You need a compass - Posted by Karl Grube
Posted by Karl Grube on June 09, 1999 at 12:55:43:
SOLAR ORIENTATION: example - Great Lakes Region - (2) identical blueprint houses - one faces Northwest and the other faces Southeast. The bottomline is that the Northwest house will consume 50% more energy - oil, gas, propane, or electric heat! Landlords have understood this fact for decades.
Re: COMPARABLE HOUSING - FOR PSYCHIC BANKERS - Posted by CarolFL
Posted by CarolFL on June 09, 1999 at 07:02:46:
Thank goodness I never heard the above referenced method for determining value - or we would never have been able to figure it out, and would never have done the first deal!
For the multitude who are looking for a more simple way to approach things:
it depends on your exit strategy … what are you going to do with the property?
Sell it? Absolutely 100% comparables… REAL comps.
Hold it as a rental? Don’t care what the price is (I’m exagerating to make a point), but be sure that the cash flow is there, so run the “income approach” numbers.
Sorry to simplify.
Carol
Re: You need a compass - Posted by JPiper
Posted by JPiper on June 09, 1999 at 21:21:42:
And here I thought most landlords had the TENANTS pay the utilities…silly me.
JPiper
Landlords understand what heating contractors have missed for decades - Posted by Tim(SNJ)
Posted by Tim(SNJ) on June 09, 1999 at 19:38:37:
In an earlier chapter in my life I spent over 20 years as a HVAC design engineer. Served on the state board of directors of the Michigan chapter of Air Conditioning Contractors of America (MiACCA)before moving to NJ.
Karl, you are all wet on this one. Neither ACCA nor ASHREA use solar orientation for calculating the heat loss of a building. On the cooling side, yes, solar orientation is very important to properly size an air conditioner but in the sample you used there would be virtually no difference. If you used North and West there would be about a 25% difference. I am basing this on ACCA’s Manual J. Check it out at your local com. collage or trade school’s library.
The number of people living in a house and their habits will make a larger difference on the operating cost of the house than will the solar orientation. I didn’t see number of accupants or life styles in you equation for FMV.
Re: You need a compass - Posted by KF
Posted by KF on June 09, 1999 at 16:35:02:
Karl,
I for one want to thank you for your tip on calculating FMV using solar orientation. I couldn’t figure out until now why the RE market was so “hot” and active here in Arizona. It’s the darn solar orientation. Since I’m confident that the temperatures will remain pretty consistent for the next couple of hundred years, I know your formulas will stay true to factoring FMV. What’s even more exciting is that not one potential buyer of my properties have even asked about this solar orientation factor! And…they don’t even put it on the MLS sheets! So, thanks again for your insight into this “market value” quotient that the “market” doesn’t even know they should be looking at. Verrrry creative!
Further Refinement - Posted by Karl (MI)
Posted by Karl (MI) on June 10, 1999 at 05:52:23:
Your point on North and West is correct … 25% However, I stated Northwest (prevailing winter winds) and Southeast (rising sunlight) in the Great Lakes Region. In the winter two identical houses will have a 50% difference in heating utility bills. (Detroit Edison heat pump studies) Michigan has six climate zones, thus there needs to be a difference in your calculations. (ASHREA) I would also suggest that you visit the University of Michigan Engineering Library or Lawerence Tech Library and/or a good NJ library and read the fundamental of Radiant Theory (solar energy) … quite the opposite of HVAC Conduction/Convection Theory.
Re: Landlords understand what heating contractors have missed for decades - Posted by JPiper
Posted by JPiper on June 09, 1999 at 21:27:31:
Thanks for the chuckle.
JPiper
Re: Further Refinement: Chapter 3 - Posted by Tim(SNJ)
Posted by Tim(SNJ) on June 10, 1999 at 21:58:53:
In another chapter in my life I spent over 5 years working with a company that provided computerized control of the environment inside greenhouses (especially the glass Dutch style). U of M and MSU both have our systems. I do know something about the fundamentals of Radiant Theory (solar energy). Maybe though, you can enlighten me.
Please bear with me. In your example, your two houses are equivalent to being across the street from each other with the street running NE/SW (unusual since in Michigan most of the county roads are laid out in a N/S, E/W grid). I don’t know what kind of a house plan Detroit Edison used so I am going to use a typical HUD 1040. (1040 sq ft ranch built to Michigan’s new energy code.) Across the front there are two windows and one door in the living room, and one widow in each of the two front bedrooms. Across the back is a smaller kitchen window, a sliding glass door in the dinette, a bathroom window and the back bedroom window. Bedroom and living room widows have about 24 sq ft of glass each, kitchen and bath are about 10 and the sld gls door has about 40.
If the morning sun is hitting the front of the house facing SE, it is also hitting the back of the house facing NW. Solar gain on the SE house is about 12% greater. 94 sq ft of glass on the front verses 84 on the back. However, in Michigan, the winter sun is in the north and the number of hours the sun will shine on the front of the SE house in the morning equals the number of hours the sun will shine on the front of the NW house in the afternoon. No net difference.
I also know something about the wind. I sailed many years on the pond called Lake Michigan. I know that it is low air pressure that pulls my boat through the water and makes an airplane fly. I also know if you have a 70 mph wind going over the roof of a glass greenhouse, the glass on the leeward side of the roof will explode outward due to the relatively air high pressure inside the house trying to equalize with the relatively air low pressure outside. By the same token, the NW wind blowing on the front of the NW house is creating a high pressure area in front and an equally low pressure area in back. Is the cold air being blown in from the front or the warm air sucked out the back? Both with as much air going in the front as going out the back. The same would be true for the house across the street.
The only way I can make any sense of this is that the houses aren’t across the street but are back to back sharing a back wall. That way, the warm air from the NW house is being blown into the SE house to replace the air that is being sucked out of the SE house. Of course, that doesn’t explain the importance of Solar Orientation to FMV.
OH!! WAIT, I THINK I GOT IT - Solar radiation causes the water from the big pond to evaporate in the morning and by afternoon, with the NW winds blowing, Detroit is overcast.
Karl, honestly, the studies you sight were done by an electric company trying to promote the sale of heat pumps to Eskimos in a state where electric is the most expensive fuel. (I am a misplaced Michigander and proud to have been born and raised there.) I think their numbers maybe skewed. If you have the details of the study, I would be happy to look them over to see where I maybe missing something. You have my Email address.
Tim
PS: If you work for D.E., say hello to my cousin, Big Steve, in computer operations.
Please Explain - Posted by JPiper
Posted by JPiper on June 10, 1999 at 10:55:05:
Let’s assume for a moment that you’re correct, and that the heating bill is 50% higher because my property is oriented “incorrectly” according to the sun.
Let’s assume that the heating bill would have been $600…but instead is now $900 annually because of “incorrect orientation”.
How would you propose to reflect this fact under the cost replacement technique that you recommended?
JPiper
Re: Further Refinement - Posted by KF
Posted by KF on June 10, 1999 at 09:52:06:
Karl,
Your research and/or knowledge on subjects painfully unrelated to Real Estate investing is impressive. I would humbly suggest that you are missing your calling. You should either look into being a Solar Engineer or a morning weather man for the Great Lakes region.
Good luck,
KF
agreement - Posted by Karl (MI)
Posted by Karl (MI) on June 11, 1999 at 05:53:33:
Thanks for your extended e-mail effort! I am glad we agree that that orientation of a building to the sun influences heating and cooling costs!