Attention, ethically minded investors: One well-chosen investment
could potentially help clean the environment, reduce crime, and
appreciate by 10 percent or more each year.
Experts say the place to seek this investment would be in real
estate, a growing favorite among Americans eager to profit from the
sector's historic strength and recent boom. Yet to marshal bricks
and mortar in a quest to build a better world, investors would need
to be proactive long after the purchase - and be willing to craft
their own definitions of success.
That's because few real estate investment products are packaged
or marketed as "socially responsible." Though investors may choose,
for instance, from among more than 300 real estate investment trusts
(REITs), none of them touts a social or environmental agenda,
according to Gary Pivo, a professor of urban planning and natural
resources at the University of Arizona.
Still, whether investors aim to reduce energy consumption or
provide a lift to nearby neighborhoods, real estate offers an
opportunity to have a social impact they can actually see. And
plenty are jumping at the possibility. Fifty percent of mortgages on
single-family homes from socially motivated ShoreBank in Chicago,
for instance, go to borrowers who are buying a nearby investment
property on the city's South or West sides to fix up, rent, or sell.
"They don't trust the stock market, but they're not afraid to put
on their overalls on a weekend and paint an apartment," says Jack
Crane, senior vice president for mortgage lending at ShoreBank.
"They're often coming into distressed neighborhoods where everyone
from the community activists to the aldermen to the local business
people is just thankful."
Real estate investors can choose from a vast landscape of options
that stretch from their own kitchens and bathrooms to rental
properties and REITs. But wherever they venture, experts say,
certain practices can increase the likelihood of reaping social and
financial dividends: Know your goals, do your homework, and have a
For many a homeowner, real estate investing begins literally at
home, where improvements to one's primary residence can boost
property value by tens or even hundreds of thousands. For the
environmentally inclined, moves to benefit the earth can also reduce
utility bills and attract buyers who aspire to keep operating costs
Priorities should begin with making a building as energy
efficient as possible, according to Patty Rose, executive director
of GreenHOME, a nonprofit that aims to make low-income housing more
energy-efficient. Begin with weatherstripping for doors and double
panes for windows, Rose says. Add appliances with an "Energy Star"
seal, water-efficient fixtures, and plenty of insulation. For more
tips, consult the United States Green Building Council's rating
system (www.usgbc.org). Then expect to see a happy occupant as
operating costs drop.
"If someone with a small amount of income gets hit with a big
energy bill, it's one of the biggest causes for default on a
mortgage," Ms. Rose says. Likewise, when renting to middle- class or
low-income tenants who pay their own utility bills, "this is the
sector of the housing market where better-performing housing will
make the biggest difference."
In real estate, the environment has much at stake. Buildings
consume about one-third of all energy, water, and materials in the
United States and generate the nation's pollution in similar
proportions, according to a 2003 report from the US Green Building
Council. But investors can profit from proactive remedies.
Efficiency measures can cut the energy costs of a commercial
building down to as little as 30 cents per square foot per year,
says Nadav Malin, editor of Environmental Building News, a
publication for green builders. …