Decades ago, renewables and energy efficiency were after-thoughts in real estate. Today, energy-saving and energy-efficient features in homes are part of the conversation.
With the high-efficiency standards of new buildings, upgrading older residential structures with energy-efficient improvements can fuel property values.
And for owners who look in the right places, there are all kinds of opportunities that incentivize energy-saving upgrades.
One thing to keep in mind, however, is efficiency improvements can reduce monthly costs and can increase a property’s value, but those are not givens.
Brooklyn-based energy consultant Jacob Bayer wrote about considerations before investing in energy-saving upgrades in an article published August 12, 2016, on Inman.com’s New York edition.
First, consider the property’s age. Bayer cited a 2013 study by Resources for the Future, which suggests efficiency improvements add value to properties built before 2006. But the upgrades might not be justified in properties built after 2006 because those structures tend to be energy efficient, and upgrading to more current standards doesn’t always pay off.
Don’t do the work without certifying it. You’ll need the written certification as proof of a structure’s energy efficiency when applying for special incentives, and it’ll come in handy when you go to sell the property and are expecting a premium price, in part, because of those upgrades.
Consider solar panels, but with a caveat, according to Bayer. A 2015 study by the University of California, Berkley, researchers found that homeowners who install solar solutions to cover their monthly energy needs get higher prices for their properties, Bayer noted. Other studies have concluded the same. Even if they don’t sell, they can recover their initial investments within three to five years.
Solar panels come with investment perks. Solar incentives are easy to find, and the panels are quick and easy to deploy, he wrote.
Adding solar panels and other renewables to a home, however, is probably overkill. Bayer recommends improving efficiency first, then adding solar. Once you improve energy efficiency, the need for solar panels might diminish.
Finally, tap available incentive programs. Why not? Paul Bubny, wrote in an August 9, 2016 article about Freddie Mac incentives for green upgrades on GlobeSt.com, that multifamily borrowers who include Energy Star scores with their loan documents could qualify for better pricing and increased loan amounts to finance energy and water efficiency improvements.
Freddie Mac is not alone in its incentive program to encourage green upgrades.
Urban environmentalist and real estate agent Cathy Allen wrote about the abundance of available incentives for green upgrades in her June 29, 2016 article on AFRO.com.
Energy-efficient mortgages (EEMs) provide borrowers with money beyond the standard maximum loan amount to make energy-efficient improvements to their existing homes, according to Allen.
The mortgage is one stone to turn for incentives. Another is energy ratings. Some power companies, for example, go to homes to do energy surveys and recommend improvements, which qualify for rebates or discounts.
Green is the way, and energy efficiency has grown to be an important part of real estate investing and sales. Energy Star, an efficiency program that launched in the 1990s, is among the organizations that have raised awareness and changed the way people think about energy waste and value energy savings, according to Bayer.