Why do cities care about rental properties? Why are cities your clients?
Cities are on the front lines of tackling climate action, waste reduction, social equity, affordability, infrastructure investment, and so many other issues, and rental housing is a key part of all of them. Many cities have also established ambitious climate and sustainability goals, including many who have set their sights high: to reduce carbon emissions by at least 80% by 2050.
Rental housing makes up the majority of housing in many cities (typically 50-80%), and it’s usually really hard to get good information about the non-rent costs of living (like utilities and transportation). It’s also really challenging to promote efficiency in rental housing (see next FAQ question).
That means that without better tools to address the rental sector, cities are highly unlikely to meet their ambitious climate goals, and housing affordability will continue to get worse.
We want to help. Since our founders spent decades working for cities with lots of rental housing, this problem is close to home for them, and it’s the reason they founded RentLab.
Why is it so hard to make rental housing more efficient? Why not just focus on all housing?
Rental housing tends to be difficult to improve for a couple of reasons. First, there’s something called a split incentive. To understand this problem, it helps to first understand the incentives in an owner-occupied property. If an owner has high energy or water bills, they can invest money in their property (to install attic insulation, for example), and reap the rewards of that investment in the form of lower utility bills and increased resale value.
Now let's consider renter-occupied properties.
In the typical situation where the tenant pays the utility bills, there’s no incentive for the landlord to make investments to reduce utility costs by investing in efficiency. In the less-typical situation where the landlord pays the utility bills, they have an incentive to invest in efficiency, but then tenants have no incentive to behave efficiently – by keeping the AC at a reasonable temperature or keeping the windows closed when the heat is on, for example. We've summarized this in a handy diagram below.
Second, there’s a lack of complete information, especially when it comes to utility and transportation costs. Tenants don’t know the full cost of living in a given property, and can be surprised (at best) or forced to divert money from critical needs or default on their rent (at worst) by excessive utility bills. Landlords don’t have a good information on how their properties are performing compared to other properties in their communities. Nobody knows what a “normal” bill is.
That means many renters pay more than they should for rental housing because so many rental housing options aren’t very efficient. That means less money for essentials like food and health care and transportation, less money for living life and having fun, and less money in local economies as those funds end up in the coffers of big utility companies. It also means more energy and water used, a bigger burden on public infrastructure, and a bigger challenge for cities focused on being more resilient and sustainable.
How does your approach work? How do you have an impact?
There are a number of reasons the rental sector is a challenging sector to improve. Our approach focuses on using data transparency and community-specific analytics to create new market signals around rental property features that have historically been invisible. In the past, tenants have been much more likely to pay attention to how recently the apartment has been painted than they are to the amount of attic insulation or the age of the furnace, even though the latter is much more likely to have an impact on the overall cost of living.
With RentLab’s tools, we aim to make these “invisible” features visible. We combine publicly available and crowdsourced information (like utility data, amount of insulation, etc.) to create a Smart Living Score and a summary dashboard for every rental, and enable people to see both the actual, total costs of a rental property and the factors that might contribute to those costs.
This works like Yelp for rental properties, but without the nasty reviews. Our platform lets the best properties share the things they’re doing right, and helps them monetize those investments - like low-flow toilets or a modern refrigerator - that would otherwise be unlikely to pay off. For the properties that don’t perform as well, we help both tenants and landlords see what’s “normal” and what’s not, and provide insight on how those properties can be improved. As more people get informed about their options, property owners and managers who don’t invest in their properties will miss out on renter dollars, scare away reliable tenants, and increase tenant turnover.
In addition to the public-facing platform, we also supply cities with detailed analytical reports to help them target resources and programs like education, energy incentives, and utility rebates to the properties and areas that most need them.
Cities are already investing in the idea of using transparency to encourage property improvements. Many cities and states have passed energy disclosure laws for certain types of buildings, and are having an impact. At RentLab, we aim to build on the success of these efforts, to provide tools for cities who don’t have these requirements or choose to take a more voluntary approach, and to extend the benefits to multi-family and smaller properties that aren’t usually addressed by energy disclosure requirements.
While there is still much to learn, the potential for impact is huge. With a fairly modest improvement in rental efficiency nationwide, we could save an estimated $12b in utility costs, reduce CO2 emissions by 27 million tons, and save 47 billion gallons of water every year. (Source: analysis based on American Community Survey and Energy Information Administration data)
What is the property dashboard / Smart Living Dashboard?
The property-specific Smart Living Dashboard is how we at RentLab bring everything together so it's as easy as possible for tenants and landlords to see how different properties compare to one another. The Dashboard aggregates everything that goes into the calculation of the Smart Living Score and other key features so that all of those "invisible" property features are summarized all in one place. Those features include walkability and bikeability, access to recycling, relative square footage per person, utility costs, and priority areas identified by the community.
For every community, the Dashboard evolves over time. We start with whatever data is available - for most communities, that data can be relatively sparse - to give people a set of information to start with. The Dashboard shown here focuses on the basics, and calls for site visitors to help us gather some of the information we're missing.
As we build our datasets over time through partnerships (with utilities or landlords, for example) and crowdsourcing, the amount of information on the Dashboard changes to be more similar to the version below. Each Dashboard design is customized to reflect our community clients' priorities as well as the data available.
What is the Smart Living Score?
The Smart Living Score is RentLab’s effort to reflect the cost and environmental impacts of rental properties in a simple rating. We hope this score will become the standard for judging the affordability, efficiency, and sustainability of rental housing – something tenants expect to see before they sign a lease, and something landlords strive to increase over time.
Before the Smart Living Score was created, the day-to-day costs and impacts of rental housing – beyond the cost of rent – were often invisible in rental transactions. That meant tenants could be blindsided by unexpected costs, and the cumulative effects of unsustainable, inefficient rentals were having a negative impact on the environment and quality of life.
To calculate the Smart Living Score, we draw from public and crowdsourced datasets. In every community, we look at the following factors:
Walkability, bikeability and access to transit: Properties with high scores make it possible for residents to rely less on cars, which is healthier, cheaper, and better for the environment. Data source: Walk Score API
Square footage per occupant, with properties that have a smaller amount of square footage per person receiving more points to reflect how closely environmental impacts are tied to house size. Tiny houses receive bonus points. Data source: city or county datasets
Waste management, including provision of recycling or composting by the city or the landlord. Data source: city or county datasets, crowdsourcing
On-site renewable energy, usually solar or geothermal. Properties that are all-electric earn a bonus point since that makes it easier to convert all of the property’s energy use to renewable energy. Data source: city or county datasets, aerial photos, crowdsourcing
Participation in local programs: Each community can customize this metric to reflect their local programs. This could include local energy incentives, recycling programs, etc. Data source: Community partners
Where available, we also consider:
Relative utility costs per bedroom or per square foot. While this is unavailable in most communities, we will build these data sets over time. Data source: city/county/utility datasets, crowdsourcing
Transparency: Landlords can earn points for their properties just by sharing data, including basics like how many bedrooms are in each apartment to utility bills to what types of upgrades have been completed. Data source: landlords, property managers
The Smart Living Score is deployed in each community in phases, with the initial phases focusing on data that is immediately available, and more advanced versions deploy as additional datasets are developed through partnerships and crowdsourcing.
Later, we also plan to add point values for green infrastructure, landlord compliance and complaint history, health history (e.g. radon, mold), comparative affordability (i.e. how the monthly rent per person compares to other properties in the community). We anticipate that the score will evolve over time as we gain access to additional data and refine our analyses.
Can't you just get all the data you need from utilities?
Wouldn't that be nice. Performance data (that is, data showing how much energy or water is actually used by a building) is a critically important in understanding which buildings are using more or less energy or water and cost more to operate. Without it, we can guess at performance based on size, year built, and other factors, but the real opportunities for improvement are in the buildings that don't fit these expectation. In fact, data from some studies shows that older buildings can sometimes outperform newer buildings.
Utilities have historically been resistant to sharing property-specific utility data publicly or with communities. Reasons given for this range from security and privacy to the complexity of the data.
That said, each utility has its own policies for data sharing, and some are finding ways to make their data more available. At the very least, many utilities will share annual community-wide usage data, which helps cities know if their overall usage is going up or down.
Next, some utilities share data aggregated by area, like a neighborhood or a school district or a zip code.
A step up from there are utilities that share whole-building aggregated data. This is for buildings with many tenants, where all the bills can be added together and shared to prevent privacy concerns for individual account holders. A map of these utilities is here.
Finally, there are rare utilities that actually disclose data at the property level for certain types of buildings. These utilities are few and far between.
Because building-level data is so hard to come by, we supplement the utility data we can get with crowdsourcing, outlined in more detail below.
Why do you use crowdsourced data, and how does crowdsourcing work?
Crowdsourcing is the gathering of information from many different people rather than from a centralized data source. At RentLab, we define this pretty broadly, and consider all of the data we get from tenants and landlords to be “crowdsourced.”
Why do we use crowdsourced data? Because there’s not enough available information about the rental housing sector, especially with respect to utility and other less-visible costs associated with individual properties. Utilities generally don’t make utility cost data available on a wide scale, and landlords usually don’t have it because they typically don’t pay the utility bills, which means that, for most rentals, the only current source of this information is tenants.
We allow tenants to share data in lots of different ways. We ask them to email utility bills and property photos, to fill out webforms, and eventually we aim to have tenants share data through a customized app that makes it super easy and lets them accumulate points and get rewards.
Over time, this crowdsourced data will enable us to track trends in different properties, and to see what costs are “normal” for a given community. Over-time data will also allow us to determine when high levels of usage are due to the tenant’s behavior or the property’s condition, which helps us target less-efficient properties for incentives and other programs to encourage improvement.
The data we gather also includes information like whether recycling is available, what types of amenities are available at the property, and other basics.
Landlords help out too – many landlord partners in our communities make data available about their properties, from the number of bedrooms and information on appliances to the unit-level utility costs, if they have access to it, and everything in between. We recognize these landlords for their participation, both by reflecting this information on our community map and by awarding them “transparency points” when we calculate the Smart Living Score for their properties. RentLab is built on collaboration, so partner recognition is a critical part of our approach.
Interested in sharing information on your properties, or want to know how to encourage your landlord to participate? Email us at firstname.lastname@example.org.
What do you do with my data?
We collect data from many different partners, including tenants, landlords, utilities, and cities.
When we receive individual unit data from tenants, we retain the address associated with the data but remove any personally identifying or account information. Photos associated with a given unit or complex, utility data, and other information is then aggregated (in the case of an apartment complex) or uploaded directly to the Smart Living Dashboard for that property.
Data from landlords or property managers is treated similarly, with shared data aggregated into complex-wide data where appropriate or simply uploaded to the Smart Living Dashboard.
The data we receive helps us calculate our Smart Living Score and to build graphs like this:
In all cases, properties that have more detailed data are color coded to reflect that data has been made available (below left, blue = data shared, gray = no data yet), and eventually to reflect how the sustainability and cost impacts of that property compare to others in the community (below right, red = high utility bills, green = low utility bills).
In other words, sharing your data is one of the best things you can do to help shift the balance in your community toward rentals that are better-managed, more affordable, and more transparent - and that's good for tenants, for landlords who are focused on managing their properties responsibly, and for communities overall.
Tenants just don't care. No matter what, they're just going to be irresponsible and wasteful.
Landlords just don't care. No matter what, they're not going to do anything to make their properties better.
As we talk to both tenants and landlords, everybody thinks the other guy is never going to do their part and that we’re stuck in a hopeless cycle of inefficient buildings and/or wasteful behavior.
But just like with anything, there are good actors and bad actors among every stakeholder group involved in the rental housing sector. Our goal at RentLab is to find the good actors – the tenants who conserve, the landlords who invest responsibly in their properties – and to celebrate them as examples for what the whole industry could look like. With time, education, and support, we aim to bring the less-good actors along.
Think tenants don’t care? Look for the ones that have had the experience of getting a shockingly high utility bill; the ones who are environmentally minded and doing their part to conserve; the ones who are paying their own bills while in school, while early in their career, or while struggling to make ends meet and for whom a high utility bill can completely derail their tight household budgets. That last category, by the way, is likely higher than you think – in some of the communities where we work, 80 or 90% of lower-income households (those making less than $35k/yr) pay at least 30% of their income on utilities, according to the American Community Survey.
Think landlords don’t care? There are examples in every community of landlords who have upgraded their buildings to be more efficient, purchased Energy Star appliances, provided recycling services or bike storage even when they weren’t required to, or installed solar panels.
As we start using the RentLab platform to share these stories and examples, we aim to develop better expectations about what’s possible, and to encourage everyone to aim their sights (and their sites) a little higher.
Know someone out there setting a good example – a tenant, or a landlord, or someone else in the rental housing sector? Tell us about them at email@example.com, and we might share their story on our blog.