Utility rates have increased, and tenant preferences have changed as well. So what do your renters want now? This guide will show you the six most cost-effective green updates for your rental property, how to save money on operating expenses with environmentally friendly solutions, and how to promote these updates to potential renters.
With this information, you can defend higher rents, experience fewer turnovers, and get tax breaks. Also, you’ll keep your rentals competitive and appealing to today’s renters.
Rising Utility Costs and Shifting Tenant Preferences
You don’t need a full report to feel the effects of rising utility costs. As such, when selecting their next rental home, tenants are paying closer attention than ever to their monthly rent.
In addition, due to their desire to save money on their own expenses (utilities) as well as create a more comfortable place to live, many renters are actually seeking homes that provide energy efficiency through their features.
When considering what today’s renters typically want in a home, here are some common expectations:
- Lower heat and air conditioning bills
- Smart thermostats, LED lighting, etc.
- Better insulation and new windows
- Less environmental impact
If you ignore the needs of today’s renters with respect to green-friendly homes, it may take longer to lease your property, or you may get less qualified renters. A more environmentally friendly unit will help your property stand out from others in your area, make your current tenants happier, and give you an actual competitive advantage in your local rental market.
How Do Eco-Friendly Improvements Reduce Operating Costs?
Green improvements aren’t just good for the environment, but are also great for improving your bottom line. Implementing these eco-friendly improvements returns more money from higher rent, longer tax breaks, and happy occupants.
Justify Higher Rent
When tenants see how much they can save on utilities and other green features, it makes paying a little more per month reasonable. As a result, you get a better net income by providing an actual cost of living that is lower than the average.
Decrease Tenant Turnover
When homes are warm, safe, and easy to maintain – i.e., when they have working heating/cooling systems, good insulation, etc. – renters tend to renew their leases. Imagine a home that maximize space with energy-efficient lighting solutions; it will save tenants money on bills while creating a visually appealing space. In return, you spend much less time searching for new tenants and advertising. A stable occupancy rate is probably the biggest financial advantage of going green.
Unlock Tax Incentives
There are numerous federal, state, and local tax credits available to owners who make their rental properties environmentally friendly. Depending on where you live, for example, installing an Energy Star-certified furnace or water heater could provide you with a large enough credit to offset some of your property taxes. Check which credits are currently offered in your area before investing in any environmental upgrades.
How to Market Green Upgrades to Prospective Tenants
One of the quickest ways to reduce carbon footprint of your rental is to install smart thermostats. However, if no one is aware of your sustainable improvements, no renters will be attracted by them. Here are five marketing tips to showcase the cost savings and improved tenant comfort your rental property offers through its sustainability.
1. Lead With Specific Monthly Savings
Instead of saying “this is an energy-efficient unit,” give renters an idea of how much they’ll save on their monthly utilities. An example would be to say something like “save as much as $75 per month using a smart thermostat and LED light bulbs.” Anytime you provide concrete dollar amounts, renters notice quickly, which helps them feel better about paying higher rents for your units.
2. Show the Upgrades in Photos and Tours
Ensure that all pictures/video listings you post include visual examples of all your green upgrades. The smart thermostat should be displayed, low-flow fixtures should be shown, energy-saving appliances should be included, and new windows should be clearly displayed. If renters see these items during a virtual tour or a walk-through of your property, they are more likely to remember them and appreciate them.
3. Emphasize Comfort and Health Benefits
While green features do save you and the tenant money, they also provide cleaner indoor air, fewer drafty areas, and a more uniform heating and cooling system. Therefore, while promoting eco-friendly aspects, don’t forget to highlight other benefits such as “improved air filtration,” “less cold areas in winter,” etc., so you’re targeting renters who are looking for a comfortable living space as well as those who are focused on being environmentally conscious.
4. Name Certifications and Trusted Brands
When using Energy Star products for your rental (appliances, HVAC systems) or when adding additional insulation, point them out. Using the phrase “new Energy Star refrigerator” gives instant credence. Also, when pointing out a well-known manufacturer or certification of a product, you’re telling renters you were concerned with quality rather than just creating a good selling pitch.
5. Use Every Channel to Reinforce the Message
Consistency is key. Make sure you deliver this message across all your channels, including your website listing descriptions, social media posts, and neighborhood signs. For example, if you include the green features in your title, photo caption(s), and closing remarks, renters are more likely to see your rental home as a modern and efficient option because they have been seeing the same message over and over again.
Conclusion
At the end of the day, green upgrades are a smart business decision that also benefit the environment. By focusing on upgrades that produce strong returns, showing tenants how much they save with each upgrade, and marketing these features to tenants, landlords can attract quality renters at competitive rents and retain them for extended periods.
If implementing these changes and marketing recommendations feels like too much work, consider partnering with an experienced property manager. Bay Property Management Group can streamline energy-efficient maintenance and effectively market green property features to attract long-term tenants.
With the right partnership and strategy, landlords can reduce operating expenses, increase rental income (and thereby increase the value of their properties), and realize tax benefits.
