Going 'green' doesn't just save the environment—and your conscience—it's an investment that pays off. Improving the energy efficiency of your rental properties can increase gains and ensure you stay competitive in the rental market while improving your tenants' living environment.
In this blog, we share insights on the impacts of energy efficiency, cover a range of changes you can make to your properties, and offer legal and strategic guidance on making the most of your upgrades.
What are the Benefits of Energy Efficiency?
If energy efficiency has been at the bottom of your priority list, consider moving it up—they're your new strategic advantage. Whether you start small or do an energy efficiency overhaul—a variety of measures can help stabilize monthly operating costs, increase your property value, and attract and retain tenants.
With the right improvements, unexpected and variable expenses like utility bills and appliance maintenance can be reduced or avoided. They can also aid landlords in complying with local ordinances, adopting a more sustainable approach, and reducing their environmental footprint. Adding a cost management system to your approach can further minimize expenses while encouraging tenants to conserve energy.
Deciding Which Upgrades to Make—Assessing Energy Consumption
The best place to begin analyzing which improvements make the most sense for your properties is with an assessment of your utility bills and an energy audit. Both will reveal potential inefficiencies and cost savings. With these details in mind, you can make the most of your upgrades.
Understanding Utility Bills
If you currently use a RUBS billing system for your tenants, you'll be able to evaluate the utilities for an entire property at once. If not, you'll need to obtain records for each unit and assess them together. Each bill will contain information on service charges, energy consumption, and charges, riders for specific utilities, and taxes. The energy consumption stated on your utility bills can indicate areas for improvement.
Conducting an Energy Audit
Start by contacting your utility company and inquiring about any free energy assessments or weatherization programs available in your area. From here, move on to consulting with an energy assessment expert or an HVAC professional who can determine where insulation is lacking, where air sealing is needed, and what other improvements could increase energy efficiency.
Creating Immediate Savings—Simple Energy-Efficient Upgrades
While you can opt for low-lift property upgrades like switching to LED lighting over time, combining this with more proactive measures such as installing programmable/SMART thermostats, sealing windows and doors, and installing Energy Star® appliances can lead to more noticeable energy and cost savings for both landlords and tenants. Prioritizing property upgrades that address the gaps identified in your energy audit is crucial to seeing both short-term and long-term benefits.
Amplify Cost Savings With RUBS Billing
A ratio utility billing system, or RUBS, allows landlords to assign utility costs to each unit based on an objective formula that considers square footage, occupancy, and appliances. This system enables landlords to avoid costly sub-metering, which can cost up to $2,000 per unit. Because it transfers utility costs to tenants, it encourages energy conservation. From an investor perspective, RUBS essentially turns utilities from a net operating expense into a net operating income, positively impacting property valuation and profitability.
This system should be implemented carefully to prevent legal or leasing issues. Working with a property management partner like Rincon can help you implement RUBS seamlessly.
Considering Compliance—Legal Requirements and Local Regulations
When it comes to energy efficiency, regulations happen at the local level rather than the universal or federal level. For example, in California, Title 24 Energy Efficiency Standards mandate the insulation, windows, and HVAC system requirements for rental properties. These measures help reduce energy consumption in newly constructed and existing buildings. Additional energy efficiency requirements in your area could include obligations such as documenting energy consumption.
To maintain compliance, landlords can:
Take a Shortcut → We've alleviated many of the headaches associated with keeping track of legal requirements and local ordinances with our Navigating 2025: A Comprehensive Guide to Rental Laws and Regulations—a free resource. Inside, we break down exactly what landlords in California need to know, including guidance on energy efficiency and Title 24.
Prioritizing energy efficiency is a win-win for both landlords and tenants. From stabilizing operating costs and increasing property value to reducing your environmental footprint, energy-efficient upgrades offer a range of advantages and protect your investment in the long run.
Looking to simplify your energy efficiency upgrades? Contact Rincon Property Management for expert advice on making your rental properties more sustainable and cost-effective.
