Why Build a green rental?

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There have been a few stories lately about the rental market and the financial advantages of building housing for rent.   Compared to investing in the stock market or the lottery ( not as different as it sounds) or the bank, rental property is investing in a real asset that provides a tangible service and makes money at a mostly predictable rate.

There is clearly demand in our area. Overall about 30% of the population in Buncombe County rent their homes.(https://bit.ly/1tFi3cS )   Also the population has grown about 12% since 2000 ( https://bit.ly/1l3T6rh ) and doesn’t look like it will slow down anytime soon. . Surprisingly average rents are slightly higher in Buncombe County than the Asheville Metro area. https://bit.ly/1l3UNVo

Buncombe County Rental Market Comparison

Beds                     Buncombe County            North Carolina            United States

0                                               $790                            $598                                       $1,403

1                                               $770                             $833                                       $1,359

2                                               $1,585                         $1,046                                    $1,927

3                                               $1,355                         $1,583                                     $2,216

4                                               $1,005                         $2,731                                     $3,441


Did you notice that the average 2-bedroom rental is higher than a 3 bedroom and 0 bedrooms rent for more than 1?? Not sure why.

Single-Family homes built to rent are a small percent of homes built, about 3%. I have no idea how many of those are green or energy star certified. I am guessing a lot less than homes in general where green certified homes are about 20% but rising fast (https://bit.ly/1vxsz6n ).  Interestingly, individuals are the large majority of the rental house market. “ Big money has in the past been relatively rare in the rental house market. According to an analysis earlier this year on the single-family rental market by New York investment banking firm Keefe, Bruyette & Woods Inc., about half the nation’s 14 million rental homes are owned by individuals who own just one rental property. Only about 2 million are owned by investors with 10 or more properties.” https://usat.ly/1nMNFMJ

The rental market has many of the same drivers as the buyers market and being green is going to be a similarly helpful marketing tool. It is amazing how often we have been told things like ,”why are you putting in solar panels on a rental, you don’t pay the bills?” or “why are you worrying about the efficiency its just a rental?” It seems like a dumb question to ask a green builder why they are doing efficiency upgrades or solar. Rentals are not and excuse to lower the standards. They are a significant part of the housing stock that impacts climate change the same as an owner occupied house. Both house types impact the same environment . It’s the right thing to do as well as being a good marketing advantage and if you chose to sell at some point you will have the green advantage built in. As a rental the lower utility bills and better Indoor Air Quality add value and rent ability , especially in our area where consumers are aware of environmental issues.

One thing I have learned is that net metering is better than NC Green Power as the later is only a 5 year contract and it is costly at the end to shift to net metering. But Net Metering has some tricks to it too as Duke doesn’t want the account in a renters name due to liability issues for a roof top system even though you have the house covered for liability. So you have to keep the electric bill in the owner’s name and send the renters the bill from your account.

Renters often ask about the utilities costs for a prospective rental. It can be a significant unknow cost. Net metered solar is a great lesson for renters as they get extremely low utilities and can see production vs use on their bills. I know it affected our behavior when we started getting our bill after installing a Solar PV system on our own house. We became more efficient to try and get to as little of our energy from coal as possible.

While there is some added expense to building a certified and solar powered home the returns are significant both in cash and reduced carbon foot print.

To look at the risks associated with the rental market


23 trade front

Boone Guyton- Cady and Guyton Construction