With the growing social awareness of the need to care for the environment, emphasizing the importance of  green living to parry climate change, every rehabber may have toyed the idea of doing a green rehab. So what’s holding you back from jumping on the green bandwagon?

While you think of some excuses why you cannot get involved in green rehab, here is a list of why you should:

1. Let’s Begin With the Obvious: Green Rehab to Help Minimize Climate Change

It is the conscientious thing to do. Since this opens up to a larger topic, and perhaps may spark several arguments, let me leave it to Greenpeace and other tree huggers to expound on it.

2. Do Green Rehab to Cash In on the Growing But Untapped Green Market

The spate of global events linked to climate change, such as the recent flash floods in Australia, the cold snap in the Northwest and the die-offs of fish and birds in Chesapeake Bay, have certainly roused even more people to consider leading a green lifestyle. Yes, consumers have been inundated with energy saving appliances, hybrid cars, organic products, recyclable materials and sundry other eco-friendly items, but the room for a real estate investor to venture into green rehabs can still be measured in many acres.

Results of a 2010 study conducted by AvidBuilder.com showed that 60 percent of the respondents who are potential homebuyers considered “Green Features” as must-have’s while only 38 and 9 percent, considered “Home Design” and “Home Fixtures” as must-haves, respectively.

Roughly 58 percent of first-time buyers and 62.5 percent of retirees deemed overall energy efficiency as a must-have. Although they understand that they have to pay a premium when opting to live in a green building, yet first-time buyers and retirees who usually are the financially challenged look for these eco-friendly features. Real estate investors must take note that while more than half of the market composed of retirees and first-time buyers look for these green features, only less than 5 percent of this is supplied for.

Into the bargain, the After Repair Value of your property with these green features will increase allowing you to command a higher asking price.

With some real estate investors starting to understand this market need, it may not be for long before this unsaturated market be drenched with green rehabbers. So why not consider this as your niche NOW?

3. Green Rehab to Save Some Green on Green Real Estate Rebates and Incentives

Green Rebates. Buying energy efficient heaters, air conditioning units, furnaces, washers, and the like, entitles a real estate investor, even if not occupying the property, to get this reward. Just fill up some forms, furnish a proof of purchase and you can claim a check for a certain amount.

Green Incentives. When you green remodel, build or cut down consumption of energy or water on property, you may be entitled to cash checks; enjoy deductions or waivers on planning, zoning and engineering department fees; and be in the priority list in processing your application for zoning, and the like. These incentives usually come as part of local government programs backed by Stimulus funds. Most incentives are awarded to owners and they do not have to be occupying the property. Rebates and incentives for doing a green rehab may be incorporated.

Loan Some Green With Energy Efficiency Loan Programs for Your Green Rehab

You can apply for a loan to fund the upgrading of energy efficiency in your rental properties or fixer-uppers. Rates in this loan are often lower accompanied with friendlier terms.

The craving for greener homes has not been satiated. This unserved market seasoned with enticing rebates and incentives and supportive loan programs will make a number of real estate investors salivate at the prospect of feasting on this potential to earn more green. Before doing anything, chew over it as this may not be your usual salad.

Green rehab may entail additional details to the work done with respective costs, but it may soon be a standard rather than just an option.

Avalanche of Money Lenders Replaces Customary Lunch with Private Investors

Luncheons with a coterie of investors with deep pockets used to be the avenue that lead real estate investors to the Land of Ready Cash. Today, however, more and more private lending companies are purveying rehab loans to rehabbers and real estate investors who want to renovate their rental properties. The government is also offering rehab funding with terms and conditions varying from city to city.

A real estate investor does not have to go far to look for a rehab loan. Skipping the need for leafing through the menu of the restaurant where private investors’ money were used to be raised, a cash-hungry real estate investor can instead browse the Internet for a list of lenders for this kind of loan. For the newbie, however, selecting the lenders to transact with could be overwhelming.

What Do You Need The Money For?

When deciding on which type or source of rehab loan to choose, keep in mind your purpose of your loan. Are you about to buy a handyman special or bid on a foreclosure? Do you plan to do up a rental property? Would you be willing to rent out your property to low income families? Do you need the cash immediately? Look for the kind of rehab loans that best suit your needs.

Where To Get Rehab Funding?

Banks. Most banks and lending companies shy away from rehab projects. Some local banks may offer rehab funding but the red tape, sluggish rate of approval and high credit rating requirements that go with bank loans often discourage real estate investors from seeking funding from these institutions. If you are looking to buy a handyman special, you may want to look for other sources of rehab loans that can provide you with faster funding.

Government Grants for Rental Rehabilitation Programs. This is for the socially responsible landlord who is willing to rent out affordable, decent, safe and clean housing for low income families. If your property is located within the given city boundaries and could accommodate at least 10 families, then you may apply for this forgivable deferred loan which funds up to 50% of the total cost of renovation. Other certain conditions you must agree with include renting out the rehabilitated property to tenants below 60% median income, setting maximum rental rates per unit, annual reporting of tenant income and other rental information, and organizing the annual maintenance inspections to be done by the city. Owner occupied units are not included in this program. Provisions for this type of program may vary from city to city.

Private Investors/Hard Money Lenders. This type of lenders still remains to be the fastest source of funding for real estate investors. They can lend you 100% of the acquisition, rehab and closing costs, they require less paperwork and more lenient about your credit rating. However, these conveniences come with a dear price tag. Be prepared to pay at least 15% interest and at least 10 points or 10% fee which is added to the amount loaned. This is suited for real estate investors dealing with a motivated seller or bidding on a foreclosure or estate sale, since the ability to move quickly is of the essence here. Just make sure you have done your due diligence.

With many competing hard money lenders springing up, some have refined their terms into more borrower-friendly provisions. It is better for you to obtain financial sources that do not exact prepayment penalties. Not only are they expensive, they may also hamper your momentum for moving quickly. If you have a good credit standing, opt for private lenders who offer real estate investor-friendly programs such as the “6-Month No-Pay Plan.”

So, which source of rehab funding will you be turning to?

Rehabbing a foreclosure to hold as a rental property, versus selling it to a homeowner, requires a different approach to the rehab than one may be accustomed to.  Think durability.  Most tenants generally do not care for their homes as well as homeowners.  Also, many homes in rental heavy neighborhoods usually wind up having many more live-in boyfriends, girlfriends, and kids than originally accounted for on the lease.

Rehab choices for a rental house should be made with with durability and ease of maintenance in mind.  Remember that when you decide to sell your investment property down the line, you will have to clean up after the previous tenants anyway.  So at that time, invest the additional $3,000 to $4,000 to spruce up the house to make it look homeowner ready instead of tenant ready.

#1 Rule – Durability and ease of replacement or maintenance

Regular carpet will get trashed – go industrial

Install low pile industrial carpet in all your rentals

Whether the rental property is getting $3,000 per month or $700 per month, nice carpet will be in bad shape even after a relatively good tenant moves out.  If your rehab property has old and worn wood floors, refinish and seal the floors.  Old wood floors are usually solid oak planks which makes them super durable and will allow you to rent your property in half the time.   Otherwise install low pile industrial color (the grayish kind you see in office buildings) carpet with no padding in the bedrooms.  If the sub-floor is uneven underneath adding padding may help hide the uneven floor boards depending on the severity.  To you and I as homeowners this does not sound too appealing, but from a business perspective this single rehab decision could save the landlord thousands of dollars down the line.  The industrial low pile carpet hides stains, shampoos easily, and holds up well to a large amount of abuse and traffic.

Vinyl floors

Install vinyl on the kitchen and bathroom floors.  18” square heavy duty vinyl tiles work great in these locations.  Going with the tiles instead of solid sheet eases installation and future maintenance costs.  Ceramic is still a common favorite for many rehabbers but it tends to crack and break over time especially under heavy abuse.  Also, if the subfloor isn’t perfect (which many times it isn’t) the ceramic tiles will tend to crack and fall apart at the grout lines much easier.  18″ vinyl tiles can even be installed directly over ceramic tiles as long as the grout lines are brought level with the ceramic tiles before the overlay.  Vinyl is the best business decision for maximizing cash flow and minimizing long term maintenance costs.

Here is a great link for the basics on vinyl flooring.

http://www.thisoldhouse.com/toh/how-to/intro/0,,595318,00.html

Paint the basement floors

Rehab homes with unfinished basements should have the basements fully cleaned out, sprayed for bugs and have the concrete walls and floors patched in preparation for painting.  Use a concrete paint made for basements or exteriors to paint the floors and walls of the basement either gray or brown.  Paint the support columns and anything else in your way down there.  This clean and fresh look will make the basement more inviting to prospective tenants as many will consider this a bonus space for the kids to play in or for extra living space for adults.  Painting the concrete walls and floors in the basement provides a lot of bang for the buck.  It provides the perception of the house being larger than it is because of the clean and usable living space created in the basement.

Remember that you will not be the one living in this house, so your personal tastes may not be the same as to what goes into the rehab.  The goals are to provide affordable housing to the community while building long term wealth for yourself.  The flooring choices listed here are smart business decisions in regards to keeping current rehab costs low and future turnover costs in check.

Related articles

• House Fixing Nightmares!
• 4 Great Reasons Why REIs Must Do A Green Rehab
• 6 Ways to Legally Avoid the EPA’s New Lead Based Paint Renovation Laws
• Estimating Construction Cost – Actual Repair Budget Attached
• Landlord’s Rehab Flooring Guide
• How to Find a Contractor to Flip That House

Video of a deteriorated house fixing case