Thousands of Phoenix homeowners have upgraded or build their homes to include increased energy efficiency features. It is now commonplace to see homes equipped with solar or wind power, and water saving or collection devices. The issue of going green has been going strong for many years, but how does it apply to rental property owners? Is there an increased demand for green homes? Do green or energy efficient homes generate higher rental income potential? Let’s look at some of the pros and cons:
Pro’s and Con’s Of Increasing The Energy Efficiency Of Your Rental Property.
- Pro: Your Property Will Stand Out. Phoenix has a highly competitive rental home market. A qualified tenant will most definitely recognize the benefits to renting a more energy efficient property. Lower utility costs, and being environmental friendly are appealing characteristics. It could be enough to give your property the edge over other competing rental properties.
- Pro: Tax Benefits. Although it can vary from year to year, there are almost always tax advantages to upgrading to or maintaining the energy efficient features of a property.
- Pro: Higher Rent? There isn’t much data available to say for certain if a green home will generate higher rental income. However there is no doubt that energy efficiency or “going green” is important for many people. A rental property that offers significantly lower energy costs will be very desirable.
- Con: Costs To Upgrade. When someone mentions “going green”, for property owners, it might bring thoughts of price tags and induce sticker shock. Indeed upgrading the energy efficiency of a home can be very costly. Solar panel prices have been dropping over the past few years, but may still be cost prohibitive, or not worth any potential ROI. However there are some energy saving techniques that are affordable yet can still make a significant difference in energy consumption. For example, for just a few hundred dollars, window tinting has been shown to significantly reduce home cooling costs.
Upgrading does not have to be done all at once. Plan just one energy efficient project per year, and if/when an appliance fails, replace it with an energy efficient model.
It’s up to each individual property owner or investor to answer this question based upon his or her unique and individual properties, but as a Phoenix property management company, there is no ignoring the fact that there is a demand for energy efficient rentals, and with rising energy costs, that demand will only grow.