Climate Change is a Reality — But Why Aren’t New Home Builders Improving Their Materials?
To Get My (and Your) Business Built-to-Rent Housing Developers Need to Keep Up with the Times and Do Better.
I am getting closer to my TFP — my Time Freedom Point. That’s the point in time on the calendar where my passive income will be sufficient to cover all our expenses, and I no longer have to exchange my time for money.
That’s exciting, and the journey I took to get there — and help other people who like this idea to do the same — includes residential real estate investing out of state.
The “out of state” part applies to me because I live in an expensive area of the country — San Diego County — where we continue to reach record-high levels of median house pricing year after year. 2020 was no exception.
That means any investment in a single-family house or even a duplex, triplex, or 4-plex does not perform. It would not generate sufficient positive cash flow and therefore not help us get to the Time Freedom Point.
The solution is investing out of state in places where the performance is still good — mainly in the Midwest and South.
As I am approaching my TFP, I thought my “summit-investment,” the one that takes me over the top in massive income, could be something special.
Now let me take a quick pause to tell you a bit about my environmental values and beliefs:
- I have always cared for the environment.
- I advocate for eating and living healthily. Buy organic and grow things in your garden or on your balcony.
- I advocate using environmentally friendly material, separate trash, and use as little packaging as possible.
- I advocate for removing the plastic tape from the cardboard boxes you receive, i.e., from Amazon, and then put the boxes in your garden, covered by mulch or woodchips. Did you know you can get free woodchips directly dropped at your address? Here is how that works.
- I advocate for collecting rainwater in big barrels or an underground tank so you can water your plants and don’t have to pay a higher water bill for it. Here is a place to find them — for free.
- I advocate for generating our own energy using the sun. When I came to the United States 26 years ago, it was already common to have solar panels on roofs in Germany, especially on most farm structures, industrial buildings, etc. In my house, the solar system we installed right after moving in produces more energy over the year than we consume, so we never have an electricity bill.
- There are a bunch more things I believe everybody should do and can do for healthier living and protecting nature, including our climate.
Back to the “summit property.”
I normally buy properties in well-performing areas in the country that have been found by one of my trusted turnkey providers. I call them the ugly duckling in a nice neighborhood.
The TK-provider renovated the property for me as the buyer, knowing that they will also be managing the property after the sale closes. That challenges them to do a great renovation using good quality products but keeping the cost at a reasonable level. Hence, the finished property still appraises at or above the asking price.
Such a property normally pays about $250 — $300 per month in positive cash flow.
Because I am pretty close to my TFP, I thought I would do something special and look for an advanced way of investing using the same principles.
Instead of finding an ugly duckling and turning it into a beautiful swan, I aimed to find a new build house. Yes, there are now “built-to-rent” turnkey providers. The idea is that a brand new property has all the latest systems from the start and would not require any significant repairs or maintenance for about 5–7 years. Even if something breaks, it would be mostly under warranty and not cost anything to me as the investor/owner.
Because of the steady increase in rent prices, building a new house to rent it from day 1 can now work. Sometimes you might even get a tiny bit of positive cash flow — something like $30-$50/month.
As I kept researching, I wanted to know if contractors build these brand-new houses to meet modern climate change and environmental solutions. Here is what I was hoping to find:
- Solar roof instead of the regular roof — i.e., Tesla roof. According to my research, new construction is the perfect time to install this type of roof because the price is the same as a new roof + solar panels, and it comes with a 25-year warranty, both for the roof and the solar system.
- Some energy storage — i.e., Sonnen storage solutions. That allows you to power your house even if there is a power outage, as well as charge a car if your tenant has a plug-in hybrid or electric vehicle. It sounds a little unusual now, but we own these houses for decades, and electrification will probably keep moving forward rapidly.
- High insulation levels to keep the cold or warmth (summer/winter) inside the house and not lose it to the exterior.
- Environmentally friendly materials that don’t have a lot of chemicals and use mainly renewable resources
- A water separation design. In that design, there would be blue lines for drinking water, grey lines for water that does not need to be drinking level quality, and black lines for human waste flushing. Such a system would dramatically reduce the amount of water we consume and reuse three times: 1. Blue — unused blue goes to grey. 2. grey — unused grey goes to black. 3 Black goes to the sewer line.
- Line stub for access to surplus greywater for use in the garden. Plants don’t need drinking water to grow.
- A rainwater collection system that funnels the water to the in-ground grey water tank — both for watering the garden and use as greywater in the house, washing the car, etc.
- All LED lighting to reduce energy usage
- Ceiling fans in all rooms to reduce the need for the use of A/C
- High-efficiency air conditioning and heating systems to rescue energy use
- High-efficiency appliances
- Cabling for high-speed internet connections in most rooms or wifi boosters connected to broadband internet. Ideally, I was hoping for a pre-planned Starlink setup, as I believe, that will be the most affordable high-speed solution of the future.
- Environmentally friendly flooring with tenants in mind. That means ideal hardwood floors or non-toxic luxury vinyl planks in all rooms, including bedrooms, to avoid costly carpet replacements at turnovers.
- Wall paints that are non-toxic and allowing for easy removal of scratches, etc. I have found bathroom paint to be the best to cope with the small booboos in life.
There were a few other things, and I admit that I did not expect to find any development to meet all those desires. The sad reality is that, actually, none of the things listed above are being built into any of the built-to-rent houses I could find.
Sometimes I wish I were able to create a development that has all these modern systems integrated. I am not a contractor, though.
In conclusion, I learned that the talk about climate change and the environment has increased, but the actions are still lacking. I don’t know how much longer we think we have until it is too late.
I hope you can help advocate for more of these already available systems in your own home. We all have to pull together if we seriously want to save the environment and leave the world livable for the coming generations.