The more I've poked around in the question of "green" real estate, the more I realize it's the "in" thing, but the field is far from fully realized. The "green" label is all too often applied indiscriminately and without proof that the property you're buying actually is, in any way, more environmentally friendly than the one across the street.

There are roughly 900 MLS systems in the United States. Fewer than 40 of those have fields where an agent can list a property's green features. Most just use the description and comments field. (Austin is, thankfully, one of the cities with a "green" MLS.) By the same token, appraisers wrestle with putting a value on something like solar panels on the roof because the cost of installation for such items is high and the returns poorly understood.

My gut level reaction on all fronts is, "Prove it to me." If you're looking at an investment opportunity with a property that is supposedly green, prove it to me. If you have a property you want to rent and I'm your prospective tenant, prove to me my energy costs will be less in this home or office. And if I have a property that I want to sell and I say it's green, than I need to be able to show that to a potential buyer.

Until we understand green tech the way we understand our old gas guzzling, juice wasting lifestyle, this is a game of documentation. You want to keep things like receipts for green upgrades and certificates that show energy ratings. If you say a house uses less electricity, be able to produce a year's worth of electrical bills showing monthly draw in kilowatt hours.

I have a friend who successfully cut energy use in her home with simple measure like window tinting, eliminating vampire energy draws, switching out light bulbs, and supporting her AC in the summer with fans to circulate the air. She kept monthly records and can prove that over 18 months she lowered the energy load in her home by 25%. Those are behavioral changes. Anybody can do that. But if you've blown 8-10 inches of insulation in the attic and claim that's adding value to the property, show me the before and after electric bill.

As real estate investors, we essentially have two goals in mind: acquiring or divesting ourselves of a quality property and achieving a good revenue base with that property while it's in our hands. I believe in going as green as possible, but if it's going to get worked into your investment strategy at any level, prove it to me. The best way to claim value, is to show value.

Posted by Monte Davis on
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