benefits of BRRR #81. Cash Flow (spouse happy)2. If Market goes up, I will benefit from the increase.3. No Tax Consequences until the property is sold.4. Appraisal issue is pushed into the future when it will be irrelevant.5. $ available to Re-invest6. Freedom to pursue Zero Energy with 3KW PV system

351. 10 Ways To Add ValueThere are many ways To Add Value in order to justify the profit that comes from Buying Low & Selling High.

352. The 3 Package System1. The Energy Package2. The Wow! Package3. The Done Package(It works better when they all work together)

353. Energy Package

354. 1. New HVAC system, Stainless Steel Heat Exchanger2. Manual J sizing, usually half of previous capacity3. New R-8 short mylar ducts partially buried4. Manual D with tight seal and test5. Extra Return Duct in Master Suite6. New LoE2 windows and Patio Doors7. Low E 140 at west windows8. Deciduous Trees planted selectively9. Shell Sealing of floor & ceiling with test10. Attic Insulation to R-50 11. Occupancy sensors12. Gas Stove and Dryer options13. Ceiling Fans at all sleeping and living rooms14. Panasonic Ventilation with controlsEnergy Package

355. Wow! Package

356. 1. Granite Counters at Kitchen & Baths2. Extra Deep Stainless Steel Sink3. Designer Spray Faucet4. Italian glass tile backsplash5. Under Counter Lighting6. All wood Maple Cabinetry7. Crown Molding and Tall Baseboard8. All new interior doors & stepped trim9. New Front Door with Art Glass10. Tile & Travertine floors11. Engineered Wood Laminate Floors12. Designer tile and faucets at baths13. Chair Rail, , Wainscoating & 3 tone paint14. Designer Light fixtures & ceiling fans15. All New Stainless Steel Appliances16. Newly Textured Ceilings (no popcorn)17. Carpet & Pad with quality you can feel18. Sculptured Exterior TrimWow! Package

357. Done Package

358. 1. New Front and Back Lawn2. Automatic Sprinklers with timer3. New 30 - 50 year roof4. New Roll-up Garage Door with Openers5. Gutters6. New 2 inch faux wood blinds7. Major Professional Tree Trimming8. Sewer line renovated as necessary9. All new oil rubbed bronze hardware10. New Energy Star Appliances with Warrantees11. New Windows and HVAC with Warrantees12. Upgraded Carpet with 6 lb pad 13. Deciduous Trees placed for Energy EfficiencyDone Package

359. 4. Fix A White ElephantRenovate a Nasty PoolRemove An Illegal Addition(These were both on the same house!)

360. 5. Add A RoomWorks best when adding to make a more desirable Bed-Bath configuration. (add a Master Suite to make a 3-1 into a 4-2)(the neighborhood must be able to sustain the larger home)

361. 6. Renovate Obsolete FloorplansBoxy RoomsRemove WallsOpen Floor PlansBars & IslandsNo Thru Rooms To Rooms

362. 7. Toward Zero: Add SolarAfter the tight envelope and good HVAC Wipe out the remaining electric load with a Solar PV system. Domestic Hot Water can be done with Solar Assist or a Heat Pump Water Heater.

363. 8. Offer Creative FinancingLease Option, Owner Carry, or Contract SaleOpens up the HUGE group of buyers who cannot qualify at B of A etcSome of these are really good people who deserve a chance. Some are not! Discerning the difference is your job.

364. Creative Financing PossibilitiesHelp People = Feels Good, Right thing to do, etc.Sell your product when others cant = Yahoo!Sell for a higher price= Double Yahoo!Eliminate Sales, Marketing and Finance Costs =More money for the Energy Package (or Your Bank Account)

365. 9. Become A RealtorMore Options To Further The Mission.Commission on your own projectsAccess to MLSProfessionalism

366. 10. Become A Rater(or at least qualified to be one)Get the trainingCBPCA, & others leading to BPI Certification.GreenBuildingAdvisor.com(Musings of an Energy Nerd & Green Building Curmudgeon)Knowledge Is PowerYou may or may not want to do ratings. For credibility, the industry expects “3rd party” certification

367. Thank You!You’ve been very patient and absorbed a lot.If you missed a point or 2,Everything and more is at GreenEarthEquities.comIn the PlanetSavers University(Leave Email address for downloadable copies)In The Energy WiseRenovating Army!