Bamboo Houses as Investment Property (Can It Work?)
Bamboo is a popular construction material in Southeast Asia and Latin America and is ideal if you want to live sustainably and reduce your carbon footprint.
However, many things come into play if you’re considering bamboo houses or other buildings as investment property.
Some things that may concern you as an investor include home value, return on investment, internal rate of return, maintenance, potential for property growth and value appreciation, availability of mortgages, and much more.
In this article, I’ll discuss bamboo houses through the lens of an investor. I’ll talk about the home value of bamboo buildings, their maintenance requirements, the availability of mortgages, and how long they last.
Whether you’re a seasoned real estate investor or new in the industry, this article will give you an insight into whether bamboo homes are a suitable investment.
Let’s get started!
Bamboo Housing Value
Real estate valuation is a necessity before you invest in any property. The same holds for bamboo homes. So how do we investors start to value bamboo real estate? Given that bamboo material is relatively cheap, and may not last as long as regular, more sturdy-built homes, looking at cashflow might be the most important thing.
Thinking Like An Investor – Looking at Cashflow
Figuring out your cashflow and return on investment for bamboo property is similar to any other rental property:
All revenue minus all expenses = cashflow
Bamboo Rental Property Cashflow Example:
Your bamboo rental home brings in $1,500 USD per month from short term rentals. All the expenses to run it (loans/mortgages, property taxes, maintenance, cleaning, listing fees, insurance (if you have any), and the rest come to $900 per month.
That’s a $600 per month profit. Go us! If we multiple that per year, that’s $7,200 USD profit per year on this property.
Figuring Out Return on Investment
Let’s say you built or bought this bamboo rental home for $80,000 USD total (land and structure included).
To figure out our return on investment, we divide the yearly profit by what we spent on the property:
$7,200 / $80,000 USD = .09 or 9% ROI on your initial investment of $80,000.
Investopedia has some more good information on real estate investing, such as estimating the value of any real estate property helps in investment analysis. The valuation report will help you in the financing, taxation, and sales listing endeavors.
When assessing the value of a bamboo house, you should be aware of the critical factors to consider. These are the factors potential buyers look for before making a decision.
The following are the factors that determine the value of bamboo homes:
Sustainability of the Material
Construction that uses more natural materials is currently in demand due to the negative consequences of the industry on the environment.
Conventional building materials like steel, concrete, and wood require more energy and resources to produce than bamboo. These materials are responsible for 50 percent of climate change and 40 percent of carbon dioxide emissions that contribute to global warming.
Bamboo is an economical, resilient, and eco-friendly building material. It’s a renewable and versatile crop that doesn’t put undue pressure on the environment.
Compared to conventional wood, bamboo matures within a shorter period, usually between three and seven years, depending on the species.
Moreover, bamboo has carbon sequestration properties that help filter carbon dioxide from the environment. Averagely, a hectare of bamboo plantation absorbs up to 17 tonnes of carbon annually.
You may be wondering how bamboo’s sustainable nature affects a home’s value. Well, sustainable construction is increasingly in demand as buyers look for eco-friendly homes to reduce global warming.
Utilizing bamboo in building houses makes them a good investment since they can increase in value due to their sustainable nature.
If you want to build a sustainable home, here are other materials to consider besides bamboo.
The House’s Appearance
Bamboo has a unique and visually-appealing appearance. Its modern and rustic appearance makes it a versatile material for creating stylish furniture, flooring, and structural elements of bamboo homes in general.
Like any other property, a bamboo home can increase in value if they look attractive. The home’s neatness is important when appraising its value. This gives you a competitive advantage in the negotiation.
Energy Efficiency
The cost of energy is at an all-time high. For instance, the U.S. electricity price averages $14.9 cents per kilowatt-hour. As a result, most home buyers are looking for ways to reduce their energy consumption, including buying energy-efficient buildings.
Bamboo can be coupled with sustainable insulation material to improve the energy efficiency of bamboo housing.
Its ability to regulate temperature helps reduce energy costs, making the building attractive to buyers. Consequently, the building will have a higher value thanks to its energy efficiency.
Location
As with any other property, the value of a bamboo house is affected by its location. For instance, if the home is located in an area with plenty of real estate options, the market will be competitive, driving down the price.
On the other hand, the building will sell for more than its rebuild cost if it’s in a prime area.
Mortgage Availability For Homes Of Bamboo Construction
Mortgage debt is among the leading debt sources in America, and most homebuyers in the U.S. rely on mortgages to finance their purchase.
You can apply and qualify for a mortgage under the energy-efficient mortgage and loan options. However, each mortgage and loan provider will have different qualification requirements. Usually, you’ll have to provide an energy efficiency assessment report to qualify.
Although most lenders are willing to offer loans for homes of bamboo construction due to their increasing popularity, some may still be hesitant.
Some lenders may consider bamboo an unconventional building material. In such a case, you may struggle to find a mortgage lender.
However, this doesn’t mean it’s impossible; you’ll have to do additional research to find a mortgage lender willing to work with you.
Alternatively, you may need to provide extra documentation to prove that the building is structurally sound.
The International Building Code (IBC) and International Residential Code (IRC) may be helpful if you live in the U.S. The good news is that homes of bamboo construction can comply with these building codes.
Some mortgage providers to consider for this purpose include:
Energy Efficient Mortgage (EEM)
Federal Housing Administration
Veteran’s Administration
Fannie Mae Homestyle Energy Mortgage
Overall, it’s possible to finance bamboo buildings through a mortgage.
However, it may require more effort and research than traditional houses. Since not all lenders will be willing to finance bamboo homes, you may need to speak to several lenders to find one willing to work with you.
Maintenance Of Bamboo Homes
The cost of maintaining a building is another factor homebuyers consider.
Although bamboo is a sturdy material, buildings of bamboo construction require specific maintenance to remain in good condition.
If not adequately cared for, bamboo is a natural material prone to rotting and insect infestations.
Some maintenance practices for bamboo buildings include:
Regularly cleaning and sealing the surface to prevent rotting.
Inspecting for signs of insect infestations like termites and treating them with an appropriate insecticide such as Gladiator 4TC. You can inspect the walls, floors, and other areas made of bamboo.
Applying fungicides to prevent the growth of fungus on the surface.
Maintaining a balanced humidity level inside the building to prevent material damage due to high moisture levels.
Sustaining optimum air circulation in the house to prevent moisture buildup. Excessive moisture can lead to mold growth.
How Long the House Lasts
The lifespan of bamboo homes is anywhere between 3 months and more than 30 years. The period depends on construction professionalism, bamboo species, and treatment.
A professional design using treated bamboo poles extends the lifespan of the house. Some such houses can stay as long as 200 years.
Bamboo is a sturdy and lightweight material with high tensile strength, making these natural materials ideal for construction.
Some bamboo species have a tensile strength between 140N/mm2 and 280N/mm2, comparable to steel. Therefore, like steel, this renewable material can resist more tension and last longer.
Genus species like Guadua, Dendrocalamus, and Phyllostachys are the best for constructing long-lasting bamboo houses. These species have solid walls, which makes them more durable and capable of withstanding strong winds.
Moreover, bamboo houses can withstand high-magnitude earthquakes due to their lightweight nature.
Since force is a product of mass and acceleration (F = m.a), lighter objects exert less force. Therefore, since bamboo is lighter, it distributes the earthquake’s force more evenly, reducing the risk of structural damage.
An article in Washington’s Observer Report of 1991 confirms that 20 bamboo houses in Costa Rica withstood a 7.5 magnitude earthquake. Other homes around these bamboo houses toppled due to the quake.
Investing in proper bamboo treatment and curing will help increase lifespan and hence, the home’s value. The treatment aims at preventing water, soil, and insects from damaging the poles.
There are two ways to treat bamboo poles for construction; traditional and modern methods.
Traditional Methods
Traditional methods use only natural resources, are the cheapest, and don’t require specialized skills. They include:
Clump-curing: Involves leaving the bamboo culms in a vertical position to enhance evaporation in the leaves. The aim is to reduce starch content and beetle attack.
Soaking: Immersing the bamboo canes in water immediately after harvesting. You leave the canes in the water for at least a week before removing and drying them in the shade.
Smoking: It involves hanging the bamboo poles above smoldering charcoal to harden. This prevents termite and beetle attacks.
Modern Methods
These bamboo treatment methods require specialized skills. Moreover, they are more expensive than the traditional ones. They include:
The Use of Chemicals
You can enhance the longevity of your bamboo poles by preserving them in chemicals. The most common chemicals for this purpose include:
Boric acid
Borax and boron
Copper-chrome-arsenic-composition (CCA)
Boucherie Method
It involves forcing the preservative into the bamboo using pressure.
In most cases, a tank with the preservative is raised on a tower and connected to the bamboo ends by tubes. Eventually, an air pump forces the preservative into the bamboo.
Butt Treatment Method
It involves immersing freshly cut bamboo into a drum with preservatives. The bamboo poles are immersed upside down, with the bottom going in first.
When cutting, you should leave the leaves intact to help in transpiration.
You can remove the poles after staying in the preservative for one week and dry them in the shade.
Final Thoughts On Investing In A Bamboo Home
A bamboo home can be an excellent investment if you use the correct construction techniques.
Bamboos are lightweight and sturdy, with a longer lifespan when appropriately treated.
While traditional methods of treating bamboo poles are cheaper, modern approaches such as butt treatment and chemicals enhance the building’s durability even more.
Consequently, this lowers maintenance costs, increasing the resale value.
If you’re interested in bamboo homes, why not read our Bamboo Homes Ultimate Guide?
