The most effective value optimization strategy for multifamily properties, irrespective of size, is improving the Net Operating Income (NOI). Why? Because reducing net operating expenses not only improves financial performance but also enhances the property's marketability and long-term investment potential.
This brings us to the critical question - What steps can an owner or investor take to lower operating costs (without breaking the bank, of course!)? In this post, you can find some no-cost and low-cost strategies that would help you accomplish your goal.
Property Value Optimization Strategy 1 - Preventative Maintenance
Take advantage of the free energy audits offered by utility companies and local governments to assess the energy performance of your property. Periodic inspection and maintenance of HVAC systems, insulation, and the building envelope can improve energy efficiency, reducing utility costs and the need for costly energy-related upgrades. By detecting and fixing leaks, cracks, or equipment malfunctions early on, property owners can avoid the need for expensive retrofits or replacements to meet energy efficiency standards or address comfort issues.
You can cut upfront costs in two ways: through insurance and utility rebates. First, check if your insurance covers equipment repair or replacement. Second, use utility rebates to save money on maintenance and fixing any efficiency problems.
Property Value Optimization Strategy 2 - Improve Energy and Water Efficiency
Switching to energy and water-efficient equipment can dramatically reduce operational costs and enhance overall financial performance, leading to a higher NOI, higher tenant retention, and increased property value in the long term. If the property has not been upgraded in a while, installing energy-efficient appliances, lighting, and HVAC systems will significantly decrease utility bills.
Tap into resources like utility rebates to implement basic energy efficiency upgrades such as installing LED lights, programmable thermostats, and water-saving fixtures like low-flow faucets, toilets, and shower-heads (which are often provided for free in many jurisdictions).
Property Value Optimization 3 - Technology Integration
Installing a centralized Building Management System (BMS) for your property can improve energy efficiency by monitoring and managing various building systems and equipment, including HVAC (Heating, Ventilation, and Air Conditioning), lighting, security, fire safety, and other mechanical and electrical systems. They provide centralized control, real-time monitoring, and fault detection through integration with energy management systems. By leveraging these features, building operators can achieve significant energy savings, reduce operating costs, and enhance sustainability.
Explore financing options offered by government agencies, financial institutions, or utility companies that specifically support energy efficiency projects, including the installation of BMS systems. These programs may offer low-interest loans, grants, or rebates to help offset the initial costs.
Focusing on energy-efficient fixtures, smart scheduling for equipment, and staying on top of maintenance brings multi-fold benefits.
It helps save money by using less energy
It makes sure the building systems lasts longer, and avoids big repair projects.
It keeps tenants happy and reduces the hassle of finding new ones, reducing vacancy and tenant turnover costs.
It enhances the building's overall sustainability and green image
It improves long term value of the property
And all these benefits can be achieved at low/no cost and can be funded through various green incentives and financing programs. To explore the best options for your project, consider reaching out to local utility companies to learn about rebates or consulting with energy efficiency experts like EnerYields.