If you are a residential property manager you must be aware of energy use. Energy is used in buildings for heating and for lighting. However, energy consumption is not the only issue effecting sustainable home ownership, as a residential property manager must know.
Canadians have a natural interest in sustainable home ownership. For many years homeowners have taken the initiative in adopting measures to reduce heating costs. This has been motivated by rising energy costs. This has likewise motivated more efficient electrical lighting usage.
Homes built over the last few decades in Canada are among the most energy efficient in the world. They use less energy than older homes. This is the case even though they are bigger homes.
Sustainable home ownership includes more than energy costs, however. Real estate must be financially sustainable. The term often used is "affordable housing".
Affordable housing is a tough nut to crack. Its important to understand that the higher the value of an asset the lower the return, assuming rents are constant. As the value of the house rises, the return on it drops. This occurs because purchases can be financed while rent cannot be.
This creates a conflict between the cash flow generated by tenant paid rent and the purchase price of the underlying asset. Real estate can command more than it's rental income justifies. Rents don't rise enough to keep up with the increase in purchase prices, so the cash flow on rental properties becomes unrealistic.
The people who invest in rental real estate accept these lower returns because the price of the asset keeps rising. They also hold because of emotion. Last, they hold because transaction costs and taxes are high.
In theory this is not sustainable. If rents do not justify purchase prices, rents should increase. When they cannot increase further, property prices should drop. This doesn't happen in the real world because competing investments do not appear to be attractive enough to depress real estate purchase prices.
The result is that real estate owners get inferior cash flow returns. Tenants pay extremely high rents. However, tenants get a great deal from the standpoint of cost-benefit.
Canadians have a natural interest in sustainable home ownership. For many years homeowners have taken the initiative in adopting measures to reduce heating costs. This has been motivated by rising energy costs. This has likewise motivated more efficient electrical lighting usage.
Homes built over the last few decades in Canada are among the most energy efficient in the world. They use less energy than older homes. This is the case even though they are bigger homes.
Sustainable home ownership includes more than energy costs, however. Real estate must be financially sustainable. The term often used is "affordable housing".
Affordable housing is a tough nut to crack. Its important to understand that the higher the value of an asset the lower the return, assuming rents are constant. As the value of the house rises, the return on it drops. This occurs because purchases can be financed while rent cannot be.
This creates a conflict between the cash flow generated by tenant paid rent and the purchase price of the underlying asset. Real estate can command more than it's rental income justifies. Rents don't rise enough to keep up with the increase in purchase prices, so the cash flow on rental properties becomes unrealistic.
The people who invest in rental real estate accept these lower returns because the price of the asset keeps rising. They also hold because of emotion. Last, they hold because transaction costs and taxes are high.
In theory this is not sustainable. If rents do not justify purchase prices, rents should increase. When they cannot increase further, property prices should drop. This doesn't happen in the real world because competing investments do not appear to be attractive enough to depress real estate purchase prices.
The result is that real estate owners get inferior cash flow returns. Tenants pay extremely high rents. However, tenants get a great deal from the standpoint of cost-benefit.
About the Author:
Learn more aboutresidential property management by visiting Oswaldo Taggart's website, www.coronetrealtyltd.com onresidential property management.