It's easy for landlords and property managers to get wrapped up in the day-to-day: Have rents been paid? Are leases set to expire? When will the next showing be? Will that unit need to be renovated before I can re-lease it? Why hasn't the landscaping company shown up yet?!
With so many pressing tasks at hand, it can be easy to put long-term, big-picture items on the back burner--such as home energy improvements.
Utilities are usually one of the biggest expenses that a landlord faces. These costs are generally passed on to residents in one form or another. Some landlords will meter each unit separately and ask residents to register utilities in their own names. Other landlords will bake the cost of heat, hot water, and other utilities into the rent. Residents are often overwhelmed at the idea of the former, preferring to pay a set rate each month for utilities. However, landlords and property managers often underestimate costs when proceeding with the latter, which can cost the owner hundreds of dollars each year.
One way to offset these costs is by investing in home energy improvements. Improving your property's energy efficiency can reduce utilities by more than half.
Energy efficiency can seem daunting, especially if your mind automatically jumps to investing in solar panels or replacing all of your hot water heaters with tankless systems. Sure, those improvements will lower your utility bills--but they carry large up-front costs. There are plenty of other steps that you can take on an interim basis to improve your property's energy efficiency.
How Does Your Home's Energy Efficiency Compare to Others'?
In order to determine where your money is best spent, start with a home energy audit. This is the best way to understand where your rental is losing money and where you can save. It's possible for landlords and property managers to do a DIY energy audit. This usually entails a thorough walk-through of the property to locate air leaks, inspect HVAC equipment, and inventory appliances and lighting.
However, a DIY home energy audit only gets you so far. What it doesn't tell you is how you stack up against other properties in your area.
The U.S. Environmental Protection Agency (EPA) has another tool that landlords and property managers will find useful: the
Home Energy Yardstick
. The Home Energy Yardstick is a simple assessment of the home's annual energy use compared to other homes. It considers information like the property's location, square footage, number of full-time residents, and types of fuel used. For instance, an electrically heated building will perform differently than an oil-fueled property; so it's important to benchmark like-kind properties against one another. The Home Energy Yardstick also evaluates the home's utility bills for the past 12 months.
The Home Energy Yardstick then grades your home's energy efficiency based on a scale of 0 to 10. The EPA will send you a resource guide to help you understand how to improve the property's energy efficiency.
Home Energy Improvements That Pay for Themselves
As we mentioned, home energy improvements can take many forms. Some improvements are much more expensive than others. Don't let that stop you from investing in home energy improvements. No matter what your budget is, you can take small steps to lower your utility bills today. Alternatively, you can consider more expensive upgrades that may cost a lot today, but will be worth it in the long run.
Here's a sample of home energy improvements at all price points that pay for themselves over time:
Low-flow shower heads: Nowadays, you can buy high-quality, low-flow shower heads for as little as $40. For example, Evolve says that its Roadrunner II showerhead will save owners an estimated $250 each year. Of course, how much you save depends on your actual usage. In any event, however, this low-cost, water-saving improvement packs a punch.
Smart thermostats: Learning thermostats like Nest and Honeybee have grown in popularity over the years; and as a result, they've come down dramatically in cost. Some utilities providers offer them for as little as $100. These thermostats learn residents' behavior and set the temperature accordingly. Nest estimates that users save up to 12% on heating and 15% on cooling each year. On average, this equates to $131 to $145 in energy savings per year.
New windows: Replacing old, drafty windows isn't cheap. It can cost upwards of $4000 to install 8 mid-level windows. However, the good news is that Energy Star forecasts big savings on replacement windows. Not only will you save up to $465 per year on a 2000 square foot home, but you'll increase your home's value if you decide to sell it.
Solar panels: An array of state and federal subsidies have made it more cost-effective than ever for owners to install solar panels on their properties. The system usually carries a hefty up-front cost (approximately $18,000 for a single family home), but owners can recover these costs in as little as four years through a combination of tax credits, write-offs, and lowered utility bills.
Looking for other ways to save money? Consider hiring a property manager, whose expertise and assistance will be invaluable to you as you weigh various cost-saving mechanisms. When you're ready to get free quotes from property managers in your area,
All Property Management
will be here to help.
Amanda Maher is a self-proclaimed policy wonk who dabbles in real estate law. Amanda holds a B.S. in Political Science and Sociology from Boston University, as well as a Masters in Urban and Regional Policy from Northeastern.