Archive for March, 2013

Does Rainwater Collection Affect Home Resale Value?

March 29, 2013

For this blog I am using a real life example to help answer the question whether having a rainwater collection system at your home help resale value or at least helps the home sell faster.  To start I will tell what real estate agents have told me over the last few years.

I wanted to know what those in the real estate business thought about rainwater collection.  My line of questioning to 10-20 real estate agents (I forget exactly how many) went something like, “Do you think that rainwater collection increases home value?”  The answer was a 100%, “Yes.”  OK, so that’s a good start.  So the obvious next question is always, “so what percentage of the invested cost of a rainwater collection system will be recovered when someone sells the house?”  Here I had a range of answers and a lot of hedging.  I can say that I never had an answer below 50% nor higher than 100%.  I am not sure what the average was, but for the sake of this article I will use 50% as a conservative number.  In fact, when asked by Ecovie clients for a financial analysis, I use 50% residual value for ROI calculations.  I feel this is a conservative estimate.

With that background, it just so happens that I recently sold my own home.  We priced at what we felt was aggressive.  It sold in one day for full asking price.  The buyer as well as others who saw the house mentioned our 2800 gallon rainwater system as a positive.  Did the rainwater system help us sell the house?  I certainly think so!  Did it help sell at a higher price?  I like to think so, but who knows?  What I can share is that the cost of the rainwater system was around 1% of our home selling price.  Those same real estate agents tell me that homes on average are selling for around 94% of asking price.  While we have definitely done other upgrades to our home, it seems like this single case is one vote for rainwater collection helping in the selling process.  You can form your own opinion whether we received at least 1% of the sales price from the rainwater collection system.

Also, the current average time on the market is over 6 months which is way better than it has been for some time.  Nevertheless, we have saved over six months of being on the market compared to the average since we sold our home in a day at a price we and our real estate agent thought was aggressive.  Again, it’s a guess how much of this good fortune was due to having a rainwater system.  Hey, maybe the new kitchen helped too.

The next question that may come to mind is whether this was a good investment overall.  Being a  bona fide rainwater geek and amateur financial analyst I had to know.  We installed our rainwater system for irrigation and garden watering in fall 2008 and have had four seasons of use.  Before we installed it our summertime water bills (City of Atlanta) averaged around $300 a month.  Now, our bills are below $100 a month year around for a savings of around $1,600 a year.  That’s a savings of $4,800 in the last four years.  Taking the conservative residual value of 50% and reducing our time on market by 2 months (I cannot accept that we were looking at 6 months on market), I ran a financial analysis.  I used a cost of the rainwater system at pricing Ecovie would charge its clients.  I had lower costs since this was essentially a DIY project.  Using these numbers, I come up with an ROI of 22.4% with us being money ahead by a long way in the 4+ years we have had rainwater collection.  Not too shabby!  This was on top of having a system to show clients and having a great garden and back yard.

Some of you may ask, what if you had not sold your home? What would the financials look like then?  I ran the numbers again and found that ROI was still around 10%. As a low risk investment, this seems like a pretty good deal to me. Plus this does not take into account the value of a lot of other intangibles you can read about on our website.  See the ROI page http://www.ecovieenvironmental.com/return-on-investment/.  A possible future financial benefit for the couple who bought our house is a potential stormwater utility charge in City of Atlanta.  If that happens, rainwater collection will be given a credit, as well as the other things we have done such as the pervious driveway and rain garden.

I hope you have found this informative.  If you want to find out more details of our system, please respond this this blog.  I will be happy to connect!

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Long Term Water Management in The Southeastern US

March 4, 2013
Hi Everyone,
 
In this blog I use a brilliant note my good friend Bill Stolz just sent me.  He gives a compelling description of where we can go to support or water needs in the future and the possible positive economic impacts it may entail right here in the Southeastern US.  Thanks Bill for sharing this and for your efforts!
 
On March 1, 2013 he wrote:
 
The six-state territory of GA, NC, SC, TN, AL, MS has 38.5 million residents (almost 13% of the entire USA) spread among 62 metro areas (MSAs) plus smaller population centers and rural areas representing dozens of first, second and third tier markets.  Florida has 19 million and Puerto Rico + the USVI 4 million. A population-based extrapolation using the USA’s national water infrastructure investment needs during the next 25 years of over $1 trillion just to maintain our water and wastewater infrastructure at current levels of service (see AWWA’s attached report Buried No Longer”), indicates that our regional spend will be $40 billion per year and Florida’s $20 billion.  And these are conservative estimates.  

Many of these investments and expenditures are or will be mandated by EPA consent decrees or will be critical,must-execute-now types of projects requiring action no matter what political and economic climate winds may be blowing.  This will be an arduous, painful process due in part to wrongheaded politicians and other “leaders” who want everything but are often unwilling to pay their way for anything.  But it will have to happen if we as a country expect to continue to be a global leader.  Water is fundamental to our very existence in a way that most of our 310 million inhabitants take for granted and do not understand in the least.  This is o.c. true for all other nations too, but they are not the concern being voiced here.

Global infrastructure giants (MNEs) such as Siemens, GE Water, Bosch, Veolia, Suez and many others are active in the SE USA for these very reasons; clearly they “get it.” Charles Fishman, author of The Big Thirst (www.thebigthirst.com), stated in his talk here in Atlanta last fall that 49% of the energy that we generate and pump out over our national grid is used in one form or another to tap into, treat, deliver, retrieve, retreat and then dispose of water. This is an eye popper.  We also use enormous amounts of treated water to run our steam turbines to generate said power.  As a nation we cannot continue to be so blatantly wasteful of these two security critical resources – water and energy.

MNEs depend on hundreds of specialized smaller firms to be able to deliver their projects as promised, on time and on budget. This clearly bodes well for proven, long established products and technologies.  At the same time it opens the door to introducing and adopting new approaches to water usage efficiency such as rain water harvesting, grey water reuse and utilization, and energy generation from wastewater, to mention a few.  These will save enormous amounts of water and energy which will in turn result in better bottom lines for users and for the environment writ large.  Worth noting is that P3 (public-private-partnerships) project delivery models (e.g., DB, DBF, DBFM) can play leading roles in infrastructure development and execution if our states adopt the legislation necessary to move forward.  Texas, for instance, has already done this and is reaping the benefits.

Water industry professionals will obviously concentrate their work on projects that are either currently on the boards or will be in the near future in order to tap into the most viable opportunities promising the best returns in terms of both profitability and time frames for completion.  Supporting the efforts of entities such as EcoVie Environmental and the Southeast Rainwater Harvesting Systems Association (www.serhsa.com) should help new players get to the next level and ultimately move into the mainstream (pun not intended).  The question we all ask ourselves is, “What is the tipping point and how & when will we get there.”

 

Best,

 

Bill