Investing in the future of your rental property while providing a high-quality rental experience is not as challenging as it may seem. If you’re willing to pay attention to what the best tenants really want, you can provide those things and not only collect more rent, but also retain the residents who are paying rent on time, taking care of your property, and following the terms of your lease agreement. 

The rental market shifts depending on the local economy, the housing market, and the available inventory. Tenant trends shift, too. And right now, the tenants we talk to are looking for some very specific things. They’re especially concerned with living a little bit greener and contributing to a more sustainable future. 

This means that energy efficiency is high on their list of priorities. They won’t want to move into a rental home that has drafty windows or decades-old appliances. 

If you're a real estate investor looking to make a positive impact while growing your portfolio, let’s come up with a strategy for making eco-friendly improvements at your property. 

We can start with more efficient sources and uses of energy.

Financial Benefits of Energy Efficiency

Investing in energy efficiency isn’t only good for the planet and it isn’t only good for your tenants. It’s good for you, too. 

Energy-efficient homes are more valuable than homes with dated insulation, appliances, systems, and functions. As utility costs continue to rise, tenants are becoming increasingly conscious of energy bills. You’re likely responsible for those energy bills when a property is vacant or you’re turning it over, so saving on electricity and gas and water is an advantage for you and a strong selling point for tenants. 

An investment in energy efficiency upgrades may initially seem steep, but the long-term savings can be substantial. Plus, local, state, and federal incentives can help offset the costs and make the upgrade not just affordable, but lucrative as well. 

Tenant Preferences: The Appeal of the Eco-Friendly Home

Today's renters are more environmentally minded than ever, and they're searching for homes that reflect their values. By offering a sustainable rental, you're not just providing a place to live—you're offering a lifestyle that tenants are choosing. 

Eco-friendly homes appeal to a broad spectrum of tenants, from young professionals to families to retirees pinching every penny. Cementing the desirability of your properties in the marketplace is much easier when you can demonstrate your commitment to conserving resources.

Regulatory Relevance: Staying Ahead of Environmental Legislation

Regulations are shifting towards environmental accountability, especially in California. 

It's crucial for landlords to stay compliant. Eureka, like many cities, is adopting green policies to minimize its carbon footprint. By staying ahead of the curve and incorporating energy-efficient measures in your properties, you not only contribute to the communal environmental goals but also mitigate any future stress from changes in local law.

Nurturing a Green Property Portfolio: Where to Start

Building an energy-efficient rental portfolio doesn't happen overnight, but it's a journey worth embarking on. 

Start with an energy audit to identify key areas for improvement. 

From there, consider low-cost upgrades like: 

• LED lighting. With LED lighting, you’ll find you never have to replace a light bulb in your rental property again. Outfit your interior and exterior light with LED bulbs, and you’ll cut down the amount of energy that’s used in lighting your property. This is good for energy bills, and it’s better for the environment. 

• Smart thermostats. This is a big one for tenants who like to keep their homes comfortably heated or cooled, but not at a great expense. Smart thermostats can set themselves based on who is in a given room, what time of day it happens to be, and what data and behavioral patterns have indicated about the greatest need for temperature regulation. And, tenants will love that they can program them or even make adjustments via smartphone app. 

Those are two good starting points. Then, you can gradually move towards high-impact changes such as energy-efficient windows and solar panels. Over time, your investments in energy efficiency will pay dividends in terms of tenant satisfaction, asset value, and environmental impact.

Energy-Efficient Appliances 

Consider choosing energy-efficient options for your appliances. These may be slightly more expensive than basic models, but will deliver more savings in the long run. Energy Star-rated appliances, for example, use less energy than non-certified models, which can help your tenant save money on electricity bills and use less water and electricity. 

Your appliances could be energy vampires, and you’ll want to make them as efficient as you can for appreciative tenants. Here are a few things that might help you be more efficient:

• Pay attention to the settings on your water heater

Tankless water heaters are your best bet for water and energy efficiency, but they’re also expensive. If you’re not ready to go tankless, make sure you’re paying attention to the condition of your traditional water heater. Check the temperature setting. The default setting for most water heaters is 140 degrees. It’s safer to turn it down to 120 degrees, and that’s also going to save energy. Just don’t put that setting below 110 degrees. This could invite bacteria into the system. 

• Periodically clean your refrigerator coils

The next time you have a tenant turnover, spend some time on the fridge coils. Pull the refrigerator away from the wall and get to the back of the appliance. You’ll likely find that the coils behind the fridge are corroded with dust and debris. Cleaning your coils will reduce the refrigerator’s energy consumption, help the appliance operate more quietly, and extend the lifespan of the refrigerator. 

• Always be consistent with replacing furnace filters

The HVAC system is a great place to make some energy improvements. There’s a lot of energy moving through this system, whether it’s to heat the home during the winter or cool it down during the summer. Clean filters keep the air in your rental home cleaner. They also ensure the furnace and the air conditioning units are running efficiently.