A lot of talk has been thrown around lately about being sustainable, being green, going net-zero, and all the rest. We see it in the news, politics, product advertisements, and just about everywhere else.
But is it possible to create a true win-win and make your short-term rental (AirBnb, VRBO, etc) more sustainable and make you more money in the process? I’m happy to say that it is possible and that I’ve done it on my own rentals.
We all want to be sustainable and green (of course!). The trick is always making it actually feasible and affordable. Over the last couple of years, with the pandemic, the ups and downs, and all the challenges we’ve dealt with, this particular goal could fall way back on the list. Often we just don’t know where to start and don’t have the time.
That’s why with this article I’d like to tackle some proven, down and dirty, low-hanging fruit types of upgrades with actual ROI and payback. This comes from my experience renovating and building these net-zero short term rental home projects over the past couple years while combining my 15 years of experience in solar, energy-efficient lighting, and finance/real estate investing.
Why We Start With Money First on Sustainability Upgrades
One key point specific to short-term rentals is that the owner/manager typically pays for all of their own energy and utility bills as a short-term rental. If you have a two or three-bedroom house, this can add up quickly. Electric, gas, water are based on usage, usually separate from a flat rate on sewer, trash, recycle, etc. The other thing that is not in our favor is
Not My House Not My Bill (I just made that up)
We all do it. As renters and guests in hotels and AirBnB’s, etc., we take longer showers, set the air exactly where we want it, and otherwise use all the energy we want because we’re not the ones on the hook for that bill. After all, why would we? We’re on vacation!
Another note before getting started: Everyone has their starting point and lens that they are looking at things with. Each person is different, with different goals. I write this through the lens of primarily real estate investing principles, finance, ROI, and payback on your money. Because with short-term rentals, we wouldn’t be doing it if we weren’t trying to make money.
Throughout my career in sustainability (mostly in the commercial world), I’ve also noticed that not much at all gets done unless it makes monetary and investment sense. So the key is – if we can make the numbers work, the environmental benefits come naturally.
Why Try to Be Sustainable With Your Short Term Rental (STR)?
The short answer is that it’ll make you more money and be good for the planet.
But there are a lot of other benefits that I’ve noticed, both on the ROI (return on investment) spreadsheets and in my own interactions with guests, maintenance, and other things. Here is a quick list of things that come to mind:
- You can charge a bit more – due to the marketability of differentiation of your property. You will instantly stand out as a unique property to your potential guests. Your property can not only command higher rates but vacancy rates may go down, and your ratings and reviews might be higher due to a more fulfilling and enjoyable guest experience.
- Higher quality tenants – I have noticed right off the bat that I get very interesting, pleasant, and more creditworthy tenants applying and booking. This could be due to a lot of things. But in general, I think people interested in helping the environment and looking to do their part will be in instant alignment with your mission and what you’re offering.
- Your home will be worth more – The value of your home due to energy efficiency upgrades can often be convoluted and confusing. There are all sorts of government programs and certifications like Energy Star, Zero Energy Ready Homes, Passive House, BIP and RESNET certifications, and everything else. But the studies show that both energy efficient and solar homes will add value to your home, if you can prove that the energy use is less than a typical home. Solar alone can add 3-4% or more to your home value.
- Less maintenance costs – Once the components are installed (like new LED lighting, HVAC, heat pump hot water heaters, etc), they typically last longer and have lower maintenance costs than the status quo equipment installed in houses. For instance, a new heat pump hot water heater will save 75% energy on your water heating while including a 10-year warranty or more.
A Quick Win-Win Renter/Guest Story for Our Solar Home STR
For a quick story as an example – when I was first renting out that first net-zero home we renovated, I had a few months gap before the VRBO renters would arrive here in Florida for the January through April in-season timeframe.
A really lovely millennial couple with three kids and two pets were moving to the Fort Myers area. They were selling their solar home in Kansas City, and building a new solar home here in Florida. They wanted to come down beforehand, so this net-zero home instantly stuck out.
After about a five-minute conversation and ten minutes reviewing their application and background check and everything, we had a lease signed. They turned out to be wonderful tenants and enjoyed the near-zero energy bills while solar had enough juice to power the entire house along with their new Ford Mach-E with the EV plugin we had installed.
Since then, I’ve had similar conversations and guests and have the property booked out a year as of early 2022.
Sustainable Upgrades to Drive Down Those Energy Bills and Be Green In Your STR
The following lists are some practical and ROI-producing upgrades that I personally do on my STR renovation projects, outside what you’ll typically find online (I searched and didn’t find much as of this writing).
Also, as to not reinvent the wheel, AirBnB has a great section on getting started with some sustainable ideas on their website. You can visit that resource here.
I also can’t dive super-deep on every single item here, but I’ll point to a lot of other detailed articles we have on the particular subjects and will provide a general overview as I have experienced these upgrades so far.
I also do specific home consultations because every property is unique and different. If you’re interested in that, you can contact us here.
I did include some affiliate links below if you’d like to see what I’ve been using on these homes as well, but if you find better products or something different, that’s totally cool too!
Air Seal The Gaps and Air Leaks Throughout The Home
In the energy efficiency and building science and performance world, air sealing is one of the first things you’ll want to look into. Unfortunately, it’s also usually something that no one thinks about or is aware of.
Air sealing is the act of just filling all the cracks and air gaps throughout the home. Our homes are leaky, and some very, very leaky. This is because there’s no way to fill in every single little opening between the inside and outside.
This creates inefficiency, because the outside air is always trying to balance and equal the properties of your inside air. Think of holes in a ship. The more holes in the hull, the faster water will leak in while you slowly sink. Just like bilge pumps on a boat, your HVAC and home systems are constantly fighting the outside elements if there’s any kind of difference.
If we can seal up the gaps and holes, this lets all your systems run longer (won’t burn out as fast), more regulated, with fewer cycles, and thus lower replacement and maintenance costs.
Not to mention possibly the most important thing – comfort for your guests. If the air is constant and evenly distributed throughout the house, everyone is happier. Have you ever had to sleep in the “hot room” in your home? Or does your home office on one end of the house feel like working in a sauna, or a freezer? This can be due to disproportionate air infiltration.
Air sealing can help and is also one of the cheapest and easiest things you can do to lower your bills and create comfort. We have a lot of air sealing articles on the site, but a good start may be this one here.
If you want to have a professional come out to measure the exact leakiness of the house, that is called a blower door test. They usually run anywhere from $200-400 or so, and the professional can walk around with you and use an infrared camera or smoke machine to see where exactly the leaks are coming from.
Air sealing is a huge part of starting off on the right foot with efficiency, and why I wrote up a good bit on it as the first one to tackle.
Inspect and Possibly Add Insulation
Insulation is usually second in line in terms of bang for your buck. However, oftentimes older homes will have zero insulation in at least some areas. This can be because of contractors not installing it, previous owners taking it out, making modifications to the house, or other reasons.
Having little or zero insulation in the home means that your home heats up and cools down much faster than if it had a blanket slowing down the thermal transmission from outside to inside and vice versa.
Check the attic as a starting point because that attic (unconditioned space usually) can transfer a ton of energy (hot or cold) into your livable space below.
We have many articles on insulation if you’d like to read more. You can see those here.
Insulation is tricky because it’s hard to measure the straightforward ROI on it. But in general, if you know that you have none in areas or extreme discomfort in parts of the house, you should explore both air sealing and insulation.
Add or Adjust Your Water Pressure Regulator (PRV)
This is a bit of a random one, but it came to mind. If your house has a water pressure regular installed on the main water line coming into the house – this allows you to set the pressure at a comfortable yet lower level than the city’s water system is pumping in. This can have a few benefits:
- Lowers your water bill – if less water is coming out of your faucets and showers, your bill will instantly be lower going forward.
- Less pressure on your pipes – old pipes can spring leaks or burst with more pressure than they can handle. You’re also at the mercy of the city or water company’s pressure if you don’t control your own.
- Less wear and tear on your fixtures and appliances – If the pressure is as low as is comfortable and within a good operating range – a constant and reliable pressure will help all the components last longer, saving you money on maintenance and replacement costs in the process.
If you’re experienced and comfortable with DIY, installing a PRV might not be that bad. But if you have any hesitation at all, definitely call your plumber. There are multiple different connections and types of PRV’s which you can see here. You can also buy an inexpensive pressure tester here.
Maybe shoot for 50-60 PSI on the water pressure gauge for the whole house, but in general, I’d say go the lowest possible pressure without sacrificing what’s best for guests in the showers and faucets and things.
Install WaterSense and Low-Flow Faucets and Toilets
To tag onto the water-saving theme, you can swap out faucets, shower fixtures, and toilets for lower flow ones. Of course, the ROI might not make a ton of sense unless your water bills are pretty high. Ironically, water bills can be outrageous here in Florida, even though we’re surrounded by water.
WaterSense is the EPA’s main label for standardized water-saving devices. You can read all about the program here if you like. When you shop for new products, the WaterSense label will ensure that you have what’s considered water-saving.
If you don’t want to search for WaterSense, you can go by their standards instead for GPM (gallons per minute) flow rate (including Home Depot filtered links for each type so you know you’re seeing WaterSense items):
- Bathroom faucets: Maximum 1.5 GPM
- Showerheads/fixtures: Maximum of 2.0 GPM
- Toilets: Maximum of 1.28 GPM
So if you’re updating or renovating your short-term rental anyway, you might as well just buy WaterSense fixtures. There are often local, state, or federal rebates, and you can see those here for your specific area.
Just a quick note on this one, as you may already be aware – but just by installing a smart thermostat, you can save 5-15% or so on the HVAC bill by using algorithmic and behavior learning. Having it connected to your wifi & phone also has huge benefits. With that, you can monitor the home’s usage, adjust the temps yourself, and otherwise have complete control.
This could be particularly useful if you have guests changing the temperature or turning off the system when it’s freezing outside (frozen pipes), or if they crank it to 60F degrees when it’s 110F out in your Phoenix summer rental…and they’ve already checked out!
Replace Your Water Heater With a Heat Pump Water Heater
This is a big one and has become a must-do on all my projects going forward. Unfortunately, not many people know about these yet either. And even the 20+ or so contractors I had over here do not know what these are yet. The conversation often went like this:
Me: I’ll be replacing the old water heater with a heat pump unit.
Contractor: You mean a tankless hot water heater?
Me: No, a heat pump hot water heater.
Contractor: What’s that?
A heat pump water heater uses heat pump technology to (in layman’s terms) take the heat out of the ambient air around the unit, use that heat to heat your water in the tank, and emit cold air back out of the unit into your space at the same time. The critical part of this technology is:
It saves about 75% electricity versus a traditional water heater.
From an ROI standpoint, this makes it a no-brainer, in my opinion, especially when you need to replace your old one anyway.
The numbers look something like this (a real example from my current net-zero project):
Existing: 30 Gallon Traditional Hot Water Heater that’s about 10 years old. The Energy Guide label says it uses $530 per year in energy. And that’s from 10 years ago when inflation has now pushed the cost up to probably $650-700 in today’s dollars.
I paid about $1450 with tax almost a year ago, but it’s now up to $1,609 as of today. Install with a few parts was about $300 (yours will vary), so the all-in cost is $1,909. While this seems (and it is) more expensive than a regular 40 gallon which may run half as much all in, there are some key points to be made:
The Energy Guide label on the heat pump unit is $114 per year, while the standard 40 gallon Rheem is $419. That’s a $315 per year savings.
And at the time of this writing – you can get a $300 federal tax credit as well.
For payback, I take the difference in water heater prices:
Traditional 40 gallon: $450~ with tax
Hybrid 40 gallon: $1,650~ with tax
Difference in cost: $1,200 minus the $300 federal tax credit = net $900 more.
Payback: $900 divided by your yearly savings of $315 = 2.85 years or just under 3 years for it to pay for itself.
With a warranty of ten years, that gives you seven more years of worry-free operation.
More things will factor in, and you will have your own goals. You could say that if you’re planning to sell the house before that timeframe, payback isn’t worth it and you could just go with the regular one. But if the home is a long-term hold, you may want to consider it. If you’re doing solar, make sure to note the points I make below as well, because that’s even a bigger savings.
One thing about heat pump units is that they make noise. I have both the Rheem from Home Depot, and the A.O. Smith unit from Lowes installed in my homes. They both work great, but the Rheem is significantly quieter. Given that these heat pump systems make noise, you most likely do not want these inside your house.
However, they are perfect for a garage, basement (if noise won’t bother anyone down there), or a cabinet outside the house. In Florida here, putting these in the garage is perfect. It takes the hot air in the baking garage, puts it into the water, and emits A/C to cool the space down. And the noise won’t bug anyone out there (usually).
Another point to make on these is that I’ve found that by installing a heat pump water heater, you can eliminate a lot of solar needs. Creating $315+ of energy savings per year (at 12 cents per kWh per the Energy Guide labels) is nothing to sneeze at. Net-net, I’ve found that you can double or triple the cost savings by using that much less energy. So your solar system size might be $4,000 to $6,000 less because you don’t need to produce all that energy that was needed with your old water heater.
Another cool fact – my 40 gallon Rheem heat pump water heater saves enough energy to power a typical electric vehicle for an entire year.
We’ve got lots of information to help you determine whether you want to switch to a heat pump water heater or not, or just weigh the pros and cons. Here is the link for those.
LED’s are another really easy one and low-hanging fruit if your property doesn’t already have LED lights in it. They came onto the scene in a big way, maybe about 8-10 years ago, and have taken over the lighting industry.
I used to own an energy-efficient commercial lighting distribution company out of Denver, CO, and gravitated towards lighting from solar back in 2010 purely because I was attracted to the super-short payback, and substantial environmental benefits compared to all other efficiency and renewable tech.
LED lighting saves about 40-50% of CFL’s, and anywhere from 70-90% energy over traditional incandescent lights. The payback on these bulbs and ceiling can lights are usually a few months these days.
Not only does it make sense on paper, but the tech is also just way better now. Dimming works great, the color quality and flickering are a non-issue, and they last multiple times longer than traditional bulbs. So there’s pretty much no reason not to go LED anymore, in my opinion.
A couple of tips I can think of for the moment include:
- Buy the LED ceiling can lights that allow you to change the color temperature (called Kelvin temperature). Warm, orange colors are in the 2700-3500k range. White-yellowish colors fall around the 4000K range, and pure white output is around 5000 Kelvin. Also, a fun fact: The sun’s Kelvin temperature is 5,778K, indicating a pure, natural light color. However, when you creep past 5,000 kelvin, the white starts to tint a little blue, so I never like to go past that in residential properties.
- If you’re updating or replacing light fixtures, don’t buy the ones that have integrated LED’s. Only buy fixtures where you can switch out the bulbs. This is because LED’s never last as long as the manufacturer claims. Fixtures can always die early. And if and when this happens, you’re on the hook for a lot more money, and the time and cost to replace the entire thing as well, versus just replacing bulbs.
Install Solar (If Your Property Allows)
After you’ve tackled all the affordable and practical efficiency items (mentioned above and otherwise), it’s time to look at renewables. Unless you’re in a constantly windy area or have the ideal conditions and land to put up wind turbines, solar will most likely be your best bet to generate renewable energy.
There’s so much to be said on solar, but I’ll try to tackle the main points.
– Solar will be the most marketable and visible aspect of your green home. Everyone knows what solar is for the most part, and you can see the panels up on the roof.
– The ROI and payback of your system depend on many factors. These can include (but there are a lot more than I can think of):
- Roof shading
- Roof direction
- Amount of roof space you have
- The sun’s radiation potential throughout the year. Based on weather, location, and other factors.
- Electricity rates in your area
- Net metering policies (how you hook up to the utility grid)
- Whether you use batteries or not (required for off-grid installations)
- Specs on equipment of the system components
- Heat and temperature of the roof and location
- Demand rates or tiered rate structures with the utility companies
The safest way to protect yourself is to get multiple solar bids. I would suggest 3-5 bids minimum because they might be all over the place. Try to search on Google or find companies directly in your local area. This is because marketing costs are so expensive for solar companies (can run 20-30% of the system) that you can save each other thousands of dollars by contacting them directly. This will, in turn, drive your payback and costs down.
- Leasing is generally not a good idea in general and will muddy the waters. You can get roped into long-term contracts, massive payoff amounts, and restrictions on even getting out of it while trying to sell the home. We wrote up an extensive article on that here.
- Once installed, the system lasts a very, very long time. There’s usually a 25-year warranty on the panels, and at least a 10 or 15-year warranty on the electronic components.
- Having the app available to your renters can be a cool feature. I actually installed a wall mount tablet from Etsy so that guests could log in to see the daily, weekly, monthly solar production.
- Studies show solar adds 3-4% home value to your home, as mentioned above.
On my properties in Florida, I do enough efficiency and solar to power the house and the electric car (I have a Tesla Model 3) 100%. Of course, powering the car also can be excessive for a short-term rental, or any rental, really, but I like to do it anyway.
The ROI on solar in Florida currently looks something like this:
Solar itself: 8-10% return on investment. Payback is also about 8-10 years or so.
When you add in the estimated home value bump, the ROI jumps to 20-25% or so all in.
On some of my calculations that I do for these houses, and for clients, the totality of the yearly energy savings and the home value increase in equity completely pays for the cost of solar. And then you get all the benefits for the short-term rental as well, in terms of lower vacancy, having a more environmental and unique property, and possibly having a higher daily rate, among other things as well.
Again there’s so much to factor in with solar, but feel free to reach out to us, or search the blog for more info, if you’re looking at it yourself and need some consultation.
Check and Maybe Replace Your Windows
Windows can be a tricky one, and again every house is different. Different things like type of window, climate, orientation to the sun, other house factors (all the efficiency stuff mentioned above), and much more can determine whether you want to replace or fix your windows.
In general, windows have a pretty long payback. Sometimes 20, 40, or 50+ years when comparing the cost vs. the actual energy savings. And they can be pretty expensive for the money you’ll save. So you may want to take a serious look if you have an older home with very drafty, old single-pane windows that are basically falling off its hinges.
This was the case in my first net-zero home. It had original 1984 single pane windows here in Florida, where we have hurricane issues. After some analysis, I replaced all windows and sliding doors with PGT Energy Star and Hurricane Impact windows. The straight energy saving ROI payback was probably in the 12-15 year range, but it was worth it for many other reasons:
- The house was now so much quieter to outside noise
- The new white vinyl frames looked so much more modern and new as a rental
- Heat did not pour into the windows anymore, maximizing comfort in the house and helping by regulating the HVAC usage.
- Security: Impact windows and super strong glass are very hard to break into.
- I no longer needed to worry about hurricane shutters or to board up the house with plywood if a storm suddenly turned up.
- Just by doing the windows and doors alone, it made the house 50% more airtight (air sealing), contributing a ton to the comfort and that much less HVAC usage.
Windows are case-by-case (house-by-house), but hopefully, this gives a starting point.
Install an EV Charger
Electric vehicle chargers are now a feature/filter on AirBNB, VRBO, and even Craigslist. This is huge. As EV’s become exponentially popular going forward, guests will need a place to charge them up during all their vacations and road trips.
Adding an EV charger is a perfect way to attract EV drivers and to stand out from the rest. There’s no direct ROI associated (only an upfront cost), but it’s not too bad, in my opinion. You can find pretty affordable Level 2 Chargers out there now. You’ll have to get quotes from an electrician on putting in the cable and plug from your electrical panel, or you can search online the details of putting one in and the rough costs of it.
For my own properties, I went with the Enel X JuiceBox 40. It’s a 40 amp (requires a 50 amp breaker and 6 gauge wire to the electrical panel) level 2 charge that uses a 6-gauge wire with a NEMA 15-40R receptacle. It has wifi and charges the car at about 38-40 miles per hour, giving it plenty of juice to charge to full in a matter of hours.
I also decided to go for one that uses the universal standard J1772 Plug. While most EV’s on the road right now are Teslas, they use a different plug. The J1772 will work with all other EV’s as standard, and you can use your Tesla adapter on it instead.
There’s so much more to tackle, and each property will be different. However, I hope to have given you at least a few good ideas on how to practically look into short-term rental property upgrades that are realistically possible and have a significant environmental impact with a low-ish ROI on your money.
As I think of more items, I’ll try to add them in, but please contact us or comment below if you have questions or thoughts on any of the above.