The Benefits of being a Green Landlord

Like every other business, residential property management has changed to match this new internet based business model that has become the new normal and while most real estate has yet to “come back” to the value of just a few years ago, apartments are one real estate asset  that has keep it’s value. I would be lying if I didn't say that my real estate investments have been my most predictable income stream and the main reason this recession has been bearable. A few years ago I decided that I should take my own advice and Green up my apartament's and it may be the time for you to do the same. The process has three steps: greening the marketing/application process, greening the apartment painting and preparation area and finally making each unit and the building as a whole, more energy efficient.

 

The best part of greening the marketing and advertising section of your job is that it requires less work and is faster and simpler than the paper version of the same job. To start with, I’ll assume you are already marketing on Craigslist or some other online classified listing site. To fully take advantage of these sites remember that the busier the market, the more that is posted, the less face time your ad will have with the limited quality prospective tenants. That means that you need to refresh your listing every week by removing them and then replacing them with an updated version which will move your ad up the daily listings. Secondly, take advantage of the 4 pictures you are allowed to upload with your listing and take your time to show the best features of that particular apartment. If the building itself is impressive, use a picture of the building in the ad as well.

 

In your ad try to list all the information you want prospective tenants to know, leave nothing out. This information should include what would like to highlight about the apartment and building amenities, as well as any of the shortcomings that particular apartment might have.  You might want to ask why would I tell you to include any of the negatives in the apartment but the reason should be obvious, if those negatives are going to bother the prospective tenant when they see the apartment, you would be better off not wasting time with that match.  An example would be that I have a number of apartments with very small kitchens and I really can’t hide that.  I know that anybody who does a lot of cooking is not to want one of those apartments and so it would be wise for me to tell prospective tenants because I know that for many people, a small kitchen is unimportant.  Any correspondence with the prospective tenant can be used as a filtering device.

 

Now that you’ve limited the wrong tenants and found a needs matching potential tenant try to continue to keep the process electronic.  I create all my applications, disclosures, and blank lease forms in Google docs so that I can simply “share” these documents with my potential tenant.  I have them email me permission to run a credit check and return the documents with this “sharing” once they credit check comes back as a go-ahead.  This takes care of my legal position in running a credit check and also verify their email address and contact information.  I then ask them if the lease is acceptable and then to either scan the documents and email back to me as a .pdf file or mail to hard copies via snail mail to my office address.  I then can send them back a fully executed lease, also as a .pdf file.

 

Included in my application process is the requirement for an e-mail address and a cell phone number and permission to use text messages and email as the default communication method. Once completed I know I can communicate with my tenant with a minimum of effort.

 

The second part of the Greening process is all the work in the apartment itself.  I include three separate areas in this process.  The first is cleaning, the second painting and the third is windows and appliances.  For anybody who has followed my posts this year there should be at least a few related to using non-toxic, biodegradable, natural cleaning products so I won’t go into that right now. These products were named and linked in my 11/6/12 post. Using these natural products will not only save you money but will give you a giant marketing advantage in marketing your apartments as Green.

 

As most apartments get painted at least every three years so it’s important to know that almost all of the major paint manufacturers have a line of either no VOC’s or low VOCs. (VOC’s are Volatile Organic Compounds, which are gases that may have both short and long term health issues. These new paint’s have about a 10% premium in pricing but have two major advantages in usage. The first is there is no smell from the paint (it’s the smell that are those chemicals) and so it is both pleasant to paint as well as a nice for the tenant moving in to not have that “latex” smell in the apartment. The second advantage is the ability to market the apartment to a progressive thinking tenant. Landlords sometimes have a view of their tenants that does not match reality. We sometimes use reverse-discrimination and believe that only high income tenants care about environmental air quality but from real-life experience I can tell you that this is not the case.  While you may not be able to get a higher rent from low income tenants you will get a better quality tenant from Greening even your least expensive apartment.

 

 A few more suggestions:
Use only one interior color in painting all apartments.  This means ceilings, walls and woodwork will get one color.
Pick a color that is neutral, that you think anyone would like and make that the color of every apartment in that property. I use either Benjamin Moore Linen White or Benjamin Moore Antique White. All other paint manufacturers will match either of those colors.  Since 2011 almost all of the paint manufacturers have gone to low VOC paint formula as well as having a VOC free version.
At least once a year, or maybe once the lease is signed with the new tenant, the tenant will ask you if they can paint one room, or in some cases a more than one room a different color. Your answer should always be no. (If you absolutely have to give in you should add an amount equal to two times the cost of repainting the apartment as additional security deposit.)
 Use either flat or eggshell on ceilings and walls and semigloss or gloss for all woodwork.

 

The last step greening your apartment building is to make each unit as energy efficient as possible. If you are here in the Northeast that means that the biggest bang for the buck is in weatherizing. On a purely selfish level most of the appliances may be owned by you but the electrical usage is billed to the tenant so while you may want to modernize the apartment (for rental reasons) with a new refrigerator, your best return on investment will be in saving money in heating costs. The more you keep the utility costs down, the more you make. On a per apartment basis the bulk of the heat lost in each apartment is due to the windows (and window frames) and exterior electrical outlets. The exterior electrical outlets can be insulated easily by purchasing electrical outlet insulator’s at your local hardware store.  They are typically sold in packs of 10 for $1.99. Best two bucks you’ll ever spend.

 

The windows and window frames are not so simple. First you need to access the situation. What type and the age of the windows are is important.  Most home or apartment windows are called double hung and have a movable lower and upper pane and are either single pane or double pane (sometimes called an insulated window.)  If your windows are relatively new and are double pane windows you need go no further.  However if these are the older single pane windows the next question would be “Is there a storm window outside this window?” If there is a storm window all we would need to do is to make sure it was working properly. If there are no storm window’s then the option would be to either completely replace the window’s (with a cost of $250-$500/window), put on a storm window (with a cost of $65-$100/window) or install an interior storm (with a cost of $100/window.)

 

I can’t tell you which is best for you.  The return on investment is only one part of the equation.
New windows also have a  marketing value in addition to saving you operating expenses. Certainly if you can afford to replace the old windows this would be your best choice, however almost as important as the windows is the frame the window is sitting in. In most cases the window itself was put into a frame with a quarter inch gap on all sides (called a rough opening).  The window was then shimmed and nailed.  The gap was then filled with fiberglass insulation and then trimmed out and painted.  In most cases even if it’s a new window it might have been installed this way.  The best thing to do then is to take off the casement trim on the window and see if the insulation is fiberglass or foam. if the insulation is foam you can close it up and be happy you have a well sealed house.  However if it is fiberglass insulation you will need to remove the insulation and replace with non-expanding foam. (Expanding foam would ruin the window so make sure the foam you purchase is non-expanding.)

 

There will always be more to do when winterizing your apartment building and the apartments within. If the apartment has it’s own thermostat, switching to a programmable EnergyStar® thermostat will help. Once your improvement’s are made your marketing can begin. You will be amazed at the results of simply adding Green to your marketing campaign. Good luck. If you do it right, it will mean more green in your pocket.