The Smart Landlord’s Guide to Energy-Efficient Rentals & Higher ROI

Managing properties today involves more than just collecting rent. It entails building long-term value through smarter operations. 

Embracing sustainability for landlords means making your rental properties energy-efficient. It’s not just good for the environment, but it’s also good business.

This article is a smart sustainability guide for every landlord and/or property manager. Read on to learn how energy-efficient rentals can increase your returns on investment (ROI).

Why Energy-Efficient Rentals Are the Future of Real Estate ROI

Prioritizing energy efficiency is one of the rental property trends for maximizing ROI in 2025 and beyond. But as a landlord or property manager, you understand that it goes far beyond lower bills. Actually, it’s a long-term investment that drives business growth and success.

Take it from the booming figures of the worldwide market for energy-efficient fixtures:

It’s projected to grow from $103.64 billion in 2024 to $150.38 billion by 2030 at a 6.4% compound annual growth rate (CAGR).

Thanks to tech advancements in lighting and fixture designs, they are driving much of this growth. They are indeed proof that energy-efficient upgrades aren’t just a passing fad but a profitable shift shaping the future of real estate.

Image source

That said, here’s how energy-efficient rentals can help boost your ROI:

1. How Energy-Efficient Upgrades Increase Property Value for Landlords

Energy-efficient rentals make your rented-out properties truly valuable. When you invest in sustainability, you’re creating a rental space that looks good and works smart. Here’s how they can increase your property value:

• Aesthetic appeal: Energy-efficient upgrades give your rental a polished and future-ready look. Notice those sleek LED fixtures and solar panels, which are visually appealing? They are perfect examples!

• High functionality: Energy efficiency makes the lives of your tenants a lot easier. Smart thermostats and efficient appliances, for instance, make everyday living more comfortable and hassle-free.

• Increased home value: Rental properties with sustainable features often command higher selling prices. Of course, they attract quality renters willing to pay a premium.

Kellon Ambrose, Managing Director at Electric Wheelchairs USA, recommends prioritizing energy efficiency to increase property value. 

Ambrose says, “Energy-efficient rentals are no longer a luxury but a long-term asset. The combination of smarter systems and modern appeal naturally drives higher property values and stronger returns.”

2. Cutting Rental Operating Costs Through Energy Efficiency

​​A recent SmartRent survey of U.S. renters found that 92% care about cutting monthly utility costs when choosing a home. Nearly two-thirds (63%) saw their utility bills rise last year, with 35% facing hikes of over $51 a month. 

Further, less than half felt that their property manager communicates well about energy use. Only 44% believe their manager actually cares about helping them save.

Image source

That said, here’s how energy efficiency promotes sustainability for landlords to increase ROI:

• Lesser energy consumption: Energy-efficient rentals use smart systems and upgraded insulation to minimize wasted energy. That way, you get more comfort with less power.

• Lower monthly bills: Efficient lighting, appliances, and HVAC systems slash utility costs. They let you and your tenants enjoy noticeable long-term savings.

John Grant, Founder and CEO of Premier Bidets, recognizes the value of energy efficiency in reducing costs for the rental business.

Grant explains, “Energy efficiency directly translates to cost control. When landlords invest in better systems, they reduce operating expenses. Likewise, they create a more appealing and sustainable living environment that tenants value.”

3. How Sustainable Rentals Help Landlords Attract and Retain Tenants

Today’s tenants actively look for homes that help them save money and live more sustainably. Offering comfort and lower bills with eco-conscious upgrades makes your property hard to walk away from. If you want dependable, long-term renters, energy-efficient rentals give you a real edge. 

That said, here’s how energy-efficient rentals can help boost your ROI:

• Renter attraction: Energy-efficient features, such as smart thermostats, LED lighting, and efficient HVAC systems, instantly appeal to renters who value convenience and cost savings.

• Tenant retention: When tenants see lower energy bills and enjoy consistent comfort, they’re far more likely to renew their lease and stay for the long haul.

Adrian Iorga, Founder and President at 617 Boston Movers, highlights the value of energy efficiency in real estate. Having worked with clients needing moving services, he believes that energy-efficient homes can help boost renter attraction and tenant retention.

Iorga says, “Energy efficiency has become a key decision factor for tenants. Landlords that invest in smart, sustainable upgrades are building loyalty and keeping reliable renters longer.”

4. Energy Efficiency Incentives and Green Financing for Landlords

Investing in sustainability for landlords opens doors to valuable financial perks. There are plenty of ways to offset upgrade costs and boost your long-term returns.

Here’s how a rental property with energy efficiency can give you access to the following:

• Tax incentives: Property owners who invest in energy efficiency can receive these incentives. AND here’s good news: Nearly half of respondents (47%) said tax credits or rebates would make them more interested in sustainable homes. 

Image source

• Green financing: Many lenders now offer special programs and lower interest rates for energy-efficient upgrades. As a landlord, you have access to these for modernizing your rental properties without draining their cash flow.

Learn from Leon Huang, CEO at RapidDirect. He emphasizes the benefits of energy efficiency for incentive and financing opportunities in the rental business. 

Huang shares, “Landlords who prioritize sustainable improvements gain access to better tax incentives and financing options. What a great financial opportunity! Ultimately, ‘going green’ gives you leverage to grow your portfolio faster and smarter.”

5. Stay Compliant with Energy-Efficient Rental Regulations

It’s evident: Laws and regulations around environmental standards tighten. The good news? Energy-efficient rentals help you stay ahead of the curve. Meeting today’s sustainability requirements protects your business from costly fines and future-proof regulations. Take note:

• Legal adherence: Many regions now require landlords to meet specific energy efficiency standards. Maintaining compliance with your property safeguards you from penalties or restrictions. Check the federal and/or state laws governing real estate, particularly those related to rental businesses.

• Regulatory compliance: Updating your rental with eco-friendly systems ensures you align with evolving building codes and sustainability policies. Contact your local administrators to check local ordinances for 100% legal adherence.

Take it from Simeon Genadiev, Managing Partner at The G Law Group. He underscores the importance of energy efficiency for legal and regulatory compliance in real estate.

Genadiev states “Energy-efficient rentals make compliance straightforward and stress-free. Landlords who adopt sustainable upgrades early stay ahead of real estate laws and regulations that may be implemented in the future. Ultimately, sustainability gives you a competitive advantage.”

Julia Rueschemeyer, Divorce Mediation Attorney also adds her insights: “When landlords build energy efficiency into their rental strategy, they don’t just save money—they protect themselves legally. Proactive compliance reduces liability, builds trust with tenants, and keeps your business on the right side of evolving environmental regulations.”

How to Build a Smart, Energy-Efficient Rental Business for Higher ROI

Energy efficiency proves beneficial for the real estate industry in more ways than one. In fact, focusing on this can help you build a smarter rental business, one that’s absolutely both profitable and sustainable!

The best part? While most upgrades pay for themselves over time, they also keep your tenants happier and your ROI higher. What amazing benefits they bring to the table!

As a landlord or property manager, here’s how to incorporate energy efficiency into your rental properties:

1. Audit Energy Use to Identify Efficiency Opportunities

When it comes to sustainability for landlords, the most brilliant move is to start with what you already have. 

But before upgrading lighting or HVAC systems, get a full energy audit. It shows where your property loses power and how much you can save. A certified electrical contractor can perform the inspection, identify wiring issues, and suggest the right upgrades. They also ensure your new systems meet code and run efficiently.

Below are areas of your rental properties to examine:

• Home lighting: Switching to LED or motion-sensor lighting cuts energy waste while enhancing the ambiance of your property.

• HVAC systems: Regularly servicing and upgrading HVAC systems ensures consistent comfort and lower utility costs throughout the year.

• Home appliances: Energy Star-rated appliances consume less power and water. They give tenants reliable performance and you long-term savings.

2. Invest in Smart Home Tech and Sustainable Upgrades

If you want your property to stay competitive, energy-efficient rentals are the way to go. By enhancing energy efficiency in rental properties, you’re creating smarter spaces that tenants actually want to live in. A few smart upgrades can turn your rental into a modern, eco-friendly home that pays off in the long run.

When it comes to home sustainability, most realtors are most knowledgeable about energy-efficient appliances (66%) and solar or renewable energy systems (52%). About two in five were also familiar with smart home tech for energy management (39%) and the benefits of better insulation and air sealing (39%).

Image source

Below are smart technologies and sustainable upgrades you can invest in for your rental properties:

Smart technologies:

• Smart thermostats 
• Smart lighting systems
• Energy monitoring devices 

Sustainable upgrades:

• LED lighting
• Efficient appliances
• High-quality insulation
• Double-glazed windows
• Solar panels/solar water heaters
• Low-flow fixtures

3. Maintain Energy Efficiency with Regular Monitoring and Upgrades 

Keeping energy-efficient rentals in top shape and working condition means protecting your property investment. Smart rental property upgrades help you stay competitive, cut costs, and keep tenants happy without the stress of major overhauls later on.

The biggest challenges around sustainability are understanding how solar panels affect a sale (58%) and how they’re valued in a home (52%). Another 42% said figuring out lending options for energy upgrades or solar installations was also a key concern.

Image source

As a landlord or property manager, here’s what you can do:

• Regular monitoring: Keep a close eye on your energy systems to identify minor issues before they escalate into major expenses.

• Consistent upkeep: Schedule routine maintenance to make sure your HVAC systems, lighting, insulation, and appliances perform at their best.

• Property upgrades: Plan long-term improvements that increase efficiency and appeal. Think of solar panels, better insulation, efficient lighting, and upgraded HVAC systems.

4. Measure the ROI of Energy Efficiency in Rental Properties

To make the most of sustainability for landlords, you need to know what’s working and what’s not. That’s where data-driven property management comes in. 

It helps you track performance and spot trends, proving that your green upgrades are boosting returns. The correct data lets you fine-tune your strategy and keep your rental business both profitable and sustainable.

That said, here are key metrics to measure your returns from energy efficiency:

• Occupancy rate: Watch how quickly your units get snapped up once you add energy-efficient features. It’s a good sign that renters value what you’ve done.

• Utility cost reduction: Keep an eye on your monthly bills to see the difference your upgrades make in cutting costs.

• Tenant retention: You’ll likely notice tenants staying longer because your property feels more comfortable and easier on their wallets.

• Rental profit: Compare your earnings before and after the upgrades, as you’ll see just how much efficiency pays off.

• Resale value: Check how your property’s worth grows over time as sustainable improvements make it more desirable to buyers.

Smart Sustainability for Landlords: Building Profitable, Energy-Efficient Rentals

Promoting sustainability for landlords requires being smart with your rental investments. For one, energy efficiency is crucial for enhancing your property’s value and attracting tenants. Not only does it help you cut costs, but it also helps you obtain incentives and financing. Finally, it contributes to increasing your profits for the long term.

That said, follow the key steps outlined above to make your rental properties truly energy-efficient. With all these tips and steps, you ultimately build a profitable and sustainable business in real estate!

Ready to make your rental business smarter and more sustainable? Book a RentRedi demo to see how technology can increase your ROI.