With summer here, now is the time most multifamily property owners and managers look to reduce their energy bill. Taking steps to make buildings more energy efficient not only has a positive impact on the environment, but it can also save a lot of money for property owners in the small-balance market, reports Multi-Housing News.
Quick and easy upgrades
Todd Feist, sustainability program manager at the Institute of Real Estate Management (IREM), said one of the easiest and most affordable things small-portfolio owners can do to make their properties more sustainable is upgrade the lighting.
“Inefficient lighting can take up a substantial part of a building’s energy profile, and upgrading to LED lighting is fairly simple and the return on investment is easy to measure and understand for a lot of people,” he said.
Also, consider benchmarking, which Feist says is fundamental.
“You can’t manage what you don’t measure,” he said. The EPA created ENERGY STAR Portfolio Manager, a free energy management tool for owners looking to begin their journey toward sustainability.
Timing is key
There are other common systems in multifamily buildings that consume a lot of energy, but they may not be as simple to upgrade for small-portfolio owners who have limited resources.
“Old HVAC systems are a drain on energy, but these can be a little more difficult to replace and the return on investment perhaps isn’t as apparent as upgraded lighting,” Feist said. “People usually want to use the HVAC to the end of its useful life, and then consider upgrading to a more efficient system at that point.”
It’s especially important to strategically time property improvements to not displace renters and disrupt inflows.
“A good time to complete upgrades is during lease turnover, when you can more easily swap out old equipment and fixtures for more sustainable options. If you have any big cosmetic or design renovations planned, this could also be a good time to make some energy-efficient upgrades,” he said.
Programs and benefits
There has been an increase in state and federal programs promoting green energy in recent years, and it can be difficult to determine what you qualify for and which program is best suited for you. Since programs and tax benefits vary, Feist recommends checking out the DSIRE database, which is searchable by state.
Utilities companies are ramping up their offerings to promote energy efficiency by offering incentives.
“A lot of times they will even go above that and offer walk-through’s and assessments of your property to identify opportunities for additional efficiency,” Feist said. “Depending on the program, the assessment could be free, and they’ll list out recommended upgrades and provide you with a quote.”
Financing companies have also increased their offerings to encourage sustainability. Well-known programs such as Fannie Mae’s Green Rewards program and Freddie Mac’s Green Advantage program are great options for small-balance owners improving existing properties.
Additionally, IREM created the Certified Sustainable Property program, a green-building certification that provides a framework for smaller owners and operators to get a handle on how to best make their properties energy efficient.
For small-balance multifamily owners, making sustainable, energy-efficient upgrades can require careful consideration.
“Owners and managers are being pulled in a million directions as it is, so it’s important to make upgrades that don’t require a huge shift in staff and resources,” Feist said. “Partner with providers that you trust, and don’t fall for improvements just for their flashiness. Make sure you have a thorough understanding of how all upgrades and improvements will benefit you and your residents.”