One way to boost your profits and make tenants happy at the same time is to effectively manage and optimize utility costs. High utility bills can take more money from your revenue and poor energy supply can cause tenants to complain.
With this guide, we aim to look at different strategies that can help you lower this utility cost, such as smart home upgrades that improve energy efficiency. Continue reading below as we also explore why informing tenants about energy usage is important.
Impact of High Utility Bills on Rental Property Profitability
Rising utility expenses can put a huge dent in the profit received from your rental properties. Let’s explore in detail below how increased utility costs could translate into operational expenditure, tenant grievances, and sometimes harmful ecological impacts.
Increased Operational Costs
If left unattended, utilities such as electricity, water, and gas can quickly drive up the cost of managing a rental property. It could potentially be only a matter of time before it begins to affect the landlord’s finances.
When the utility cost is too high, it may be hard to use the rental income to cover these expenses and handle other property maintenance requests. These costs sap the majority of profits and render it difficult to maintain positive cash flow.
In this case, landlords should monitor energy consumption and reduce it wherever possible without compromising the tenants’ comfort level. This may involve purchasing new energy-efficient appliances, upgrading insulation, and regularly servicing heating and cooling systems.
Tenant Dissatisfaction
Naturally, unpaid utility bills are carried by landlords unless it is stated in their lease agreement that tenants will be held responsible for it. When tenants have to pay such high bills, they will be unsatisfied with their utility costs. This will eventually lead to frustrations that may cause them to think of moving out to a different home.
For landlords, this is not good news as this will result in a high vacancy rate, requiring them to find new tenants since their rental income will be put on pause.
Environmental Concerns
Maintaining rental properties requires a lot of energy, which has environmental implications. This increased energy consumption can result in more carbon dioxide being emitted and damage to the environment.
Some tenants who are more socially responsible may find renting such a property highly undesirable. Moreover, there is a new trend of wanting to “go green”, and this has made such properties more marketable.
Landlords can make their properties more environmentally friendly by making energy-efficient improvements that appeal to our modern world. These improvements can include the installation of energy-efficient lighting, the use of programmable thermostats, and other water-saving devices.
Smart Home Upgrades to Consider
To make your rental unit more energy efficient, one excellent option is to invest in smart home upgrades.
Energy-Efficient Appliances
Switching to energy-efficient appliances can significantly cut down utility costs. Contemporary energy-efficient models of fridges, washing machines, and dishwashers consume approximately three or more times less energy than their older counterparts.
Choose appliances that have the ENERGY STAR label. It indicates that they have passed stringent energy efficiency criteria. These appliances not only save electricity but also serve various functions with improved performance streamlining.
Smart Thermostats
Smart thermostats enable landlords to control a property’s heating and air conditioning via smartphone apps, even though they are not within the area. Also, these devices adapt to the user’s lifestyle and routines, thereby eliminating the need to constantly adjust the temperature throughout the day.
Smart thermostats offer comprehensive energy consumption reports, enabling users to alter their energy habits accordingly. The installation of such devices is a good investment in energy savings and cost reductions.
LED Lighting
Making the switch to LED lighting is one of the simplest and most affordable ways to boost energy efficiency. Apart from their longevity, LED bulbs use substantially less energy than conventional incandescent bulbs.
These changes require fewer replacements and incur lower maintenance costs over the long term. What’s more, LED light bulbs dissipate less heat which in turn, lowers the burden on air conditioning systems in hot months of the year.
Because there are many types of LED lighting to choose from, it is possible to obtain LED bulbs that give the same brightness and color as traditional bulbs while consuming a lot less electricity.
Insulation and Weatherproofing
Insulation and waterproofing are important in maintaining temperature control and energy spent in your home. It’s important to ensure the property gets warm enough during winter through insulation of walls, attics, and even flooring. Also, it’s important to stay cool during summer, diminishing the energy needed for heating or cooling.
Weatherproofing measures like sealing gaps around windows and doors would prevent drafts from getting in and cool air from getting out. The installation of quality insulation and waterproofing could translate to better energy savings and overall comfort for the tenants.
Failing to properly conserve energy, especially through insulation can lead to higher vacancy rates. In other words, you may need to consult a Google Adword expert and other marketing techniques to successfully fill in your property after renovations.
Importance of Tenant Awareness on Conserving Energy
Educating tenants on effective energy-saving measures is fundamental to achieving improved utility efficiency on rental units. Start by determining how best tenants can conserve energy and then lay out the information in a simple easy-to-follow manner.
For instance, ask them to switch off lights, disconnect any electronics not in use, and use devices that are energy efficient as well as set the thermostats on positing temperatures hot and low. You can send such tips in welcome packets presented to them during meetings or update them regularly through emails.
You may consider offering some rewards to the tenants who engage in saving energy. For instance, provide gift vouchers to those who consume the least amount of utilities in a particular month or rent discounts to those who set energy-saving devices and practices.
With these tips and focusing on educating tenants on conserving energy, they can help create a more sustainable environment that also helps save money on items they use daily.
If you need more help understanding the importance of conserving energy, consider reaching out to your rental property manager in Boston to discuss the impact of high utility bills on rental property.
Conclusion
Focusing on improving utility costs is crucial for tenant satisfaction and landlord earnings. This is because having high utility bills raises the operational costs which may further lead to tenant dissatisfaction.
As such, landlords can upgrade their properties into smart homes, which means they can bring down energy utilization drastically by incorporating energy-efficient appliances, smart thermostats, LED lights, and quality insulation.
Furthermore, educating tenants on energy-saving practices along with providing incentives can enhance efficiency even more. This is a win-win scenario for landlords, tenants, the environment, and society as a whole.