CRE Investing - $100 Is Worth It - Energy Audit/Upgrade

Reduce expenses with upgrades and fine-tuning existing equipment. Being green and energy efficient can help your bottom line, especially when someone else helps you pay for it. Find your local partners that can help you uncover the potential your property has for reduced utility bills. Remember that every $100 earned or saved in NOI translates to $1,428 in value.

Local utility providers typically promote energy saving upgrades to both residential and commercial that property owners can take advantage of. Utility companies enjoy charging us all for use of their goods and services so the message of saving energy can come across sketchy. The benefit to them is the reduced peak usage of electricity at the various times throughout the day.

The utility providers partner with local engineering firms and contractors to become pre-approved to streamline the promotion process. These are the partners that you will want to reach out to. If you are unaware of who they might be, contact your local utility providers to find out who to contact.

Where to begin

The process typically requires a formal audit to be completed to document the baseline operations. The cost of the audit will vary depending on your property, amount of systems, and promotions provided by the partners. A representative walks through the property documenting all of the equipment and the conditions. A report will show the recommendations to save money with estimated costs and savings. Recommendations can be as little as servicing existing equipment all the way up to system and building material replacement.

It is key to have the audit completed prior to any changes to the property to take full advantage of any promotion.

Upgrades

Examples of upgrades would be windows, insulation, lighting, switches, appliances, and heating/cooling systems. Upgrades influence more than just utility bills, workforce performance can improve with better lighting and an optimal work environmental. So whoever occupies your property has more potential for doing more business.

The usual method for having the utility company pay for upgrades is in the form of reimbursement. Promotions will typically be a partial contribution towards the cost of replacement with the incentive of selecting a more energy efficient model. The initial cost might be the same but the equipment will be a more efficient model.

Existing Equipment

The consumption of existing energy systems can be improved with proper maintenance and tweaking settings. Have qualified technicians ensure that the gears are greased, levels are topped off, and faulty components are quickly replaced to maximize the life of the equipment.

Some funding from the utility company may be available to have maintenance completed on an existing equipment. The improvement on system efficiency can be worth the cost. Regardless of who pays for the servicing, the audit should calculate the estimated savings if completed so decisions can be made.

Changing the timing and settings for systems to be utilized has huge potential for savings to better match usage with operations. Engineering firms can analyze operations and provide how to best utilize the settings to minimize energy needed.

Bottom line

Reduce utility bills, improve productivity, and increase the value of the property. Amplify the value-added by re-investing the savings in other non-utility improvements. The amount of potential will highly vary but remember that every $100 earned or saved in NOI translates to $1,428 in value.

Make sure to check out the other posts in this $100 Is Worth It series.

Jake Ammon is a Vice President with Addison Commercial Real Estate in Jacksonville, FL. He specializes in commercial investment properties. Contact him at jake@acrei.com or call Jake at 1-904-834-9809.

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