Landlording & Rental Properties

How to Boost Your Cash Flow With a Water-Efficient Rental Property

Expertise: Landlording & Rental Properties, Personal Development
35 Articles Written
Man washing hands in bathroom sink at home checking temperature touching running water with hand. Closeup on fingers under hot water out of a faucet of a sink.

Of all the rental properties I’ve ever owned, there is one utility bill I’ve always gotten stuck paying out-of-pocket.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

The water bill.

There are a few reasons why the water bill always ends up being my problem.

  1. In my area, unpaid water bills go as liens on a property (instead of collections to tenants), so if my tenants ever stop paying—it hurts me, not them.
  2. Water bills in my city are read quarterly (not monthly like gas and electric), which makes it very difficult to track which tenants should be paying which portions of the bill when one moves out and another one moves in.
  3. Most cities don't have the infrastructure to deal with "landlord situations" very well. Frequent tenant transfers, notifying landlords if water is shut off, transferring to landlords when a tenant move out—it’s a hassle to make tenants pay this bill directly.

A lot of multifamily landlords have to deal with this issue. Water is one of those ever-present utilities that is always needed, no matter who your tenants are, what time of year it is, or what region of the country you’re in.

Luckily, even though the extra cost of water is mildly annoying, its usage is consistent enough (without any major spikes from month to month). Therefore, I can factor this cost into the price of rent fairly easily, and it all comes out pretty square in the end.

Last year, the cost of water at one of my duplexes was approximately $800 for both units combined. (I should mention that all of my properties are Michigan, where fresh water is abundant and the price of it is about the cheapest in the nation.) It wasn’t the end of the world, but I certainly would’ve been OK with that bill going down to, say, $400-$500 or lower.

It got me thinking—what if I could save a few hundred bucks on all of my rental properties each year? Would it make sense for me to invest in some new, water-efficient plumbing fixtures at this property?

If I was able to justify this kind of investment in Michigan, it would certainly make even more sense to do it in places like Atlanta, Seattle, or Santa Fe, where the cost of water is three to six times more expensive than it is in my hometown. For landlords in these more expensive markets, savings could be more like $900-$1,800 per year for a similar duplex—maybe even more!

According to CircleofBlue.org, the cost of water has gone up 33 percent in 30 major U.S. cities since 2010, which means we can probably safely assume it will only continue to increase in future years. (Click the chart below to enlarge).

WaterPricing2014GraphsFinal-1image: circleofblue

With this in mind, I wanted to find out how much it would cost to install some new fixtures with higher water efficiency and how long it would take for this increased efficiency to actually pay for itself and start adding a real contribution to my bottom line each year.

A Look at the Numbers

All of my rental properties were built about 100 years ago. Each unit is in decent shape, but the toilets, faucets, and shower heads are all showing their age.

While it’s difficult to say how old each individual fixture is, they’re clearly dated from an era prior to 1992, which allows me to draw a few conclusions:

  • Each toilet consumes anywhere from 3.5 to 7 gallons per flush [Source]
  • Each faucet runs anywhere from 3 to 7 gallons per minute [Source]
  • Each shower head runs as high as 5.5 gallons per minute [Source]

According to the EPA website, the U.S. government imposed a number of water consumption standards throughout the 1990s that set new limitations on the flow rate of faucets to 2.2 gallons per minute, toilets to 1.6 gallons per flush, and shower heads to 2.5 gallons per minute. In short, today’s plumbing fixtures have become WAY more efficient than they’ve ever been before.

Finding the Right Fixtures

After a bit of shopping and a few months of trying them out in my own house, I was able to find some solid choices to act as replacement fixtures in each of my rental units. There were a few basic criteria I used to decide which ones I would end up installing in my rental properties.

They were as follows:

1. The reduced flow rate cannot inhibit the tenant’s experience.

Obviously, the goal with these new fixtures is to use less water and save money, but nobody wants to take a shower under a faint trickle of water, nobody wants a cheap bathroom faucet that hardly does the job, and nobody wants to be stuck with a toilet that backs up, clogs, and doesn’t “take care of business.” There should be no negative perception from before and after these new fixtures are installed in each unit.

2. The cost of each fixture must be reasonable.

As I was shopping around, I found that some plumbing fixtures can get really expensive, making it very difficult to justify this kind of “improvement” to a rental property. In order for this cost to make sense, these plumbing fixtures needed to be justifiable as an investment with a real, positive end result in the form of cost savings. If a faucet, toilet, or shower head is so expensive that it takes 15 years to pay off, it’s not going to work.

3. The fixtures need to be highly rated, well-built, and able to take a beating.

Make no mistake about it, these fixtures are going into rental properties; they aren’t always going to be treated with “tender loving care.” I’d be remiss if I wasn’t planning for these things to take a real beating over the next couple of decades. As such, each of these fixtures had to be built to last for several years without needing replacement.

Related: When Going “Green” Counts: 7 Ways to Save Money on Your Rentals Through Water Conservation

The Fixtures I Chose (and the Results)

Delta Foundations Single Handle Kitchen Faucet, 1.8 Gallons Per Minute

71AgbUh8BxL._SL1500_Coming in at less than $60, with a 4.5-star rating on Amazon and a flow rate of 1.8 gallons per minute, this faucet was an easy choice. I actually bought this faucet for my first house back in 2006 and we used it there for over three years. Not only does this thing look great, but it also works flawlessly.

It’s a well-built faucet that seems to be made mostly of metal (which makes the price surprisingly low). I was also pleased to find that the 1.8 gpm water flow didn’t seem to cause any annoyances or get in the way of our daily kitchen tasks. Delta sells an aerator that goes with this faucet, as well. For an extra five bucks, you can increase the water savings even further by reducing the water flow to 1.5 gpm (assuming your tenants don’t figure out how to take it off on their own).

Delta Classic Single Handle Centerset Lavatory Faucet, 1.5 Gallons Per Minute

61TO-Lm3igL._SL1118_

Again, coming in at less than $60, with a 5-star rating on Amazon and a flow rate of 1.5 gallons per minute, this one was another winner.

I installed this faucet in my bathroom. I’m not a plumber and I’m not very handy, but I was able to figure it out myself. It took me about 45 minutes to install (not bad for my level of incompetence), and while it took some patience on my part, it was relatively easy to do with the right tools. The hot and cold hoses came pre-installed into the faucet itself, so it was a couple less steps in the installation process (which was a couple less opportunities for me to screw something up).

I certainly don’t have any formal complaints about the product, but I’ll admit that there was a slight “cheapness” factor to this one. While it appears from the picture to be made of metal, it is actually made almost entirely of plastic—not that plastic is a “bad thing” per se, but judging by this picture, the faucet looked deceptively higher-quality than it actually is.

I will say that this faucet put out noticeably less water than the faucet I replaced (which was to be expected), but in all honesty, even with less output, we haven’t noticed any problems or annoyances with it. We’re still able to wash our hands just as quickly with less water. It really hasn’t seemed like a big change in the grand scheme of things.

Would I buy this faucet again? Absolutely. I actually ended up buying two more of this exact model for the other bathrooms in our house. Regardless of the VERY small issues (if you can even call them “issues”), it delivers as expected and the price is acceptable for what we’re trying to do.

Kohler Forte Single-Function Shower Head

31gwHXMyOlL

The shower head was the one I probably struggled with the most. Mainly because:

  1. Generally speaking, a shower consumes more water than any other plumbing fixture (which makes it a big opportunity to save money).
  2. When the water flow of a shower head is restricted to less than 2.5 gpm, it becomes very noticeable (in my humble opinion).

Don’t get me wrong: I want to save water but not at the expense of creating an everyday annoyance for my tenants. Not to mention, if my tenants decide they don’t like the shower head, it’s about the easiest thing in the world to switch out.

With this in mind, I went with a shower head that had the maximum 2.5 gpm water flow, recognizing that even the most liberal usage of water with this shower head would still be a substantial improvement from the older shower heads that consumed up to 5.5 gallons per minute.

Related: The Pros and Cons of Including Utilities with Your Rentals

In my experience with this shower head, it has a nice, even distribution of water and doesn’t seem overly restrictive in terms of its output (probably because it has the highest water flow available by today’s standards). And coming in at approximately $35, it’s not a bad choice.

Toto Drake Two-Piece Toilet, 1.28 Gallons Per Flush

51q3i9WupML._SL1280_Simply put, I love this toilet (and I don’t care if you judge me for it). I’ve been using the Toto Drake in every house I’ve lived in since 2006 (if there hasn’t already been one there, I’ve gone out of my way to buy one and install it). Simply put, this toilet is the bomb.

“Toto” is a Japanese brand that is both the Cadillac and the Honda of plumbing fixtures. This company has mastered the design and functionality of toilets to the point that they don’t clog—ever (unless you’re trying to flush an entire phone book down the toilet).

Better yet is that it uses the bare minimum of 1.28 gallons per full flush, and this particular unit is reasonably priced at less than $250. The low maintenance, high efficiency, quality design and reasonable price of this toilet make it a great choice for just about any/every property out there.

Running the Numbers

All in all, this is what it will take to replace all the plumbing fixtures at my duplex:

  • 4 toilets at $223.03 a piece ($892.12 total)
  • 4 bathroom faucets at $59.00 a piece ($236.00 total)
  • 2 kitchen faucets at $56.75 a piece ($113.50 total)
  • 2 shower heads at $35.15 a piece ($70.30 total)

Altogether, I’m looking at a cost of approximately $1,311.92 to overhaul the plumbing fixtures at this point (assuming I do all of the installation myself).

According to Energy.gov, the savings from these new plumbing fixtures will likely be anywhere from 25 to 60 percent. In my situation, I’d be looking at a savings of approximately $300-$400 per year. This means it would take about four years for this $1,311.92 cost to pay for itself (and every year thereafter would simply add another $300-$400 of savings to my bottom line).

Again, given that water in my town is about as cheap as it’ll ever get, it’s not the most astonishing savings. Is it worth the time, money, and trouble to switch out these fixtures? Probably, but the savings won’t be anything to write home about.

That being said, if my properties were in a more expensive market for water (like Atlanta, Seattle, or Santa Fe) and my annual water bill was substantially higher, my savings would be MUCH more significant each year, which means this cost could potentially pay for itself in less than a year—with a permanent savings of this same amount every year thereafter.

In my opinion, if a landlord has a property in one of these more expensive markets and their plumbing fixtures aren’t as efficient as they can be, they’ve got a no-brainer decision on their hands (and every year they don’t take action, they’re just throwing money away).

It’s also worth noting that with the replacement of these plumbing fixtures, landlords are also able to eliminate any and all of the leaky faucets throughout their building (an unseen cost that can waste a ridiculous amount of water and money).

Is It Worth It?

In the end, the conclusion I take away from this study is that unless a property is already running with plumbing fixtures that are mostly water-efficient (e.g., homes built within the past 20 years probably won’t realize as much of a benefit), most property owners—especially of older properties—can probably justify investing in some updated plumbing fixtures that will waste less water and save them a ton of money in the long-run.

What do you think? Will you consider moving to water-efficient fixtures in the future? If you’ve already switched over, have you noticed a difference in your bill?

Leave me a comment below, and let’s discuss!

Seth Williams (@retipsterseth , G+) is an experienced land investor, commercial real estat...
Read more
    Hugh Nelson Investor from Ashburn, Virginia
    Replied about 5 years ago
    Seth – I had to comment about the Toto Drake toilet. I’m with you – this is a great toilet, and I just ordered another one. No reason even to look around. I just KNOW it will serve me well!
    Hugh Nelson Investor from Ashburn, Virginia
    Replied about 5 years ago
    Seth – I had to comment about the Toto Drake toilet. I’m with you – this is a great toilet, and I just ordered another one. No reason even to look around. I just KNOW it will serve me well!
    Dave Whittaker Rental Property Investor from Kennett Square, PA
    Replied almost 3 years ago
    Any thoughts on installing an adjustable pressure reducer on the main water supply? For a couple hundred dollars including labor, it will take care of the whole house without having to change, faucets, etc.
    Paul Moore Investor from Lynchburg, VA
    Replied almost 3 years ago
    Great article, Seth! Thanks for including specific fixtures and details. We’re purchasing a 125-unit townhome in Lexington KY in a few weeks, and plan to hit the utilities hard. This should help.
    G. Brian Davis from Baltimore, MD
    Replied almost 3 years ago
    Way to dive in deep Seth! Great article as always.
    Ben Staples Investor from Chicago IL
    Replied almost 3 years ago
    Awesome article. I really like the specifics and appreciate the recommendations!
    Herb Chan
    Replied almost 3 years ago
    I submeter the water. I email the tenant a water bill every month. I tack it on to the rent. Every tenant pays their fair share in a multi-unit.
    Terri Dyer from Gering, Nebraska
    Replied almost 3 years ago
    Great article, research, and details. We have a duplex we pay utilities for and another one we will be purchasing soon that we will most likely be paying utilities for. The town they are in has astronomical utility costs. I’ve been thinking of ways to save money by putting a max setting on the thermostat (not 80 which they like to keep it at since I’m footing the bill). Also changing out all the light bulbs to energy efficient one’s. I hadn’t even thought about the fixtures, but where the water bills are high in this town it just might pay off. Where did your purchase your toilet at? We usually shop Menard’s or Home Depot and I don’t think I have ever seen that brand. Thanks
    Karl B. Rental Property Investor from Columbia, MO
    Replied almost 3 years ago
    Great article. I may have to replace some shower heads now. And I’ve started adding coin-op laundry so I can use those profits toward the water and refuse/sewer bill.
    Raymond Jensen from South Bend, Indiana
    Replied about 2 years ago
    Seth, one thing about single-handle faucets I’ve found is that they tend to leak after only a few years use, which is something I that does not seem to happen with 2-handle faucets. You may want to consider only buying 2-handle faucets.