Multifamily Minute Reader Reflections: Are Energy-Efficient Upgrades Necessary?
We asked our 45,000 subscribers how likely they are to invest in sustainable upgrades after buying an apartment building.
It's hardly news that investing in sustainable features in multifamily properties can improve your investment returns. Still, there are plenty of apartment complexes out there that have yet to implement any number of enhancements.
Last week, I put the question to our Multifamily Minute audience: Are you likely to invest in energy-efficient upgrades when you buy a property?
Survey Results
How likely are you to upgrade? | Percent of Respondents |
|---|---|
Extremely likely | 62.1% |
Somewhat likely | 20.1% |
Neither likely nor unlikely | 3.6% |
Somewhat unlikely | 2.3% |
Extremely unlikely | 11.9% |
At a glance, it seems like we, as an industry, understand the importance of investing in energy-efficient upgrades. More than 80% of our respondents said they were either somewhat or extremely likely to make this a priority.
It makes sense. Why? Let's look at a few different reasons how going green can boost your returns.
Reduced Operating Costs
This one's the most obvious. If you install more advanced HVAC systems and use high-efficiency plumbing solutions, your costs will be lower. And not just your costs, but your tenants' as well. Which leads to the next point…
Increase Attractiveness to Renters
Look. Occupancy issues are (potentially) threatening most rental markets in the next year or two. As a result, you've got to make sure your property is appealing, both to future renters and your current residents alike.
More modern apartment buildings with more modern and sustainable building features can (and do) typically charge their residents a premium.
Of course, not every renter cares if their apartment is more or less sustainable, but if a renter can save money every month thanks to improvements? That's a compelling argument to lease — or renew.
Financing Incentives
There are a lot of advantages that sustainable multifamily properties can give you in terms of your financing options.
Take Fannie Mae's three programs dedicated to multifamily sustainability, for example. Each can provide a 10-basis-point interest rate reduction on a loan, and over time, that adds up to a huge cost savings over the life of the loan.
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Our Previous Survey
In our previous survey, I asked about your current loan and what your plans were for its maturity. With such a huge number of multifamily loans maturing in the next couple years, it's never too soon to think about your next move. Read the analysis here.