What is the ROI of a Water Monitoring System?

What is the ROI of a Water Monitoring System?

Water monitoring is not just a mere utility function; it’s a multifaceted financial strategy with the potential to positively impact a property’s financial outlook and long-term value. For landlords and property managers, it represents an opportunity to optimize resource management, enhance water efficiency, and foster sustainability while reaping tangible financial rewards. This blog will dive into the potential Return on Investment of a Water Monitoring System and explore the financial, environmental, and operational benefits of implementing such a system.

What is a Water Monitoring System?

A water monitoring system is a comprehensive solution designed to help you efficiently manage and reduce water consumption across your property portfolio. Comprising a well-coordinated set of essential components including smart sensors, AI and machine learning, it continuously tracks and analyzes water usage patterns in your buildings to provide real-time insights that empower you to proactively manage your water usage, prevent costly leaks and inefficiencies and reduce your environmental footprint.

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The ROI of a Water Monitoring System

Reduced Water Bills 

Consider this scenario: At any given moment, one in five toilets leaks. Now, let’s examine a typical multi-residential building with 300 toilets installed. If we apply this statistic, it means that at any given time, 20% of these toilets are leaking, amounting to a staggering 60 toilets in constant disrepair.

Each moderate toilet leak has the potential to squander a substantial 6,000 gallons of water per month. When we consider water prices, for example, in Toronto, which are $0.01395781 per gallon, this translates to a monthly cost of $84 per leaking toilet. In the context of our sample building, where we have 60 toilets experiencing leaks, this equates to a significant monthly loss of $5,024.

The financial impact becomes even more evident when we extend this calculation over a year. A whopping $60,297 is lost annually due to toilet leaks in our sample multi-residential building. 

Water monitoring and leak detection systems are crucial in reducing water waste by identifying inefficient infrastructure and potential leaks that might go unnoticed for extended periods. 

This proactive approach ensures that every drop of water is accounted for and used efficiently, leading to substantial savings on water bills.

Increase in Property Value & Financial Leverage

The correlation between reduced water bills and increased property value holds significant relevance.

Let’s expand on the above example:

Let us assume that you own a property that annually pulls in $200,000 in revenue and incurs $100,000 in operating expenses. In this circumstance, it will have a resulting NOI of $100,000. With a capitalization rate of 4%, the building’s initial market value is 2,500,000.

If the building implements the water-saving measures above that save $60,297 annually, this would increase the NOI to $160,297 and increase the market value to $4,007,425, leading to $1,504,425 in asset value appreciation.

This higher property value also equates to an additional $1,130,568 in financial leverage that a property owner could use to refinance the property at its new value, obtain a loan with more favorable terms, or secure additional funds. This cash can then be reinvested into the property for long-term capital improvements, used to purchase additional properties, or deployed into other ventures, diversifying income sources and spreading risk. The extra leverage also means property owners can negotiate better interest rates with lenders due to the lower loan-to-value ratio, which reflects a more secure investment for the lender.

Water monitoring and conservation initiatives unlock strategic financial opportunities that can significantly strengthen a property’s market standing and profitability.

Higher Tenant Attraction and Retention

Efficient water management practices resonate with environmentally conscious tenants who prioritize sustainable living options. Water monitoring systems convey that the property owner or manager is responsible for resource management. Tenants who value eco-friendly properties are more likely to stay longer, reducing turnover-related expenses, such as advertising, unit make-ready costs, and tenant screening. Furthermore, sustainable practices can enable property owners to command higher rental rates, thereby augmenting rental income and, in turn, NOI. According to REITs, green-certified buildings can translate into a 31% increase in sales values, 23% higher occupancy rates and an 8% increase in rental incomes.

Opportunities for Grants, Tax Incentives and Rebates

Companies and property owners in many regions can tap into various financial incentives and support programs to promote sustainability, including water conservation measures. These initiatives encompass grants, rebates, and tax incentives that help offset the costs of adopting eco-friendly technologies and practices. Utility-sponsored programs, offering reduced rates and credits, encourage water-saving efforts, leading to cost savings and sustainability benefits. This financial support reduces upfront investment expenses and enhances businesses’ and properties’ long-term financial performance and environmental responsibility.

Wrapping Up

In property management, water monitoring systems are indispensable for safeguarding investments, conserving precious resources, and enhancing sustainability. The hidden threats of water leaks and inefficient water management can lead to substantial financial losses, damage to infrastructure, and environmental harm. However, landlords and property managers can become architects of intelligent water management by embracing proactive strategies and adopting state-of-the-art technology.

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