If you own a rental property and your tenants pay the bulk of the cost of utilities, energy efficiency might be an afterthought. Rising utility costs, presumably, are simply passed along to tenants. But energy-efficient improvements to rental properties might do more than just save your tenants money each month. They can potentially protect or enhance your property’s value and improve the appeal of a property amid a competitive rental market.
In a market such as Santa Clara County, energy efficiency could aid in attracting and keeping tenants, lowering the cost for rental property owners, and reducing environmental impact. There’s plenty to consider when it comes to energy-efficient upgrades for rental properties.
Understanding the Rental Market in Santa Clara County
An experienced San Jose property manager will tell you that good tenant attraction and retention are vital to a rental property’s profitability. A rental owner can leverage energy-efficient upgrades to attract and retain quality tenants in an environment of continuously rising energy bills.
Santa Clara County is a high-density, high-income market with rental rates that match. A rental property with more energy-efficient upgrades and related amenities will appeal to those who want lower energy bills and are more environmentally conscious.
Also, the city of San Jose is working toward carbon-neutral electricity by 2030, so energy efficiency aligns with local trends and demands in the grander scheme of things.
Legal and Regulatory Framework in California
The state of California began adopting energy-efficiency standards in 1976 and has continued updating them since. Many recent regulations pertain to new construction but now include additions and improvements to existing properties.
As a rental property owner, it’s important to stay atop of what can seem like constantly changing regulatory requirements, both state and local. If you have a Santa Clara property management company managing your property, you should have peace of mind that they are updated and compliant with regulatory measures. If you manage a rental property yourself, it’s up to you to remain up-to-date and compliant. Penalties can be stiff if you’re not.
Through the BayREN program, Bay area property owners may also be eligible for rebates and other financial incentives for improving energy efficiency.
Key Energy-Efficient Upgrades
There seems to be an ever-increasing number of ways to increase a property’s energy efficiency, including solar panels, smart thermostats, energy-efficient HVAC systems, and LED lighting.
Each measure comes with its own level of investment – installing solar panels, for example, is costlier than installing a smart thermostat – and each must be measured with initial cost and long-term savings in mind.
A modern thermostat and LED lighting might be cheap up front, but how do the long-term savings or prospective-tenant appeal compare to costlier improvements such as solar panels or a new HVAC system?
Insulation that can lower heating and cooling costs, double-glazed windows that improve efficiency and reduce noise, and reflective or green roofs that align with Santa Clara County’s climate are also things to consider.
Water Conservation Measures
In California, which experiences droughts and fire seasons – unlike many other states – water conservation is certainly a concern for governments and regulators.
For rental owners, it can be a way to directly affect a property’s bottom line. Often, rental owners pay the water bills, even if tenants pay for other utilities. So, installing low-flow plumbing fixtures and toilets and modern, water-saving appliances can reduce monthly costs for owners as well as fall in line with regulatory trends and help to attract quality tenants.
Drought-resistant landscaping suitable for the Santa Clara County climate can also save rental owners money in the long run.
As mentioned, weighing the initial costs of energy-efficient upgrades against the potential long-term savings and prospect of tenant attraction is essential. A property manager should usually be able to provide reliable information regarding initial costs and future savings because of their experience. Still, if you’re managing a property on your own, you owe it to yourself to do the research.
Return-on-investment calculations are required, as well as possible rebates and tax-savings incentives to be explored. There are financing options available to property owners who might feel energy efficiency improvements are out-of-reach, cost-wise, and it behooves rental owners to investigate payment options. Energy efficiency might not be as far away a goal as you might think financially.
The Bottom Line
Any rental owner with energy efficiency on their mind must consider cost vs. benefit, including the potential for tenant attraction, long-term savings vs. initial cost, and environmental responsibility. Working with an experienced professional property management company to determine the most cost-effective ways to improve energy efficiency in a rental property might save rental property owners some legwork. If you are looking for an experienced and knowledgeable San Jose property manager, contact Valley Management Group. They have been providing trustworthy and affordable property management services to owners who have rental properties in Santa Clara County for over 40 years.