REI INK

Single-Family

Unlocking the Potential

Single Family vs. Multifamily Investments By Jennifer Stoops Investing in rental properties is a strategic move for those seeking to build wealth through real estate. However, the decision between single-family and multifamily units is not a one-size-fits-all scenario. It requires careful consideration of various factors, including investment goals, risk tolerance, and market dynamics. In this comprehensive guide, we delve deeper into the pros and cons of each option to help you make an informed decision and maximize your returns. Assessing Investment Strategies When embarking on the journey of real estate investment, it is crucial to align your strategy with your financial goals and timeline. Single-family homes offer the advantage of quicker appreciation, making them attractive for investors seeking short-term gains. On the other hand, multi-family properties provide a long-term investment opportunity, with the potential for stable cash flow and sustained growth. Understanding your investment horizon is essential in determining which option best suits your needs. Evaluating Exit Strategies Before diving into the real estate market, it is essential to have a clear exit strategy in mind. For investors looking to capitalize on short-term gains, single-family homes may be the preferred choice. With the right property and a reliable tenant, you can leverage the property’s appreciation to maximize returns in a relatively short period. Conversely, multifamily properties offer a more gradual appreciation but provide a steady stream of rental income over time. Assessing your investment goals and risk tolerance will help you determine the optimal exit strategy for your investment. Loan Requirements Regardless of whether you opt for a single-family or multifamily property, navigating the loan requirements is a critical aspect of real estate investment. Most lenders view rental properties as business ventures, resulting in higher interest rates and stricter lending criteria compared to traditional mortgages. Plan to allocate at least 20% of the purchase price as a down payment and ensure that your investment yields a return of at least 1% of the total purchase price per month to generate a decent profit. Contrasting Property Dynamics Single-family and multifamily properties differ in their valuation methods and market dynamics. While single-family homes are typically assessed based on their property value, multifamily units are valued based on the rental income they generate. Understanding these distinctions is crucial for evaluating investment opportunities and making informed decisions. Pros and Cons of Single-family Homes Single-family homes offer several advantages, including:  »         Tenant Stability // Properties located in desirable neighborhoods often attract long-term tenants, providing a stable source of rental income.  »         Short-term Appreciation // Single-family homes tend to appreciate more quickly than multifamily properties.  »         Lower Acquisition Costs // Single-family homes are generally less expensive to acquire, making them accessible to investors with modest capital. However, there are also drawbacks to consider, such as:  »         Limited Scalability // Investing in single-family homes may limit your ability to scale your portfolio compared to multifamily properties.  »         Tenant Dependency // Relying on a single tenant poses income limitations, with vacancies resulting in revenue loss. Pros and Cons of Multifamily Homes Multifamily properties offer unique advantages, including:  »         Lower Cost Per Unit // Multifamily properties often trade at a lower price per unit, offering better economies of scale and higher potential returns.  »         Diversified Income Streams // With multiple units, multifamily properties provide diversified rental income streams, reducing the risk associated with vacancies.  »         Ability to Scale Portfolio // Multifamily properties are conducive to portfolio growth, allowing investors to achieve scale more efficiently compared to single-family homes. However, multifamily properties also present challenges, such as:  »         Higher Property Taxes // Multifamily units typically incur higher property taxes, impacting overall profitability.  »         Management Complexity // Managing multiple units can be more challenging and may require third-party property management, increasing operating expenses. Additional Considerations In addition to the core factors discussed above, there are several other considerations to keep in mind when choosing between single-family and multifamily investments:  »         Market Affordability // Evaluate the affordability of the market and consider the cost per unit relative to rental income potential.  »         Market Demographics // Analyze the demographics of the local market, including the proportion of renters versus homeowners and the demographic profile of renters.  »         Scale // Consider the scalability of each investment option and assess your ability to manage and grow your portfolio over time. Market Trends and Opportunities Keeping an eye on market trends and identifying emerging opportunities can significantly impact your investment success. In recent years, multifamily real estate has witnessed a surge in demand due to changing demographic trends, such as an increase in millennial renters and a growing preference for urban living. This shift has led to a rise in multifamily development projects and presents lucrative opportunities for investors looking to capitalize on the rental market’s momentum. Conversely, single-family homes continue to be a staple of the housing market, offering stability and potential appreciation in suburban and rural areas. Understanding these market dynamics can help you align your investment strategy with evolving consumer preferences and maximize your returns. Risk Management Strategies Mitigating risks is a crucial aspect of real estate investment. While both single-family and multifamily properties offer attractive returns, they also come with their unique set of risks. For single-family homes, tenant turnover and vacancy rates can impact cash flow, while multifamily properties face challenges such as tenant disputes and property management complexities. Implementing effective risk management strategies, such as thorough tenant screening processes, proactive maintenance plans, and contingency funds, can help safeguard your investment. By identifying and addressing risks upfront, you can navigate market fluctuations and protect your investment portfolio. Tax Implications and Financial Planning Understanding the tax implications of real estate investment is essential for optimizing your financial strategy. Both single-family and multifamily properties offer various tax benefits, such as depreciation deductions, mortgage interest deductions, and property tax deductions. However, the tax treatment of rental income and capital gains may vary depending on the property type and ownership structure. Consulting with a tax professional and incorporating tax-efficient strategies into your financial planning

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2024 State of Homebuying Report

Opportunities, Challenges Await Investors By Joseph Ticchione A new generation has emerged, showing readiness and eagerness to buy despite the recently volatile housing market. Gen Z—born between 1997 and 2012—is eager and willing to purchase their first home, while being more tolerant of relatively higher interest rates than older generations. However, data from ServiceLink’s 2024 State of Homebuying Report (SOHBR) shows Gen Z — and even their slightly older counterparts, Millennials, who are still making their move — are not looking for the typical starter home. They’re seeking a larger home with more space that features tech upgrades and amenities. For investors, this all points to added competition when it’s time to buy, but also a growing opportunity to explore fix-and-flip projects. In March, ServiceLink released its annual report, which features data from a survey of 1,519 individuals who either purchased or attempted to purchase a home in the last four years. The report provides year-over-year data that reflects generational trends among buyers, including desire to purchase, attitudes related to alternative paths and the role technology plays in the process. It is clear that there are evolving opportunities and challenges for investors in the current market. Here is a look at what we found. Competition to Buy Despite the dramatic ups and downs of the housing market over the last four years, many still have a strong desire to purchase a home. Of those surveyed for the 2024 SOHBR, 47% of respondents said they plan to purchase a home this year. For the first time in the survey’s history, Gen Z rose to the top when it came to home purchasing plans. Sixty-three percent of Gen Z respondents said they want to buy this year. Millennials—born between 1981 and 1996 — were right behind, with 59% looking to purchase in 2024. For investors, the market has been tough with the high cost of capital coupled with high interest rates. But as rates are likely to soften, the market may become more appealing. With a new generation looking to enter the market, there will be added competition, specifically from current renters who now want to buy. When asked if they planned to buy or continue renting in 2024, 69% of current renters said they plan to buy this year, along with 70% of those living rent-free, possibly with parents or family members. Add in the 34% of current homeowners who are looking for a home and tight housing stock, and competition could be fierce. Fix and Flip Opportunity While Gen Z and Millennials are ready to buy, they also have very specific desires. SOHBR findings indicate they want bigger homes that feature technology upgrades. Across responses from all generations, 43% said they want a larger home with more space, 35% said they want more room between their home and a neighbor and added yard space, and 30% said they want both recently updated kitchens and bathrooms and homes with technology upgrades. On the opposite end, aside from financial constraints and high interest rates which respondents said was the biggest reason they abandoned the homebuying process in the past 12 months, the largest dealbreaker for those looking to buy this year is a home being too small. This could be an opportunity for investors to fix and flip, turning existing housing stock that could be on the back burner into a more desirable purchase that today’s youngest generations will jump at. Investors also could take existing housing stock and make upgrades to convert the home into a more tech friendly space. Ask yourself: Can I add space to this home? Can I add technological upgrades that will make this home more valuable? If you can make the property special enough, there’s a lot of opportunity here. Utilize Technology to Your Advantage Technology in the mortgage space continues to grow and buyers are ready to take advantage. SOHBR data indicates that 60% of those who purchased a home in the last four years utilized eSign technology, up from 48% in 2023. Also 50% applied for a mortgage online and 40% scheduled an appraisal or closing digitally. For investors, technology can also be a great resource. Utilizing the latest technology can help lower costs and make investing easier, along with providing greater visibility into the process and market. Finding the right partner is key. You want to work with an organization like ours that provides automated, lower cost services, which can increase efficiency and save you money. Tightening in the auction space Buyers who are striking out in the traditional market are increasingly looking at auction to purchase their primary residence. SOHBR data indicates the appeal for today’s buyers in the auction market is a potential cost savings, being able to bid on a home remotely, having a faster homebuying process and added transparency. While just 33% of those surveyed in 2022 said they were willing to buy at auction, that number has continually rose, to 40% in 2023, and 54% in 2024. The younger generations — Gen Z and millennials — are the ones with the greatest interest (67% and 64%, respectively), and the majority want the property to serve as their primary residence. For investors, this goes back to competition. There is a larger pool of people looking at this space, so, as ServiceLink’s Amy Daniel, senior vice president, previously pointed out, it’s even more vital to sharpen your pencils and make sure the property makes sense for you and to find that right fit in a partner. Growing equity With rising home prices, many homeowners have seen increased equity. Nineteen percent of SOHBR respondents this year reported having more than $200,000 in home equity and another 15% percent said they have more than $100,000 in home equity. In total, that’s 34% of all respondents who have at least $100,000 in home equity, up from 21% in 2023. For investors, you’re likely seeing your equity in current properties soar as well. Now is a good time to evaluate your portfolio and

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AI is Already Changing the Game When it Comes to HOA Hurdles

SFR Investors Will Soon be Very Grateful By Vishrut Malhotra Identifying HOAs and addressing their requirements has long been a massive headache for investors, especially when it comes to possible leasing restrictions. AI is changing that right now through tools far more advanced than simple chat bots. More than a few Single-Family Rental (SFR) investors have experienced the nightmare of dealing with difficult Homeowners Association (HOA) restrictions or petulant property management companies, both during the purchase and settlement process as well as thereafter. Because of HOA requirements, investors may be limited in how they can rent out their properties, with limitations on lease durations or the number of tenants allowed. HOA compliance often imposes time-consuming and burdensome administrative tasks on the investor or asset manager. HOAs Can Make Investing a Challenge Overall, the stringent regulations and ongoing financial obligations imposed by HOAs can make SFR investing more challenging, impacting the potential return on investment and limiting the investor’s freedom to manage the property according to their investment strategy. All of these are things an investor needs to know in advance of a purchase decision. And yet, it can be a maddening exercise simply to locate and procure the relevant HOA documentation, bringing needless time and cost to the process. Whether simply trying to determine if a property falls under an HOA agreement or scouring endless reams of documents to determine if leasing restrictions or fencing requirements apply to a property that’s the focus of an ongoing transaction, identifying an HOA, procuring and studying its requirements and documentation and then proceeding accordingly have caused more than a few mistakes or delays in the world of SFR. The fact is, however, that HOAs are not going away any time soon. There are over 370,000 HOAs nationwide representing over 40 million households (over 53% of the owner-occupied homes in America). In combination with an ongoing housing inventory shortage, that means that investors seeking to continue on in the SFR space must find a way to address HOA-generated challenges directly. There is no avoiding it. However, there is good news emerging for investors and buyers wrestling with HOA-related complications. In just the past two years, amazing advances in Artificial Intelligence (AI) have vaulted the technology to the top of the list of most effective HOA-focused solutions. As a result, the investor’s due diligence process, once seemingly unable to be automated with regard to HOAs, is moving deeper into the digital age. The current results and additional potential could relegate the challenges once associated with HOA documentation to the past. HOA Issues Traditionally Once Addressed Piecemeal, Manually The biggest issue with identifying HOAs and procuring HOA-related documentation is that there is no national or market standard. That means there are literally thousands of HOAs operating under thousands of varying requirements and mounds of disparate documentation. There is no national repository for HOA bylaws and requirements. Traditionally, the entire process was by and large a manual one for investors and buyers. Emails, phone calls and the manual extraction of data from complex and confusing forms were the preferred (read: only) means of addressing each and every HOA-related chokepoint. The process usually included an employee or vendor manually “scraping” data from a patchwork of websites (which may or may not have been comprehensive or current). The employees likely had to key and rekey some of the relevant data into their own system. From there, the person would visually scour that data to glean what was necessary in terms of requirements, fees or other elements for a transfer of ownership. Did a fee need to be mailed to a specific P.O. box? Did a specific form need to be filled out in a certain way? Each of these elements was traditionally as manual as it was time-consuming. Especially where fencing requirements or leasing/rental restrictions are involved, this unreliable means of collecting and analyzing data could (and often did) lead to delay, costly oversight or error. Enter a new generation of AI, including Large Language Models (LLM). The result? The introduction of various levels of AI technology which are already automating an increasing number of the HOA-related processes involved in residential real estate closings. AI is Impacting HOA-Related Real Estate Issues Right Now AI is changing the broken “model” for addressing HOA-related issues right now, and not just when it comes to communicating with property management firms or HOAs. Today, firms are beginning to use AI solutions to scrape thousands of HOA and HOA-related websites and data sources for all relevant information and documentation. This is happening in a fraction of the time it would otherwise take humans to do, and substantially more accurately. AI is providing cognitive labor, empowering humans to focus on more complex tasks by freeing them from mundane processes. AI is not just collecting HOA data, however. It is also extracting relevant data and discarding or sorting out extraneous or outdated bits of information. Once limited to analyzing similar categories of documents –virtually impossible in the HOA field – AI today can perform a level of analysis, classification and even decision-making (making payments when necessary or raising a “red flag” where leasing restrictions might exist) quickly and efficiently, freeing human employees to focus on other tasks or even quality control (QC). Amazingly, today’s AI can even assist in its own QC, calling attention to discrepancies in its own performance with a layer of redundancy and oversight. In a matter as confusing and variable as HOA information gathering, QC is imperative. Of course, AI is also being used in the back-and-forth communications process between property managers, closing vendors, buyers and sellers. AI is already being utilized to contact HOAs to request data. It is also being utilized to document and coordinate the numerous processes involved in this complex element of the real estate transaction. The technology is not doing these things unattended, but instead, in combination with the training, expertise and judgment of human employees. However, it is probably safe to say that, for any

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Single Family Rental Turns

Maximizing Tenant Satisfaction By Nickalene Badalamenti-Kalas It is an established dynamic in the single-family rental (SFR) space that a satisfied tenant tends to be a long-term tenant. Conscientious investors and property managers recognize the importance of fostering tenant satisfaction and understand the essential difference between a house and a true home. The former necessitates administrative efforts, whereas the latter yields substantial and perpetuated financial returns. There are a number of key criteria that support tenant satisfaction and long-term tenancy, and the critical juncture to addressing those criteria lies in the transition between occupants, a period averaging between three and five days. This brief interval involves many moving parts, making the tenant-turn process a multifaceted challenge. Achieving success during a tenant turn is predicated on all stakeholders —investors, property managers, inspectors, field service professionals — understanding and conducting their interdependent roles quickly and effectively. An empty house will detract from a neighborhood, it’s a waste of resources, and an inadequately prepared home is a wasted opportunity. A field services partner with the necessary scope, resources, and expertise to execute quick, high-quality turns on time, on budget, and within rental requirement guidelines are essential. Here are factors that make a difference in transforming a house into a true home, and that will help ensure your tenants’ satisfaction. Inspection/Scope The first step toward a swift and comprehensive tenant turn is a thorough inspection/scope. Proper execution within rental requirement guidelines demands training, oversight, and thorough, accurate documentation of the property’s condition. Experienced field service professionals can deliver a fast, technology-enabled inspection/scope — fully documented with geo-tagged and time-stamped photos — that meets rental compliance certification requirements These detailed reports are essential to processing claims and initiating necessary cleaning, repairs, grounds keeping, and other necessary work. The Satisfied Tenant Tenant satisfaction hinges on maintenance, repair, and cosmetic considerations. Long-lasting tenants want a house they can move into easily and seamlessly and that they can turn into a home without encountering livability issues. Factors influencing tenant satisfaction include the condition of interior walls, floors and working surfaces, exterior walls and roofs, windows, appliances, utilities, locks, alarms and other safety features, and the overall appearance and neatness of grounds, sidewalks and driveways. Doors, windows and attic insulation may require attention to maximize heat retention during winter months, and lower utility bills. Equally important to the tenant’s satisfaction is their relationship with property management and the prompt, professional resolution of maintenance and repair concerns. When a tenant feels supported in their home, they will be much more likely to take a personal stake in the care and upkeep of the property. The Quality Turn for the Happy Tenant To ensure a SFR property is turned over to a new tenant in the best possible condition, the following key components must be addressed during the turnover process: Appliance Audit Your field service providers should conduct a thorough assessment of major appliances and functional “systems, including HVAC, furnace and water heater, oven, dishwasher, microwave and laundry appliances. Regular maintenance checks on HVAC and climate control systems are essential in extending system life and preventing costly repairs. Plumbing Another area where an ounce of prevention is worth a pound of cure is the plumbing system. Field service providers will examine the general health of the plumbing network, checking for existing and potential leaks, backflow hazards, and water heater efficiency. This is also the perfect opportunity to address overall system efficiency, with consideration for improvements such as low-flow toilets, high-efficiency faucets, or tankless water heaters. Interior Cleaning A thorough deep clean of the home is essential to attracting the committed, long-term tenant. When they assess their future home, it should be in as-new-as-possible condition. The process should include steam-cleaning of carpets and floors, replacing as needed, cleaning and/or painting of walls and ceilings, cleaning interior and exterior window surfaces, and clearing out HVAC and heater vents. Window treatments including blinds and curtains should be addressed, and woodwork including baseboards, wainscotting and stair rails should be cleaned. This is also a good time to address air quality, with purifiers and ozone treatments, as necessary, to ensure an impression of overall quality and cleanliness upon entering the home. Exterior Cleanup When approaching the property, if the grass is tall or the entryway is dirty, a prospective tenant will be put on guard and begin looking for more things that are wrong. Your field service provider should enhance the curb appeal by attending to weeds, landscaping and trees, lawn maintenance, gutter cleaning, driveway and walkway appearance, and exterior walls and windows. In the latter cases, a power washing can do wonders for revealing the home’s native charm and curb appeal. Property Improvements The turn interval between tenants is also the ideal opportunity to make improvements and complete necessary rehabilitations where appropriate. Our field rehabilitation services are designed to improve efficiency and enhance visual appeal, such as kitchen and bath remodeling, landscaping, and irrigation system installations. Regarding efficiency, there are a range of upgrades available to lower tenant costs, including energy-efficient appliances, smart thermostats and locks. Consider upgrading to more efficient windows, door sealing and other insulation measures. Upgrades such as home alarms, smoke alarms, radon and CO2 detectors, and security cameras can go a long way to giving tenants the impression of a safe and secure home. A Lasting Investment The goal of any SFR property is to attract and retain high-quality tenancy. These are the tenants who want to create and protect their home for the long term, and who will complement your investment in the home with their own. They are more likely to take responsibility for its care and maintenance, lowering overall costs and increasing returns. Because the tenant-turn interval is brief and can include a wide range of activities, expert supervision and oversight are essential to executing a quick, quality turn. Your field services partner should be selected on their ability to manage the project within timelines, budgets, and rental requirement guidelines while ensuring a delighted tenant experience. This approach

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Utilize Modular-Built Assets for Higher Returns

Modular Housing is Gearing Up to be the Future of Real Estate By Amy Martinson Institutional investors play a critical role in the real estate market, constantly seeking innovative strategies to maximize returns in a market that is marked by complexity and rapid change. The United States real estate market, in particular, presents a complex tapestry of contradictions that demand a fresh perspective and novel approaches. On one hand, residential single-family properties are experiencing a remarkable surge in valuation, as confirmed by recent data from the S&P CoreLogic Case-Shiller Home Price Index. This index meticulously monitors fluctuations in the value of residential real estate on a national scale, and its findings reveal the significant increase in home values. This rise in valuation has naturally piqued the interest of investors, especially institutional ones, who are always on the lookout for opportunities to capitalize on market trends. However, on the flip side of this coin, the behavior of Wall Street paints a different picture. Prominent Real Estate Investment Trusts (REITs), which have traditionally been buyers in the real estate market, are increasingly becoming sellers. This shift in strategy by the corporate giants in the real estate world underscores a growing sentiment: building new homes seems more advantageous than buying existing ones. The proof is in the numbers; U.S. single-family housing REITs are trading at a 20% discount to their gross asset value, making this an opportunity too crucial to overlook. So, what are the potential resolutions for institutional investors in this evolving landscape? Let’s take a deep dive into the options available. Navigating Real Estate Investment in Changing Times The traditional approaches to real estate investment are undergoing rapid changes, driven by pressing challenges and evolving financial conditions. One alarming statistic that underscores the urgency for change is the fact that monthly mortgage costs now consume a significant 42% of the U.S. median household income. This calls for an immediate paradigm shift in how we approach real estate investing. These challenges compel us to explore alternative avenues, including innovative financial models such as modular bridge financing, and consider building rather than buying. Addressing the Housing Crisis Adding complexity to the financial landscape is the ongoing housing crisis in the United States. According to Fannie Mae, the overall housing stock falls significantly below what long-run demographic trends suggest is needed. Their estimates indicate a cumulative shortage of approximately 4.4 million housing units across the country’s top 75 metropolitan areas. Policy group Up for Growth offers a similar assessment, pegging the shortfall at around 3.8 million units. David Howard, CEO at the National Rental Home Council (NRHC), also emphasizes the urgency of this housing shortage, which spans all housing types. Shifting Focus: Building vs. Acquiring Dallas Tanner, the CEO of Invitation Homes Inc., which manages a substantial portfolio of over 83,000 homes for lease, sheds light on the changing landscape of SFR investments. He notes that the focus has shifted away from primarily acquiring existing housing stock towards the development of new homes. Tanner reveals that over the past five years, Invitation Homes has acquired slightly over 12,000 homes while divesting nearly 10,000 homes. Notably, the company is actively engaged in development activities, with the number of homes in its development pipeline growing significantly. Embracing a New Strategy: Build-for-Rent (BFR) Large corporate landlords are adapting to the changing landscape, opting to build rental homes rather than acquiring existing ones. This shift aligns with the rise of the Build-for-Rent (BFR) model, especially in high-demand states like Texas and California. Despite challenges like high borrowing costs, BFR communities are expanding their appeal beyond seniors and are attracting a wider demographic, including young families. Navigating Market Dynamics The aftermath of the pandemic has ushered in remarkable shifts in the real estate sector. Factors like inflated currencies leading to higher interest rates and a significant property inventory shortage have created a volatile market. However, despite these challenges, the sector remains dynamic. Reports from organizations like the California Association of Realtors indicate sustained interest from potential buyers, hinting at an active market. Modular Bridge Financing In this evolving marketplace, modular housing stands out as a viable solution, offering substantial benefits like affordability, speed, and sustainability. Several compelling financial metrics validate the investment potential of these homes, including around 20% cost savings on construction compared to traditional homes, and eligibility for tax credits due to eco-friendly construction methods. Additionally, the quick return on investment and immediate occupancy make modular homes a lucrative investment opportunity. What Makes Modular Housing Enticing? Cost Efficiency // One of the most significant advantages of modular housing is its cost efficiency. Compared to traditional construction methods, modular homes can offer substantial savings, up to 20% or more on construction costs. For institutional investors, this translates into a lower upfront investment and the potential for quicker returns. Speed of Construction // Modular homes are known for their rapid construction. Factory-built modules can be produced simultaneously while site preparation is underway, significantly reducing construction timelines. Sustainability // In an era marked by increasing environmental consciousness, modular housing is emerging as an environmentally friendly option. Many modular homes are built using sustainable materials, and their construction processes generate less waste compared to traditional construction. Tax Incentives // Modular construction often qualifies for tax incentives due to its eco-friendly construction methods. Reduced Labor Dependency // Modular construction relies less on skilled labor compared to traditional construction methods, thus reducing the dependence on scarce labor resources. Market Growth // The expected growth from $32.49 billion in 2023 to $40.70 billion by 2028 represents not just a numerical increase but a testament to the growing recognition of modular housing’s potential. The Bottom Line Modular housing is proving to be more than just an alternative; it is gearing up to be the future of real estate. With its numerous advantages, it offers solutions to many of the current housing challenges. However, realizing the full potential of modular housing requires a collective effort from government agencies, investors, and homebuyers alike.

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Energy Savings for Your Single-Family Rentals

Achieve Savings Through Regular Inspections & Proactive Maintenance By Jason Myers Conserving energy is not just good for the environment anymore. It is also good for your bottom line. Being smarter about energy use yields home energy savings and enhances the value of your rental properties. It is one of the easiest win-win scenarios possible today. Most investors like the idea of saving energy, but they assume the process will be too time-consuming or expensive to set up. Fortunately, there are numerous simple things you can do to cut energy costs that will not break the bank up front. Here are nine ideas to help you cut energy costs on your single-family rental (SFR) properties: 1. Do a Home Energy Audit The best way to cut energy costs is to first determine your baseline. An energy audit can provide this information. You can work with a certified auditor to evaluate your properties and identify and prioritize potential improvements or you can opt for a DIY energy assessment. Typical recommendations after an energy audit include adding insulation in your roof or walls; improved heating, cooling and hot water equipment; and installing new ventilation, LEDs and smart thermostats. 2. Install LED Lighting If you have not already made the switch to LED lighting, it is an easy way to enhance your energy savings. A single ENERGY STAR-certified LED light bulb requires approximately 90% less energy than traditional incandescent bulbs, which can save you around $55 over the life of the bulb. Even better, LED bulb life is about 15 to 25 times longer than an incandescent so you will be buying fewer bulbs overall. 3. Save with Air Sealing One of the most efficient (and often simple) ways to lower your heating and cooling costs is by sealing air leaks using weatherstripping and caulk. First have an energy assessor test your home for air tightness to determine if and where leaks are occurring. They will likely conduct a blower door test, which can identify leak locations and help determine if any areas of your property need additional insulation. 4. Energy-Efficient Appliances Your best bet for achieving home energy savings via appliances is to upgrade the current appliances to products with an ENERGY STAR label when they break down or age out. This goes for everything from microwaves and dishwashers to hot water heaters, stoves, washers, dryers and refrigerators. In fact, the U.S. Department of Energy estimates that you could save hundreds of dollars annually by replacing a 10-year-old refrigerator with a new ENERGY STAR model, and an ENERGY STAR hot water heater could save you up to $3,500 in energy costs over its lifetime. Have your property services partner inspect and audit the current appliances across your portfolio to create a database of information including the current ENERGY STAR rating, make/model and serial number, a life-of-product estimate, and recommendations for newer energy-efficient options when the time comes. 5. HVAC Preventive Maintenance Heating and air conditioning account for nearly half of residential electricity consumption, so keeping your HVAC system in top condition is smart for both conserving energy and prolonging its life. Preventive maintenance checks can help with both. During a typical check, HVAC air filters are replaced, and condensate lines are “blown out” to help prevent back-up, keep the system operating efficiently and reduce larger repair expenses down the road. Schedule regular checkups like these for preventive maintenance at least twice a year with your property services partner, and put them in charge of filter changes as well. This proactive combo can help prevent damage to your system and avoid costly emergency repairs as well as deliver home energy savings. 6. Smart Meters The ability to monitor energy usage in nearly real time is not a futuristic notion; it is already here, thanks to smart meters. Installing these gauges can allow your properties to communicate with their respective utility providers, improving reliability through faster responses to outages. You can also enhance efficiency in your systems by getting a better handle on residential usage and how to make changes to lower costs. 7. Window Upgrades Windows can be responsible for as much as 30% of a home’s energy use, so upgrading them can be a priority that pays off in the long run. If it is time for your windows to be replaced, this is a perfect opportunity to move to more energy-efficient models. If your windows are still in good condition, you can make strides in energy efficiency through smaller upgrades like eliminating air leaks, caulking and weatherstripping, applying solar window films and replacing window coverings with more energy-efficient options. 8. Insulation Improvements Are your SFR properties well insulated? This one measure can help reduce energy use, make the interior of your homes more comfortable for tenants (and thus reduce temperature complaints) and deliver home energy savings of up to 10%. Before making improvements, have a professional check for air leaks as well as assess the insulation levels in your walls, attic, basement and crawlspace to help determine a property’s needs and priorities. No matter how your rental agreements are structured, making improvements with the goal of home energy savings in mind can have long-term benefits for both you and your tenants. Energy costs go down (a draw for many renters), and you can lengthen the life of your HVAC system. A few simple changes really can add up to savings over time. 9. Find the Right Partner A good property services partner can help you determine the most strategic green upgrades for your properties as well as execute many of them while also performing preventive maintenance that ensures you get the most out of your SFR investments. Learn more at mcs360.com

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