Do Green Upgrades Pay on Fix and Flip Properties? - 5 Arch Funding

Do Green Upgrades Pay on Fix and Flip Properties?

Posted by Michael Miller on April 20, 2017

Want to earn more on your fix and flip property sales, while doing something good for Planet Earth? Homes with eco-conscious, environmentally-friendly features sold for $33,894 more than the median home sale price in 2015, according to a study done by the real estate website Redfin.

“More and more of today’s buyers are seeking out opportunities to be socially conscious and environmentally savvy when purchasing their next home,” says 5 Arch Funding CIO and CFO Steven Davis. “Incorporating eco-friendly features into your property can help buyers feel good about a home, potentially leading to a higher initial offer and a faster sale.”

Indeed, some of the easiest and most cost-effective upgrades also offer the biggest return on your investment, says Davis.

Let the bidding war between buyers begin when you show off these eco-friendly upgrades in your next fix and flip property.

New Insulation to Reduce Heating and Cooling Costs 

Millennial homebuyers tend to ask about the home insulation’s R-value, which is how well the insulation blocks heat flow. So if your contractors are already ripping out the sheetrock during a major renovation, it pays to invest in better insulation, too.

You can also consider adding spray foam insulation in the attic, a cost-effective way to improve a home’s energy efficiency. According to Remodeling Magazine’s 2017 Cost vs. Value report, you could recoup as much as 107 percent of your costs on attic insulation.

Energy-Efficient Windows and Doors

You might not recoup the total cost of your investment in new, energy-efficient windows and doors, according to Consumer Reports. But that doesn’t mean you shouldn’t upgrade.

“Today’s buyers, especially in higher-end markets, expect a home to have new windows and doors. Upgrading can encourage a faster sale, which will save you money in the long run and put cash in your pocket faster,” says Davis.

If older windows require an upgrade because they will not pass inspection, shop for windows with double panes and low-e glass coating. Depending on the placement of the coating, these windows help prevent heat loss in cold climates and can block UV long-wave rays, which we feel as heat in warm climates.

When deciding whether or not to replace windows, consider three factors:

  • U-factor: the rate at which a window conducts non-solar heat flow
  • Solar heat gain coefficient (SHGC): the fraction of solar radiation that flows through a window
  • Air leakage: the rate of air movement around the window

LED Lighting

LED lighting can change the entire look and feel of a home, not to mention provide energy efficiency and cost-saving benefits. For about $7 per bulb and no installation costs, you can reduce your electric bills while you stage the home and offer a desirable feature to eco-conscious homeowners.

“This is the fastest, easiest, and most affordable eco-upgrade you can make as an investor,” says Davis. “LED lighting sends a message to prospective buyers that the home is modern and high-tech.”

Location Counts

When considering green upgrades for your fix and flip property, keep location in mind. Villanova (outside of Philadelphia) topped Redfin’s list of the top communities for green homes—57 percent of homes in the area employ green features.

Water conservation features are likely to boost sales in places like California, Las Vegas, and Phoenix, while new insulation is important in colder cities, such as Boston, Buffalo, and Chicago.

“As with any upgrade, weigh your budget with the demands of the market, look at what other homes in the neighborhood offer buyers, and act accordingly for a fast sale and the highest selling price,” concludes Davis.

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