As a landlord, you know ahead of time that you’ll incur certain expenses. But because the point of renting out properties is to make money, you probably want to minimize those costs as much as possible. After all, you’re in the business of making money, so the less that goes out the door, the higher your profit. It’s not always easy to cut costs, especially in the summer months when maintenance, upkeep, and utility prices seem to soar, but here’s a guide to help you along the way.
It’s pretty common for landlords to pass the expense of utilities on to their tenants. However, if you do pay any of them, you’ll want to do some things to reduce the expense. For one thing, start the season by replacing all the HVAC filters. Dirty filters cause HVAC units to run less efficiently, spiking the electric bill. Also, check the water heater. Consider lowering the temperature to 120 or 130 degrees if it’s not already. This small change could save you up to 10 percent on energy costs.
Another important maintenance task to perform every year is to make sure all the doors and windows are sealed well. Heat enters the home through cracks around these openings, causing your air conditioning unit to work harder than it has to. If you do find small cracks or openings, simply caulk the areas to seal them up. This will also help with heating expenses in the winter because it will keep heat from escaping and cold air from entering.
If it’s financially feasible, consider swapping out some things in the property, such as appliances and light fixtures. Today’s appliances are much more energy-efficient than they used to be, so replacing them could save you a lot of money in the long run. The same is true of the LED light fixtures now available. According to the US Department of Energy, these use up to 75% less energy than incandescent lighting.
When landlords take on the cost of utilities for their properties, there’s usually a good reason. Maybe they take care of the lawns, so they feel it’s unfair to make the tenants pay the large water bill. Or maybe it was just customary for properties in the same area. Whatever the reason, it could be time to implement a new policy.
You can’t suddenly spring this type of thing on your existing tenants. After their tenant screening, you probably had them sign a lease agreement that holds you to certain obligations. But if the price of utilities is costing you significant income, you might need to rethink those agreements for future leases or when the current ones renew. It’s certainly not a good idea to add all the utilities on at once. Instead, try making the tenant responsible for just one. If this tactic causes too many issues with your tenants, however, just consider raising the rent a little. You’ll still probably upset some people, but rent increases are a common occurrence that they’re probably more used to.
Many landlords hire landscapers to take care of the lawns on their rental properties. They usually do this because they want to keep them looking a certain way and can’t entrust that responsibility to the tenants. However, if the cost is getting too high, it may be time to cut back. This could mean doing some of the work yourself while allowing the landscapers to come once a month. Or it could even mean letting go of the reins and allowing your tenants to manage their own lawns. Either way, there’s usually a lot of cost-cutting potential in lawn maintenance.