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What Is Sustainable Real Estate Investing

view of a cityA little-known fact about housing is its damaging impact on the natural environment. Most people do not realize that buildings play a huge role in the depletion and disruption of the world’s soils, forests, and water resources.

These environmental issues happen in many ways.

For instance, cement, a major component of buildings, is a leading cause of environmental degradation in the world. The processes for the extraction of raw materials used in cement manufacture and the manufacturing process itself are significant contributors to global warming.

At the same time, the global real estate sector is estimated to account for 39% of global CO2 emissions, making it the largest emitter in the world. Considering final energy consumption, the real estate sector features very high, taking third place.

These facts make all activities related to building construction potential contributors to environmental degradation, including real estate investing. What can real estate investors do to reduce the environmental impact of their investments?

An introduction to sustainable real estate investing

Sustainable investing is property investing that considers factors beyond the financial implications of business decisions. It looks at non-traditional real estate investing criteria, such as actions’ environmental and social impact. It is not solely focused on profits.

Investors who practice sustainable real estate investing think about the energy efficiency of their buildings and the sustainability of materials used in those buildings. Their goal is to reduce the overall impact of their building on the environment.

The sustainable real estate investor emphasizes green building materials – green buildings. These buildings incorporate environmentally friendly techniques from the design stage to the choice of building materials and the technologies used in the building process.

Why does sustainability matter for real estate investors?

Given that your primary goal as an investor is to make money for your shareholders, why should you care about the sustainability of your investment decisions? Blanket Homes company says you should because sustainability practices can help to improve your bottom line.

Here are some ways that can happen:

Team of two engineers installing solar panels on roof.

1. Secure your business’s future

The rate at which humans consume the world’s resources has never been higher than it is today. As a result, sustainability is now a major factor in the future of businesses as the government looks for ways to limit the consumption of natural resources.

For instance, the US government is increasingly imposing energy efficiency standards on the housing industry. Investors who adapt quickly to these new requirements will be at the forefront of the industry.

2. Sustainability means more profits

LEED (Leadership in Energy and Environmental Design) is the number one green-building rating system globally. Buildings certified under the LEED rating system command a premium in the market.

As a rule, green homes sell at higher prices than non-sustainable homes. That is partly because of their lower energy bills and because buyers don’t have to do any upgrades. It is also because environmentally-conscious buyers want to feel they are doing their part.

3. Green homes have more demand

Energy costs are rising across the world. Homeowners and businesses are looking for ways to cut their energy usage. It has led to increased interest in homes and commercial premises with energy-efficient upgrades.

In some states, homebuyers whose homes are awarded a GreenPoint Rated label qualify for significant rebates. These rebates and the need to cut energy usage have placed energy efficiency as one of the homebuyers’ top criteria.

Strategies for sustainable Real Estate Investing

Sustainability is the future of real estate investing, but how can your business benefit from it? What are the steps to becoming more environmentally conscious and making sustainability integral to your real estate investment strategy?

1. Become LEED-certified

Real estate developments recognized as sustainable and LEED-certified stand out of the pack because they are built in line with very strict guidelines. Your business must be LEED-certified to have your properties recognized as meeting these standards.

2. Expect higher upfront costs

It costs money to bake sustainability into your real estate development. That is because often, you have to use better materials and more responsible processes. You cannot cut corners when building a green home.

team looking over documents

3. Market the project as sustainable

The higher upfront cost of green buildings is easily recouped from the property’s higher selling price. But you do have to make the building’s sustainability one of the major highlights of your marketing.

4. Recognize that sustainability is location-specific

Tailor your strategy to meet the sustainability issues in your area. That way, you will be offering more value to buyers. You also get to sell your properties at a premium in return for that service.

5. Invest in new technology

Investors who are quick to implement new eco-friendly technology in their properties can get higher returns on investments than those who are slow on the uptake.

Lastly, while it is perfectly fine to approach sustainability from a purely business standpoint, you get to make more money when you do it with the understanding that you are helping the planet and people.

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