The Financial Impact of Electrification in Multifamily Property Management

Two people discussing benefits of electrification for multifamily property management. One of thenm holding calculator, the other is taking notes. There is a house figure in the background.

Author: Tim Moegen
April 23, 2024 - 5 MIN. READ

Unit turnover costs you time and money in finding new tenants. Accommodating tenant electrification needs is an increasingly popular multifamily property management strategy to help ensure tenants stay put. Electrification upgrades also make your property more attractive to environmentally minded prospective occupants.

Electrification not only reduces the emission of greenhouse gasses but can also save your tenants money on their utility bills. The increased marketability of electrified properties also allows you to charge higher rents. High-efficiency electric appliances and lighting lead to long-term savings on your energy bills.

This article explores all the advantages of your energy modernization in greater detail.

The Benefits of Electrification to Multifamily Property Management

Electric appliances increase the energy efficiency of every unit. The technology powering electric appliances such as induction stoves uses less energy than gas-powered appliances. Electric cooling and heating provided by more efficient installations such as mini-split heat pumps save energy over traditional HVAC installations. Electric water heaters lower energy costs by two to three times compared to gas-powered ones.

Replacing gas-powered appliances with electric ones lowers indoor emissions of nitrogen oxides and carbon monoxide. Gas-burning appliances, such as dryers and water heaters, also release carbon dioxide, increasing your carbon footprint.

Electrification gives your properties the potential for green certification. Fannie Mae grants preferential pricing to certified multifamily developments. Many organizations can award these certifications, most dealing with new construction. However, existing multifamily buildings can be certified by:

Tenants of upgraded properties have the satisfaction and peace of mind that comes with adopting cleaner energy appliances. Aside from the appeal of high-tech appliances and lower energy costs, they will enjoy greater safety. Electric appliances eliminate the risk of gas leaks from stoves and water heaters. Indoor pollutants—which can contribute to asthma, COPD, heart disease, and diabetes—are also lessened with the use of electric appliances.

Long-Term Cost Savings

Designers of modern, energy-efficient electronics use components that minimize heat generation. The less heat, the higher the durability. You will face lower maintenance costs and less-frequent replacements when upgrading to electric. Solid-state components also simplify manufacturing, allowing for fewer points of failure.

You want your energy systems to be as resilient as possible to keep maintenance costs low. Appliances and air conditioning systems must be easy to fix and replace as necessary for successful multifamily property management.

A simplified infrastructure will save you time and money. When repairing an electrical appliance, your safety primarily depends on unplugging it or flipping a circuit breaker. When installing a replacement, you merely plug it in.

Stoves and dryers may require higher voltage, but maintenance is relatively uncomplicated once the outlets are in place. Many systems can also be powered from backups.

Gas requires piping and leakproof connectors. When compromised, the resulting leaks pose a hazard that must be tracked and repaired. This may result in outages to multiple or all units. Tenants may even have to evacuate.

Unfortunately, you can’t run a gas system from a backup. If your gas infrastructure fails, your tenants will lose hot water, heating, and cooking.

Electrification lowers your maintenance costs as well as your operational costs. A heat pump can replace a furnace and an air conditioner, cutting maintenance time and expense from two units to one. Using artificial intelligence (AI) to automate electrified operations reduces staffing expenses.

Employing AI will also open the door to predictive maintenance and integration of smart technology. The improvements in maintenance prevent expensive repairs. Smart technology allows lighting, HVAC, and other systems to function most efficiently. This evolving tech will also create a satisfying environment to present tenants and be attractive to new ones.

Resilience in your energy system allows you to cope with local outages and protects your tenants and property from natural disasters. As weather becomes increasingly severe and unpredictable, damage to multifamily properties is rising. Affordable housing suffers the worst impact.

As mentioned above, electrification allows backup power sources to be maintained. These can serve to run emergency elevators in multi-level properties. Providing alternatives to stairs is vital to the welfare of tenants with mobility challenges.

You can combat flooding by using backup power to run sump pumps. Backup generators can run refrigerators, stoves, lighting, heating, and cooling. Your tenants will remain comfortable and safe even during a raging storm.

When multifamily property management employs smart technology to control operations, backup power will keep it functioning regardless of service interruptions. This will enable staff to monitor and address damage before it becomes unmanageable.

Electrification also future proofs you as regulations and energy policies change. As the White House encourages the use of electric vehicles, more tenants will require EV charging stations. Charging infrastructure also attracts new tenants.

The use of solar energy presents another opportunity for electrified properties. Installing solar panels can cut your energy bills and maximize your use of clean energy.

As previously cited, an electrification upgrade allows you to replace traditional furnaces and air conditioning with heat pumps. These units cut your energy and maintenance costs while raising your sustainability profile.

Going electric lets you take advantage of incentive programs such as HERP. You will also be poised to avail yourself of future federal or local programs.

Financial Planning and Investment

The cost of electrification will vary depending on what changes you make. For example, a water-heating changeover can cost $2,000 to $8,000. Converting from a central gas boiler to a central heat will run you from $10,000 to $30,000.

Fortunately, multifamily property management can obtain favorable financing in various ways. The Department of Housing and Urban Development (HUD) makes the tools to plan an electrification retrofit readily available.

The navigator allows you to explore financing options, including leases and loans. The HUD website will also connect you with financial allies to help you sort through the programs to obtain the necessary funds.

While some tenants can’t afford rent increases to offset electrification costs, you still achieve a considerable return on investment (ROI) in energy savings and maintenance costs. The lower expenses more than offset your original investment and lead to higher tenant satisfaction, particularly in lower-rent units. An expert contends that a $25 energy bill savings on a $900 rental has more tenant impact than saving $50 on a $2,200 urban rental.

Federal and local governments provide many incentives for electrification. These include building credits, energy credits, refueling credits, and state rebates. You can also receive home electrification and appliance rebates.

Incentive programs specifically focus on recovering retrofit expenses. At least 10% of rebates must go to upgrading multifamily properties. You will recover most of your expenditures by leveraging rebates and credits and realize higher future profits.

Hitting the High Points

Electrification increases efficiency and lowers your energy costs. Installing upgraded appliances decreases the time and expense you spend on maintenance. By electrifying your property, you better protect it from disaster and prepare it for future demands.

Going electric makes tenants happier while increasing your profit margins. Adopting electrification is a multifamily property management strategic decision that benefits you and the environment.

Buy Electrification Equipment at 7% to 30% Discounts!

When you need to upgrade your heating and cooling equipment, appliances, or other assets at your property, don’t overpay, join a purchasing program like Raiven and pay substantially less!

Companies like Raiven combine the buying power of all their members and negotiate exclusive discounts, service terms, and supply chain priorities so you pay less for your equipment, parts, and maintenance supplies, and you don’t have to squabble with suppliers.

Gain access to pre-negotiated discounts of 7%-30% from industry-leading manufacturers and distributors, including Ferguson, HD Supply, Home Depot, Lowe’s, Office Depot, FedEx, Grainger, Sherwin-Williams, T-Mobile, and more! The marketplace provides real-time pricing and availability alerts while streamlining your purchasing. Reach out for a free demo today and discover how Raiven can propel you toward your electrification goals and financial savings.