The ROI of Green Improvements in Rental Properties

The return on investment of green improvements in rental properties is one that has become increasingly attractive to real estate owners. Green home improvements are becoming more popular than ever, as these improvements have been proven to increase financial and environmental benefits for both tenants and landlords. In this article, we will discuss the ways in which green improvements can improve upon rental properties in terms of ROI and sustainability.

What is Green Home Improvement?

Green home improvement is defined as any renovation or remodeling project that reduces the environmental impact of a property. This can include, but is not limited to, installing energy-efficient windows, adding insulation, replacing old appliances with ENERGY STAR-certified models, and installing renewable energy systems, such as solar panels and geothermal heating and cooling systems.

The Benefits of Green Home Improvement to Landlords

The benefits of green home improvement to landlords are plentiful. These include:

• Lower energy bills: Green home improvement increases the energy efficiency of a rental, which translates into reduced energy bills for the tenant and the landlord.
• Higher rental income: Green improvements make rental properties more attractive to tenants, which means higher rents and increased occupancy rates.
• Lower maintenance costs: Energy-efficient appliances and systems require less maintenance than their conventional counterparts, resulting in reduced maintenance costs for the landlord.
• Tax benefits: Many green home improvement projects qualify for federal and state tax credits, allowing landlords to reduce their tax liabilities while making green improvements.

The Benefits of Green Home Improvement to Tenants

Green home improvement is beneficial for tenants as well. These benefits include:

• Lower energy bills: As with landlords, energy-efficient appliances and systems mean lower energy bills for tenants.
• Improved comfort: By upgrading insulation and windows, tenants can enjoy improved comfort levels in their rental properties, resulting in a better rental experience.
• Higher resale value: By making green improvements, tenants can increase the value of their rental properties, should they choose to sell them in the future.

Considerations Before Making Green Improvements

Before investing in green home improvement projects, landlords should take the following into consideration:

• The cost of green improvements: Some green home improvements, such as installing solar panels or geothermal heating and cooling systems, can be expensive upfront. However, the long-term savings in energy costs can outweigh the initial expense.
• The location of the property: The availability of incentives for green home improvement projects varies from state to state. Landlords should research any state-funded incentives that may be available to them.
• The condition of the property: Some green home improvement projects, such as the installation of energy-efficient windows, require the property to be in good condition. Landlords should ensure that their rental properties are up to code before investing in any green home improvements.

Conclusion

The ROI of green improvements in rental properties is one that both landlords and tenants can benefit from. Not only can these improvements result in lower energy bills, higher rental income and better comfort levels, but they can also provide tax benefits and potentially increase the resale value of a rental property. Before investing in green improvements, landlords should consider the cost, the location and the condition of the property.

What are some examples of green improvements for rental properties?

1. Install energy-efficient appliances.

2. Install LED lighting.

3. Use low-VOC paint.

4. Install double or triple-paned windows to reduce heat loss.

5. Install better insulation to reduce energy costs.

6. Add water-conservation features, such as low-flow showerheads and aerators on faucets.

7. Install solar panels to reduce electric bills.

8. Install rain barrels to collect rainwater for irrigating landscaping.

9. Add native plants to reduce need for supplemental irrigation.

10. Install drought-tolerant landscaping to reduce outdoor water use.

What are some cost-effective green improvements for rental properties?

1. Change light bulbs to Energy Star LED bulbs.

2. Install low-flow showerheads and toilets.

3. Add insulation or air sealing measures to reduce energy usage.

4. Plant drought-tolerant landscaping that requires less water and maintenance.

5. Install a programmable thermostat for climate control.

6. Replace windows and doors with energy-efficient options.

7. Install solar panels or purchase green energy from a local utility.

8. Educate tenants on how to be energy-efficient.

9. Harvest rainwater for outdoor uses such as watering plants and flushing toilets.

10. Install low-VOC paint and carpets, and use certified sustainable wood flooring.

What are the benefits of making cost-effective green improvements to rental properties?

1. Reduced energy costs: Installing energy-efficient appliances and lighting, as well as taking steps to improve the building’s insulation and air seal can have an immediate impact on energy consumption, resulting in lower energy bills.

2. Improved tenant comfort: Investing in green improvements improves the quality of the indoor air, temperature and water; thereby enhancing the living conditions of the tenants.

3. Reduced maintenance costs: Cost-effective green improvements can lower the maintenance and repair costs for maintenance of the building.

4. Higher rental rates: Improved green features can have a positive impact on the market value of the rental property and enable the property owner to charge higher rental rates than similar units.

5. Enhanced public image: Taking proactive steps to reduce the environmental impact of the rental property can enhance the public image of for-profit and non-profit organizations.

6. Tax incentives: In some cases there are tax incentives available for making cost-effective green improvements to rental properties.