Insurance, property management, maintenance, utilities– these are some of the various expenses you’ll incur when investing in multifamily properties. Although most tenants of multi-family properties pay their own utilities by unit, not all leases have been set up so that the tenant is responsible for them.

If that’s the case, lowering all (or most) of your costs can directly result in an increase in your net operating income. In this article, we’ll explore five ways you can reduce several utility costs in your multi-family property. 

1. Reduce your heating and cooling expenses

If you don’t nip it in the bud right away, these specific expenses can quickly become the highest driver of a utility bill. Make sure to change the HVAC filters in every unit as often as you can to significantly lower your energy consumption. When HVAC units are dirty, they have to use more energy to work properly, thus, increasing your bill. To further reduce your heating and cooling expenses, look for air leaks in your heating ducts and seal them with either caulk or weatherstripping. Also, seal any small gaps that you find in windows or doors. 

The Department of Energy explains that you can save as much as 10% a year on heating and cooling by turning your thermostat back 7°-10°F  (8 hours daily) from its normal setting. Purchase a programmable thermostat and incentivise your tenants by explaining how they can lower their utility bills by using it accordingly. 

2. Decrease your water utility costs

For multi-family units with a shared water bill, this expense falls under you as the owner of the property. Showers and baths can easily account for the most water use in a home. You may not be able to cut your tenants’ shower times, but you can drastically reduce the amount of water that’s quite literally going down the drain. A Great Shower suggests that low flow showerheads can reduce water consumption by up to half. Your tenants will still be able to enjoy their long showers, while using less gallons per minute. These showerheads will not only save you money on your utility costs, they are also better for the environment. Water heating is also one of those high-costing expenses. In fact, as stated by The Department of Energy, after heating and cooling, it usually accounts for about 18% of your utility bill. To conserve hot water, they advise you to fix leaks, install low-flow fixtures, and buy an energy-efficient clothes washer and dishwasher. You may also want to invest in more eco-friendly toilets.

3. Install LED light bulbs

As you may have heard, LED lights are more environmentally-friendly than compact fluorescent lights (CFLs) or incandescent bulbs. Energy Star states that LEDs emit light in a specific direction, unlike incandescent and CFLs, which emit light and heat in all directions. As a result, these energy-saving bulbs use light and energy more efficiently. LED light bulbs also generally have a longer lifespan. So, although they may cost a bit more upfront, they’re definitely worth the investment as they will save you more money in the long haul.

4. Add motion-sensored lights

While we’re still on the topic of lights, here’s another way to save money on this utility. As mentioned, LED light bulbs are a great option, and you can install motion sensored ones in low traffic areas of your multi-family units. This goes for the stairwell, the garage (if one exists and is accessible to your tenants), hallways, etc. Use your discretion and only install these lights where you feel they will be convenient for your tenants. After all, aside from saving money, you want your tenants to feel  satisfied with their rentership experience.

5. Try to use only energy-efficient appliances

Energysage suggests that although energy efficient appliances come at a premium, in most cases, they are worth the expense. They report that on average, home appliances will account for 20% of a home’s electric bill. Appliances can literally be energy suckers. If you can, use energy efficient stoves, clothes dryers, refrigerators, and freezers.

Aside from making these cost effective changes, you should monitor your utility bills regularly and make changes accordingly. While it’s not possible to dictate all of your tenant’s energy utility consumption, you can certainly make changes to dramatically reduce the utility costs for your multi-family property.