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Sep
12
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Water Savings for Landlords and Managers

In some states water is becoming a precious commodity. Governor Brown has declared a water emergency for the State of California mandating a 20% decrease in water usage to cope with the drought.  Landlords and Managers should see this as an opportunity to increase net income from rental units and increase the market value of their properties.  Periodic conservation reviews are part of every property owner’s management plan to ensure the lowest utility operating costs possible.  Purchasing a replacement or upgrade to Energy Star® certified appliances is another smart move. Capital improvements or remodeling to LEED® certification by the U.S. Green Building Council is one of the best investments to ensure increase in market value.

Many residential rentals provide water and sewer services as part of their gross leases. Often hot water for the building supplied by a central boiler is part of that lease agreement.  Local governments and/or utility companies often provide water reducing appliances and fixtures at little or no cost.  Low-flow toilet- rebates ranging from $125 to $500 per toilet are available from the City of San Francisco Public Utilities Commission (http://www.sfwater.org/index.aspx?page=173).  Modest water spout aeration devices pay for themselves in a month.  Low flow shower heads have the same impact.  Add a timer to landscaping irrigation systems and water early in the day to reduce evaporation. Insulate your hot water heater or boiler and check for leaks to reduce evaporation.  These easy tips should effect an immediate, 10% reduction in your water and sewer utility costs with the corresponding increase in your monthly net operating income.  All this can be accomplished with little or no out-of-pocket cash.  Not to do these simple tasks is to leave money on the table.

Are you still using a swamp cooler with the constant drip, drip, drip of water over the filters and watering the mint plants growing in the puddle beneath the unit?  Time to consider insulation, double pane windows, a reflective surface roof, and air conditioning!   Capital improvements for energy conservation are often government funded either with reduced cost materials, rebates on appliances, low-interest improvement loans, or other subsidies. Landlords and managers can often do these water conservation tasks themselves. Replacing a fully tax-depreciated asset such as a roof, windows, or appliance accelerates the cash payback calculation. An increase in the market value as provided by a licensed California Bureau of Real Estate Appraiser (CABREA) will support a higher loan- to-value ratio in your next refinance.  A modernized building with upgraded amenities will draw many applicants often willing to pay above market rents.  Your gross rent multiplier will increase accordingly.  Governor Brown of California, your State water reserves and your pocketbook will thank you.

 

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