Real Estate IRA Update: Green Homes Catching On in North Carolina
North Carolina Real Estate IRA owners and enthusiasts take note: Green construction and green-home certification programs are rapidly gaining traction here in the Tarheel State.
According to a recent study published by the Energy Production and Infrastructure Center (EPIC), a project of UNC Charlotte and the William States Lee College of Engineering, “North Carolina has been a leader in providing third party verification for homes with certifications in energy efficiency and high performance. Within the ENERGY STAR program’s ranking of states with ENERGY STAR Certified Homes Market Share Greater than National Average, North Carolina is ranked 8th with 18.28 percent, as compared with the national average of 11.81 percent”
The substantial increase in energy efficient construction in recent years responds to increasing consumer demand for environmentally friendly housing – and, of course, lower utility bills. The green-building movement originated with commercial buildings and office spaces, but has grown increasingly significant in residential projects in recent years. According to the study’s authors, single-family building accounted for 97 percent of certified buildings in North Carolina in 2013. Commercial certifications amounted to less than 3 percent.
So what does this mean for the individual Self-Directed IRA owner?
Renters and eventual buyers are paying a premium for homes that are certified energy efficient, and they’re attracting a better class of buyers. A recent study from The Institute for Market Transformation found that default rates on Energy Star-certified properties were a third lower than conventional properties. A number of studies from around the country seem to confirm that renters are willing to pay more to rent a property that is certified under one or more green home projects.
For example, one study that looked at California house prices from 2007 to 2013 found that once other variables were controlled for, a green certification added an average of 9 percent to a home’s eventual sales price.
Another study found that certified green homes put up for sale sell significantly faster than other homes, spending a third fewer days on the market than homes that have not been certified under a green building initiative.
Self-directed IRA owners will also be interested in this table, published by Greenandsave.com, that lists the cost, estimated annual savings, ROI estimate and estimated number of years to break even for a number of common modifications you could easily make to your investment properties.
For instance, their researchers estimate that installing a programmable thermostat – a $115 expense, will provide $180 per year in annual utility savings, for an annual return on investment of 156.5 percent, and a break-even point of 0.6 years.
Other high ROI modifications include:
- Standby power reduction
- Installing compact fluorescent lighting
- Installing a hot water heater blanket
- Water-efficient shower heads
- Maintenance and ‘tune-up” of heating systems
- Sealing duct leaks
- Installing an energy-efficient dishwasher
- Water efficient toilets.
All these projects yield an estimated ROI of at least 50 percent, according to Greenandsave’s researchers.
[tweetthis twitter_handles=”@iraexpert” hidden_hashtags=”#RealEstateIRA”]NC Real Estate IRA owners and enthusiasts take note: Green construction and green-home [/tweetthis]
Some more involved projects – all of which generate at least a 40 percent ROI to the landlord/utility payer, on average, include:
- Solar path and garden lights
- Energy conservation windows
- Insulated walls
- Insulated basement walls
- Insulated ducts
- Solar attic fans
If you have an older home in your real estate IRA, chances are excellent that one or more of these renovations can make excellent sense for you and your tenant – especially if you are paying utility bills.
American IRA, headquartered in beautiful Asheville, North Carolina, is among the leaders in administering real estate IRAs and other self-directed retirement accounts. Call us today for more information, at 866-7500-IRA (472), or visit us online at www.americanira.com.
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