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5 energy-efficient upgrades for landlords

Marshall McCauley | Improvement Center Columnist | September 6, 2013

Although most homeowners realize the value of energy-efficient improvements when upgrading their primary residences, many landlords are not willing to make similar investments in their rental properties, instead opting for only fresh paint or a professional carpet cleaning every few years. Yet, energy-efficient upgrades can actually reduce annual operating costs.

5 energy-efficient upgrades that could save you money

Here are five home improvements that might also improve the overall profitability of your rental property:

  1. A new furnace can be an effective way to reduce energy use, and most furnaces available today are more efficient and less noisy than those models sold only a decade ago. Features not found on most older furnaces, such as variable speed fans and multi-stage modulating heat units, not only increase the comfort level inside your house, but they can also help to reduce the chance of an unexpected mechanical failure during your next winter vacation. You can compare some of the latest and greatest features of today's most efficient furnaces at the EPA's Energy Star program website.
  2. A new programmable thermostat is a low-cost, sure-fire way to ratchet down a tenant's wasteful energy habits. Programming features found on some of today's most popular thermostats include multiple set backs for different temperature settings throughout the day; a back-lit digital reminder to clean or replace an air filter; and even remote programming via a smart phone or tablet. If one of your tenants is a uncontrollable energy hog, then you might opt for a tamper-proof programmable thermostat. It prevents your tenant from operating the unit outside of your defined set of temperature ranges.
  3. Low-energy light bulbs can use 20 percent less energy and can last up to 15 times longer than standard incandescent lighting. Installing just a few low-energy bulbs in your most-used lighting fixtures can save you money while eliminating the hassle of frequent bulb changes. Compact fluorescent light bulbs (CFLs) and LED lighting are the two most widely available types of low-energy lighting, and over the past few years the upfront costs of both types of bulbs have come down while the light quality has improved dramatically.
  4. Low-flow water fixtures such as shower heads and faucet aerators can help conserve water and reduce the wear and tear on your home's water heater. Some of these fixtures can reduce water usage by up to 25 percent without any noticeable difference to the end user. Water conservation is a pressing issue in many parts of the country, so the EPA has developed its WaterSense designation -- similar to its Energy Star rating -- so that consumers can easily identify products and services that help reduce water usage in their home.
  5. Replacing single-pane windows with new energy-efficient windows can be a sizable investment, but it is one home improvement that is likely to increase your property's market value all while helping to reduce its overall energy consumption. The year-round benefits of energy-efficient windows are lower cooling costs during the summer months because of available heat-reflective glass coatings, and energy savings all winter long, due to the insulating properties attributed to the newer window frame technology and multiple-pane glass units. New windows can also improve the curb appeal of your property to potential tenants.

Why upgrade your rental property?

If you rent out a room in your house or an accessory dwelling on your property, then chances are your tenant does not have separately metered utilities, which means that your monthly utility bills are directly affected by your tenant's energy usage. So instead of constantly fretting about the tenant who wastes water by the bucket or the fact that they leave the lights on all the time, you can take money-saving preventative action to reduce your property's overall energy use.

Even if your tenants do pay their own monthly utility bills, there are other financial reasons to make energy-efficient improvements to your rental property. The long term value of a rental property that is well cared for should appreciate more than a property that is neglected and unimproved. Plus home improvements that increase the comfort level of a dwelling, such as a new furnace, may help you to avoid tenant vacancies and frequent turnover, both of which can seriously diminish your year-end profits.

Of course, the biggest profit you may ever realize from your rental property could happen when you sell the property during the next real estate boom, which means that any home improvements installed now, could be a selling point for a future buyer later.

About the Author

Marshall McCauley is a builder and freelance writer.