The Value of Preventative HVAC Maintenance for Multi-family and Commercial Real Estate Executives

The Value of Preventative HVAC Maintenance for Multi-family and Commercial Real Estate Executives Blog Post Header

For multi-family and commercial building owners and operators malfunctioning HVAC systems lead to lost revenue.

Whether it’s through decreased resident satisfaction, spoiled product, increasing energy bills, or expensive repairs, improperly installed, outdated or broken HVAC systems decrease in energy efficiency between 10% – 35%.

Regular preventative maintenance can keep HVAC systems in optimal efficiency and operating condition, reducing expenses not only for reactive maintenance and repairs but also through increased efficiency.

For companies managing hundreds, or thousands, of units across a portfolio, preventative maintenance can produce millions in savings every year.

What is Preventative Maintenance?

To put it simply, preventative maintenance is a proactive maintenance approach to prevent or limit potential malfunctions by conducting simpler tasks and repairs ahead of a break down. A preventative approach is essential for keeping an HVAC system in optimum working order for a variety of reasons, including:

  • Broken or worn parts can be identified before they cause a serious malfunction
  • System performance can be optimized, improving energy efficiency
  • Internal components can be cleaned so they don’t negatively affect indoor air quality
  • The overall life of the system is extended, increasing its lifetime return on investment
  • Fire hazards and any other safety concerns can be addressed and corrected before an accident occurs
  • Clean equipment improves a residential property’s curb-side appearance.

Despite these benefits, many property owners and managers fail to have regular preventative maintenance conducted on their HVAC systems. The costs might not be included in their budgets, or it might be difficult to measure the direct cost advantages when a system is operating efficiently.

In cases of larger multi-family and commercial buildings, owners and operators may not even know if all, or most, of their systems are functional.

“If it ain’t broke, why fix it?” It’s easier to prioritize other expenditures in the here and now than to proactively allocate resources toward preventing a hypothetical, yet-actually-very-real, future issue. Besides, how do you measure a system’s extended or limited lifetime if you don’t know what it would have been otherwise?

An Ounce of Prevention is Worth a Pound of Cure

Preventative HVAC maintenance may appear to some to lack an obvious ROI, but studies have proven otherwise.

When researchers from Jones Lang LaSalle analyzed the costs of regular preventative maintenance compared to savings resulting from it, they found an astounding 545% ROI.

To help determine the value of preventative HVAC maintenance, the JLL team examined 14 million square feet of mixed property types and identified the actual cost of preventative maintenance and the costs of repair or corrective maintenance, including replacement parts and equipment. They then considered the expected operational lifetime of equipment, the effects preventative maintenance had on the expected lifetime, the frequency of necessary repairs on unmaintained equipment and the effect the preventative maintenance had on energy consumption.

Based on analysis of the collected data, the researchers determined that the cost of preventative maintenance is almost always justified.

The study found that a $32,000 compressor might last 16 years without preventative maintenance, but its lifetime can be extended to 20 years with it.

Without maintenance, the equipment will need repair every three years at an average cost of $944 per incident. Preventative maintenance on the system, on the other hand, costs $472 per year and extends the length between repairs to once every four years.

What’s the take-away?

With preventative maintenance, the repair costs on a system will average $236 per year, compared to an average of $315 per year without it.

Plus, an unmaintained compressor will need to be replaced four years earlier, which decreases the initial investment of the unit from $2,000 per year for its lifetime to just $1,600 per year until it needs to be replaced – a difference that practically pays for the preventative maintenance by itself.

The additional cost reductions only increase the ROI of regular maintenance – and that’s on a single piece of equipment!

“The longer the capital expense can be delayed, the higher the ROI,” study authors Wei Lin Koo and Tracy Van Hoy wrote in their analysis. “Maintaining all the equipment in the portfolio produces the significant returns identified by the analysis and offers a powerful argument for the value of preventive maintenance and the dramatic impact PM [preventative maintenance] can have on real estate investments.”

If It Ain’t Broke, Don’t Fix It?

Of course, keeping up with a regular maintenance schedule is easier said than done. It’s not as though property managers and facility managers don’t have enough on their plates already.

Besides regular preventive HVAC maintenance is only effective if it’s… well… regular. Fortunately, there’s an technology which addresses this need.

“Owners and operators often have a multitude of communities, with a wide variety of mechanical asset types across the country and often in very diverse places,” said Matthew Sallee, Motili’s vice president of  multi-family. “It can become a very cumbersome task to understand ‘What am I spending where?’ and ‘Why am I spending that money?’”

Preventative maintenance technology takes the guesswork out of managing HVAC and hot water assets. A variety of tools, including Motili’s HVAC and hot water management technology, can schedule preventative maintenance and track equipment, notifying the property owner or facility manager when equipment is due for replacement. In an expanding range of applications the technology can even assist with monitoring efficiencies, analyzing potential problems before a malfunction occurs.

“We’re able to give a true forecast a few years out and look at not just one or two buildings, but across the nationwide portfolio, helping a multi-family conglomerate find tens of millions of dollars through savings and optimization,” Sallee said. “It often makes more sense to spread your investment over a multi-year period.”

The “App” for That

Motili is more than mere asset management, however. It offers a nationwide network of 2,000+ contractors, saving property owners money. Other platforms might offer a list of service providers, but Motili connects property managers directly to contractors.

Motili’s contractor network is fully plugged into the Motili desktop and mobile app for contractors, which technicians utilize to manage every job from start to finish. Keeping everything in the app allows Motili to have tight control over data, photos, records, etc… which are then available perpetually in one place.

Motili’s asset and data management technology keeps track of all asset tagged HVAC equipment, cataloging it and creating a multi-year HVAC asset plan. Motili continually analyzes the data collected from users’ properties, assets and jobs ordered through the platform. That way, the data can be aggregated to track performance and predict future needs.

Plus, Motili provides its customers with ongoing support for all planned repair and replacement jobs, so they can focus their precious time on a long list of other tasks. Even if a property manager found plenty of time to schedule preventative maintenance, he or she will be hindered by a lack of comprehensive data.

“It’s a complex equation, but without the data you just can’t do it,” Sallee continued. “We know how to quickly capture accurate data, analyze it, and help visualize and explain it so that our customers can manage that equation.”

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