business model 2 solar
DESCRIPTION
Doing the math to add solar to energy wise house flipping.TRANSCRIPT
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Business Model #2Our First PV NearZero Energy House
Project Summary
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Wow! Done, & Energy Packages
The Wow! & Done allowed us to do some of the largest and most complete Energy Packages in the Home Performance Industry in California.
(More than twice as complete as the average job by the best Home Performance Contractors according to a recent survey by the retiring
Chairman of the Board of Directors.)
Our First Model:The Three Package System
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
We Morphed!We’ll still do the
three packages ... But
We’re adding Solar PV!
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Q. How Can You Add SolarWhen Most Investors Cant Even See Their Way To Do An Energy Package?
A1. Paradigm Shift. Think Differently.
A2. New Math.
A3. Continuous Improvement
4. Eliminate The Sales Expense
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Paradigm ShiftPreviously the limiting
factor was the appraisal amount. We were always worried about selling for
more than the home would appraise for. So we couldn’t add another
$10K for solar.
3 ways around this problem:
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Different Thinking #1Before our preference was
Retail Flipping: Selling the home to a First
Time HomeBuyer,Probably with FHA financing.
It had to appraise for the right amount right now!
By moving away from needing the sale now, we push the
appraisal issue off for years. At which point it wont
be a problem. ReFi & Rent?Lease Option 12-48 months?
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
New Math #1!Adding $10,000 to finish a half project of $10,000 would be a
100% increase. Adding another $10,000 for Solar would be a
200% increase:
Virtually impossible for a Contractor and Homeowner
But we’re already including the full $20K energy package.
On a $200,000 sale, $10K more for solar is only 5%= Not a dealbreaker on
a 30 year loan! Or A Monthly
Cash Flow!
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
New Math # 2In Rental Cash Flow Analysis $10,000 only costs $55 per
month (at 6.5%) we only have to find $55 to break even
(Really less, since we are already paying 1/2 of
the Utility Bill & Solar will reduce our half)
One Renter offered to increase the rent $50 for the Solar and
Mini Blinds.
A Win-Win on day #1
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Continuous Improvement
We are getting better and making fewer mistakes.
No more hourly labor, Better understanding and
delivery of Wholesale PricingEliminating some of the things
that didn’t give enough bang for the buck.
Better Buying Climate.
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Eliminate Sales ExpenseSell Them Ourselves
When you realize that a Real Estate Commission $
= A Solar System $
... And you really want to put on the Solar System
... It is motivating to learn how to sell them yourself.
We’ve found:1. CraigsList is amazing.
2. It’s not that hard.
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Or Maybe Dont Sell ThemRefi and Rent has become
one of the weapons in our arsenal.
The Refi gets all or most Of our money back so we can continue in the game.
Renting allows us to only worry about cash flow and skip the appraisal issue
(for now)
How about if they just sit there and cash flow and reduce oil imports every month, Mission Accomplished!
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Purchase Price $50,000Improvements: $70,000
(includes 4 months to figure this stuff out)
Hard Cost: $120,000Asking Price: $160,000
Appraisal: $153,000Cost of $120,000 $650Other Costs $100Half of Utilities: $50
Rent: $1100Cash Flow: $300/ month
Cave Man Math (simple)Without PV Solar
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Cave Man Math (simple)(with PV Solar)
Purchase Price $50,000Improvements: $80,000
(includes 4 months to figure this stuff out)
Hard Cost: $130,000Asking Price: $160,000Appraisal: $153,000Cost of $130,000 $704Other Costs $100Half of Utilities: $12Rent: $1150
Cash Flow: $334/ month
Think About ItThis Is A
No Brainer!
I Bet I Could
Find An Investor!
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Lipstick On A Pig
Same Floor PlanRight Across The Street.
Listed at $1050 rentRented for $950
Purchased for $65,000Lipstick $10,000Invested: $75,000Money Cost: $406Other Costs: $100Total Costs: $506Cash Flow: $444
This is $90 more.....But, Could you live
with yourself?
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
For You Solar Guys:(I’m A Rookie, Just Learning)
The system is 2.81 KWThe Panels are SunTech
The Inverter is SMA SunnyBoy 4000
In the first 3.5 days we generated 100 kw.
Approximately $13.00
More Importantly, Terry Shelton, the Solar Contractor will be on the call next week
Gather your questions.
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Preliminary Thoughts:
At $4 per day, This systemmay produce “too much”
= more than zero. The water heater is still gas.
It could be changed to a heat pump for under $2000
If necessary, the inverter and the roof have room
for more panels. Without the gas we would be
closer to True ZeroThe stove and dryer are still gas.
They could be changed alsoThe tenant is a single man interested in conserving
Saving
The Planet
One House
At A TimeG r e e n E a r t h E q u i t i e s . C o m © 2010
Fun, Profit, HelpingPeople
& Saving The Planet,
What A Country!
In The Energy WiseRenovating Army!