All you need to know about conserving water at your property.
By Paul Marks
As most multifamily management professionals understand, water is one of the largest expenses at a property. According to Circle of Blue’s 2017 annual survey, the nation’s average price of water for a family of four (using 150 gallons per person per day) has “climbed 57 percent since 2010.” Aside from cost, those interested in reducing their carbon footprint also know that water conservation is a crucial way for your property to do its part in using our planet’s resources responsibly. Whether your motivation is financial, conscientious, or both, there are plenty of reasons to focus on using less water
Water conservation benefits your property in many ways:
1. Conserving Water Makes Residents Happy, and Happy Residents Make a Happier You
When your property does its part to save more water, residents who pay for their own water see immediate savings. While saving your residents money might not seem like a big financial incentive at first, let’s look a little closer. Even when residents pay for water through allocation, the property still benefits.
First, helping your residents save on water increases current resident satisfaction, which incentivizes them to stay at your property. Suan Tinsley, partner at DayRise Residential and past Houston Apartment Association (HAA) president, explains, “It helps resident retention. Whenever the water [rate] is higher, [residents] don’t accept your explanation of telling them that water rates have increased. They think you’re trying to pass along common-area water. It has been a challenge to explain when there’s a spike in the water rate.” Circle of Blue’s survey of 30 major cities nationwide reveals that the price of water climbed an average of 3 percent last year, and is on a steady increase. Doing your part to help residents save on water not only makes them happier to live at your property, but can lead to future referrals. Word of mouth is low-cost advertising, so genuinely helping your residents feel excited about your property benefits everyone.
“Water is one of the largest expenses at a property,
so anything you can do
affects cash flow and value of the asset.”
- Quintina Willis, VP at Capstone
Second, lower water bills attract new residents. Quintina Willis, Vice President at Capstone Real Estate Services, explains that future residents often ask about water prices when they are gathering information about multifamily communities. “Residents have gotten savvy, and when they’re doing their decision-making calculations, have started adding the utility expenses to make their final budget decision,” Willis says. In addition, many modern residents are drawn to eco-friendly housing. Communities should advertise when they are transitioning to a water conservation program. “[There are] more opportunities out there for us as an industry to market as participating in the green initiative. There is a huge push to go green. [There are] a lot of residents who want to focus on their carbon footprint and who are on board with this mentality,” Willis reiterates.
Finally, conserving water can ultimately increase property profits – even when the resident foots the water bill. Residents often have a fixed living expenses budget. Willis explains that if properties can lower the water bills, they can eventually raise the rent. She says, “When people are making leasing renewal decisions, every dollar that you bill for water is a dollar that you can’t increase on rent.”
2. Water Conservation Increases Your Net Operating Income
Net Operating Income (NOI) reflects whether or not your property is actually making money (and if so, how much). By lowering water costs, you will increase your property’s NOI. Water conservation will then benefit your property owners, managers and investors.
Tinsley explains, “When we buy a property, we underwrite it based on historical data that the seller provides. When we write a budget based on that, if there’s a spike in the water rates, we go over budget, and we’re constantly explaining that to investors.” She says that though properties can be proactive by calling in before they write the next year’s budget to get a projected increase, many times the increase ends up being more than predicted. “All of a sudden, you find out the percentage has grown,” she says. Tinsley explains that skyrocketing water rates are a national trend, and they have risen substantially even in Houston over the last decade. She goes on, “It’s not across the board, but … water rates have increased in our portfolio by up to 45 percent.” Water conservation, of course, gives a property a better shot at hitting its target budget.
When a property hits its target budget and raises its NOI, the property has more profit to either collect or reinvest and the property’s value increases. It’s as simple as that.
Willis emphasizes that focusing on water conservation always saves money, saying, “Water is one of the largest expenses at a property, so anything you can do affects cash flow and value of the asset.”
3. Water conservation is the right thing to do for the environment.
There’s no doubt about it: Taking concrete steps to conserve water at your property is eco-friendly. We know that our Earth’s fresh water supplies are not endless, and it takes power and energy to purify or desalinate water so that it is palatable for drinking. Why not do your part to conserve the fresh water supplies that we do have? Besides saving your property money, taking measures to reduce your water usage is the responsible thing to do.
Water shortages increase expenses over time and, especially in dry regions, cause problems for the entire environment — the land, the people and regional infrastructure. Many communities have transitioned into water conservation programs simply because they believe it is important ethically. “It’s just the right thing to do,” says Tinsley. “We have a shortage of water. I know that sounds very simple, but… you have to look at being green in your operations, and that’s one way to do it.”
Ultimately investing in water conservation, whether it’s a multifamily Toilet Replacement Service or Retrofit Service, benefits all parties and cuts costs for everyone. “Not only is it a green thing to do,” concludes Tinsley, “it’s a huge part of [alleviating] our expense increase.”
Paul Marks, CAS – “The Water Guy” is the National Director of Strategic Accounts with eConserve, a nationally-recognized multifamily water conservation company based in Houston. He has over 15 years of experience offering water conservation solutions to multifamily properties, and was the HAA’s Ambassador of the Year in both 2015 and 2016. Paul can be reached at firstname.lastname@example.org.