Going Green: A Landlord’s Guide for Fun & Profit

You can have your cake and eat it, too. There are a number of small things you can do around your property that can have a big, long-term impact on both the environment and your wallet. Whoever said you had to choose?

This guide covers ways to conserve energy and water as a landlord, which is, surprisingly, easier and less expensive than you think. In fact, most of the methods described in this guide will pay you back your investment in just a few years. Some even pay themselves off in months! After the payoff point, your tactics don’t just save the planet, they save you money too!

Table of Contents

We describe 11 different strategies you can use to make your unit greener. Whether it be something entirely new like LED light bulbs and solar energy or something more appliance specific like where you place your refrigerator or the type of toilet you install. Read through the longer guide or start small with one green change at a time.

Energy Use

While you’re figuring out which paths to take toward energy efficiency, you may want to find an energy auditor to help you. Energy auditors can locate areas where you can improve the overall energy efficiency of your property. For example, areas where heat is escaping in the winter and driving up your energy bill.

Before paying money for an energy auditor, call your utility company. Your utility company might offer you a free or discounted energy audit.

LED Lighting

Switching to LED light bulbs in your investment properties is the quickest energy-saving tool. One LED light bulb does the job of 21 regular light bulbs. At the time of this writing, a pack of 12 LED light bulbs from Home Depot, costs less than $38 at Home Depot. When you do the math, that’s about $3.15 a light bulb. Comparatively, the cheapest light bulb at Home Depot is about $1.50. For about double the price you get 21 times the power. Also, the average cost of electricity for an LED light bulb is about $140 less over the time it takes to burn out than the cost would be for the 21 regular light bulbs.

One LED light bulb has the power of 21 regular light bulbs.

LED light bulbs more efficiently convert energy into light. Regular light bulbs lose most of the energy they pull as heat. However, LED light bulbs produce a minimal amount of heat. They also don’t contain chemical toxins. You must be sure that a fluorescent light bulb doesn’t end up in the landfill because they contain mercury. No such precaution needs to be taken for LED light bulbs.

LED light bulbs are good investments for investors who own office buildings and rental properties alike. Switching fluorescent tubes in office buildings to Design Lights Consortium (DLC) Approved LED bulbs could get you tax rebates and rebates from your utility company. In addition to cheaper energy, LED tubes provide brighter light that equally covers the room for your employees.

Solar Energy

The Federal Business Energy Investment Tax Credit is a great opportunity for business investors to go green on the government’s dime. Depending on the type of technology you use, you can get a 10 to 30 percent of your expenditures as a tax credit. You can use technology for heating water, generating light and even heating a home. The credit is available until 2022. However, it the amount you get back decreases each year.

Whether you invest in rental properties or office buildings, solar energy can save you a lot of money, if you are willing to wait out the investment. It can take years to get your investment in solar panels back. However, solar panels are becoming increasingly less expensive and; therefore, Return on Investment is increasing. How much you save with solar panels depends on:

  • What local government credits and regulations are in place?
  • How much sunlight you get in your area?
  • How much solar panels cost in your area?

Savings over 20 years can range from $65,000 in Hawaii to $8,500 in Nebraska, according Clean Technica. Calculate your solar costs with this solar calculator from Energy Sage. Using solar energy doesn’t just save money, it can earn money too. If your solar panels produce more electricity than your property uses, most states require the energy companies to pay you for the energy you added to the grid. This process is called net metering.

Current technology allows you to set the temperature of your house from your cell phone.

Programmable Thermostats

Check with your utility company to see if they offer rebates for using a programmable thermostat. Some may even offer you a free upgrade to one! These are best for particularly hot or cold locations. Instead of leaving the heat or AC on overnight to ensure returning to a comfortable work environment, this thermostat can be programmed to turn on to heat the building or cool it a few hours before employees or tenants return for work.

Using a programmable thermostat also protects business investors by automatically turning off on the weekends. Rather than depending on employees to remember to turn off the A/C, a programmable thermostat is set to turn on and off at all the right times.

Changing HVAC systems regularly during heavy heating or cooling times actually saves you money and energy. Although purchasing a new filter costs money, dirty filters cause A/C units to work harder to cool or heat your property. Thus, more energy is used and the cost of electricity increases.

Refrigerators

Refrigerators use more energy than any other appliances. Keeping a refrigerator running smoothly can save landlords a lot of money.

Keeping your refrigerators in the shade (i.e. away from windows) keeps the temperature inside of the fridge cool. If your refrigerator is in the sun’s heat, it will need to work overtime to cool off during daytime hours. The extra power causes electricity prices to be higher than they need to be.

Cleaning the back of the fridge reduces energy usage by 30 percent. The fridge makes up about 15 percent of the energy bill for an average home. Make sure to unplug it before cleaning the coils! When pushing the fridge back into place, try to keep it a few inches away from the wall to allow for circulation.

If you’re purchasing a refrigerator for the office or for a rental property, don’t skimp! Refrigerators from the last century cost about $300 more in electricity each year than refrigerators made after 2001. Energy Star created a calculator to help you figure out how much you can save by getting a newer refrigerator.

The garage, basement and attic are key places where energy escapes.

Insulation

Insulating your property is a great way to save you money and save energy; however, not all insulations are created equally. If your property has a basement, a garage or an attic, it is most important for you to begin your work in those locations. It is easiest for heat to escape or enter these areas of your property. Insulating the above locations saves more money and energy than insulating any other part of a property. However, bypasses in these areas where hot air can leak in through will cancel out the insulation work.
It is too easy to lose energy through windows, garages, and attic space. Insulation minimizes the loss.

Make sure that your plumbing, vents, wires, chimneys, interior walls and exhaust fans are insulated to take full advantage of attic insulation. You can check for these bypasses by lifting existing insulation and looking for dark patches of moisture or dust. It is important to check your carbon monoxide testers after finishing work with the plumbing and vents.

In addition to insulating your property, it is important to caulk or seal windows where heat may be coming in or out. If you have an energy auditor, he or she will most likely be able to identify these locations. However, if you don’t have an energy auditor, it would be safe to take these precautions on all doors and windows.

Office Equipment

Purchase products labeled Energy-Star Qualified, which means the product uses 20 percent less energy than the standard model. These products are hardwired to automatically save energy by entering power-save mode after a few minutes of no use. It’s important for employees or building managers to shut off all equipment at night. Equipment on standby mode still uses electricity.

If you’re a commercial investor you can adjust office computer settings to save you more on electricity. According to the U.S. Department of Energy, you should set monitors to go into “sleep” or “power saver” mode after not being used for a while. These models use about 70 percent less energy than the normal mode. Screen savers use up just as much energy as leaving the computer screen on. “Sleep” mode is much more efficient.

Switching your office employees to laptops could save you up to 94 percent on energy usage. However, be wary of this statistic as it comes from the two maximum ends of the spectrum. An average desktop uses 65 to 250 watts of energy, while a laptop uses 15-60 watts. True energy savings depend on what kind of desktop computer is used in your office and what it is used for. This is something to consider only if you have old desktop computers that are ready for an upgrade. The Return on Investment is far too negligible to make the switch for any other reason.

Exit Signs

Exit signs are the only piece of technology that you can’t turn off to save money on electricity. Even when all the other lights are off and the building is empty, the exit signs need to be lit up in case someone needs to find their way out of the dark building. Switching exit signs to Energy Star qualified exit signs can save you about $10 a year and reduce the cost of maintenance. While that is not a lot of money to save, you can easily make back what you spend on the exit signs within a few years, and you’re helping the environment too!

Saving Water

Saving money on water, isn’t just saving money on water. A lot of electricity goes into heating the water that office users use to wash their hands and tenants use to take a shower. Making adjustments to the sinks, showerheads and toilets can save you money on utilities.

Sinks

Faucet aerators add air into sink water flow to maintain water pressure and water continuity but reduce water consumption. They not only reduce water costs and usage, but they also reduce energy expenses because less water needs to be heated.

A bathroom aerator should be no more than 1.5 gallons per minute (gpm), but 0.5 gpm is good too. A kitchen sink should be at most 2 gpm, because it’s used to fill pots and pans. They’re also really easy to install. You just unscrew your current aerator counter-clockwise, take it to the store to get the right size, and twist the new one into place clockwise. Use your hands instead of a wrench. Wrenches can scratch your new aerator.

The Return on Investment for water aerators is very quick. Investors typically make their money back in as little as one month and as long as four months. For a rental property, investors save about $48 per year for every device the aerator is attached to. Aerators cost as little as $1, but usually, cost between $4-6. The savings are much higher for businesses that use sinks more frequently.

Showers

Replacing a showerhead can save as much as 2,300 gallons of water per year. Standard showerheads use about 2.5 gallons of water per minute. The EPA labels water efficient toilets and showerheads as WaterSense, meaning they’re water efficient. A WaterSense shower head uses 2 gallons per minute or less. That’s a 20 percent saving on water usage.

Toilets

WaterSense models use 20-60 percent less water than average toilets. According to the EPA, water efficient toilets save $110 a year for a family of four. Low-flow toilets cost about $200-300 more, initially than average toilets. Return on Investment for investing in a water efficient toilet is 2-3 years. This amount varies based on how much water tenants use. Purchasing new toilets will also reduce the probability of costly leaks. It is important to note that when using low-flow toilets, users may need to flush more than once, at times, but, there is still a net saving of water.

If you are particularly excited about going green, you can splurge for a dual flush toilet. While these are more expensive, they conserve water. Users can decide how much water to use to flush waste.

The Brick Method

If purchasing a water efficient toilet is too big of an expense, consider putting a brick inside of the septic tank. A brick, wrapped in plastic, increases the water level inside of the septic tank, tricking sensors to reach full quicker. Thus, less water is released to flush the toilet. This also works by putting a water bottle filled with sand inside of the septic tank.

It’s important to wrap the brick in plastic because, otherwise, the clay in the brick can decompose contaminating the water supply and messing with your toilets.

In case you are worried about the potential for the clay to spill out of your plastic wrapping, there’s an alternative in Project Drop-a-Brick. Project Drop-a-Brick is selling bricks made out of environmentally friendly materials. The rubber bricks are made with hydrogel and save about half a gallon of water per flush.

Recycling

Recycling might seem a little out of reach for a landlord. What can you do to control where your tenants throw things away?

If you have a building with multiple units – commercial or residential – you can start by posting clear signage to indicating where your recycling bin is. This reminds your tenant that they have the option to recycle and ensures they know which bin to use for it.

Additionally, you can post signage directly above the can that indicates which materials can and cannot be recycled. While it might not help for the first garbage run the tenant sees the signage, it can help for future trips to the trash.

Whether you own just one unit or multiple, you can include information about recyclable materials inside your lease agreements.

Some things are surprising.

For example, pizza boxes are recyclable; they even have the recycling label on them. However, once there’s been a pizza inside the box, it is no longer recyclable. Why? Because the grease on the pizza doesn’t dissolve the same way paper does in water. Therefore, the pizza grease contaminates all the paper recycled in the batch.

The same is true for any recyclable material that has touched food. Before recycling a bottle of Gatorade, the Gatorade needs to be washed out of the bottle. If the food cannot be washed out of the recyclable material, it cannot be recycled.

A great reference for what is and what is not recyclable. Print it to include in your lease or post near the trash cans.

You can print out our list of recyclable items and attach it to your lease or post it above the trash cans in your building. Just click here.

Green Leasing

If you’re truly committed to going green, you can sign a green lease with your tenant, which is basically a promise that you will both behave in the most eco-friendly way. For example, you can require your tenants to use certain eco-friendly products and ban environmental pollutants. You can also make your tenant begin composting.

This makes a lot of sense because you’re investing in products that help your unit’s energy efficiency, which very well may be lowering your tenant’s expenses. Why should you be doing all of the work? A green lease ensures that your tenant is doing his or her part to make the environment greener too.

However, your tenant can hold you to your end of the promise too. Your tenant can hold you accountable for using the composting for green landscaping. Or for using environmentally friendly materials to make repairs.

Your green lease can be even more specific if you want it to be. You can specify what temperature the apartment thermostat needs to be set to. Or in a commercial lease, setting maximum operating hours.

Green leases can improve your relationship with your tenant. They are designed to have mutually beneficial provisions inside of them. They can make your tenant feel like he or she is working with you for a common goal not against you in lease negotiations or in an attempt to get repairs made.

As always, if you’re asking your tenant to do something specific, make sure it is in the lease. You may want to talk to a lawyer when you write your first green lease or update your old lease to include green provisions.

Having the Tenant Pay for Utilities

Having a tenant pay for utilities helps cut down your spending and wasteful resource usage. When electricity and water usage is on the tenant’s dime, they’ll be more careful to turn off lights when they leave the room or shut the faucet off while they brush their teeth.

Install a utility meter in each tenant’s unit, instead of splitting the costs amongst the whole building. The idea being that each tenant will be responsible for paying for their own water and electricity bills. Tenants will be able to directly see the impact of how much energy they use, which will motivate them to use less of it.

Charging tenants for utilities saves you money because utilities are a costly variable expense. It also protects the environment by reducing usage.

Even if you have your tenant paying for utilities, it still makes sense to use energy- and water-efficient utilities. Your tenants can save a lot of money on their utility bills. That means they have more money to pay rent on time. More so, you can use your efficient appliances as a selling point when showing your vacant units.

Going Green Saves You Green

Implementing some of these energy efficient practices in your investment properties not only saves you utility costs, but it’s environmentally friendly, too! While not all techniques are applicable for every investor, a few of them will still make a difference financially. Take care of the environment, and utility companies will take care of you.

Natalie Calvo