Installed Geothermal in New Investment Property

[Kari Rau]

Investment Info:

Single-family residence commercial investment investment.

Purchase price: $525,000

Cash invested: $130,000

Purchased a 9 acre single family ranch north of Brighton. I rent the house to a family and the shop and land to a business to store equipment. After purchase I installed new flooring throughout, repainted the entire home, updated lighting to LED, updated master bathroom, replaced old furnace, air conditioner, and propane with a energy efficient geothermal system that heats, cools, and heats domestic hot water. There is no more propane or gas used on the property. Bills have averaged about $30/month since the system was installed. My tenants love comfort of it and I love the safety and cheap utility bills. The new system will pay for itself in about 3 years when compared to propane. After utility rebates and 30% tax credit eligibility the system rivaled the cost of a conventional system.

What made you interested in investing in this type of deal?

The single family home with land was attractive in that I knew I could rent some of the other buildings and land to a business in need of space and rent the home too. Those two incomes made the deal palatable because of the higher costs of owning an acreage.

How did you find this deal and how did you negotiate it?

Found it on MLS.

How did you finance this deal?

30 year commercial loan with 25% down.

How did you add value to the deal?

2 rent incomes. Updated flooring, paint, light fixtures, master bath, and entire HVAC system to energy efficient geothermal.

What was the outcome?

Cash flows about $1700/month. Very happy with the Geothermal system as it will last longer, be cheaper to operate, safer because there is no onsite combustion of fossil fuels, eliminated the use of propane, and reduces our carbon footprint.