Investors want to maximize their rates of return. With a rental property, this means high occupancy rates, and the ability to charge premium market rents. Offering features or amenities in your rentals that meet the needs and desires of your target market will allow you to stand out against your competitors and possibly increase your rate of return. Rental studies reveal there are a number of features that appeal to renters today, but sustainability outweighs them all. Here's how to draw in 70% of tenants today by going green.

A look at today's renters

The rental market is currently a $174 billion industry in the United States. And while it includes occupants young and old, economically disadvantaged to wealthy, there are some clear heavyweights in the game. Gen Z and millennials together now make up 70% of the rental market.

This includes renters aged 18 to 40, which makes sense, considering many who opt to rent do so when younger, unable to support mortgage payments, or are not quite ready to settle down yet. There is certainly room for niche markets, but if you are looking to appeal to the masses, targeting your marketing and rental amenities toward these generations will likely please the vast majority.

What do millennials and Gen Z look for in housing?

Obviously, we can't say that all millennials care about the quality of the neighborhood or that every single Gen Z renter will seek out energy-efficient heating and cooling systems. But the majority will. These two generations not only make up the bulk of renters, but they are also quite vocal about what they support and how they choose to live.

Indeed, 95% of millennials are interested in sustainable investing, and 75% of them will change their habits to reduce their impact on the environment. And it's not just talk: 90% of Millennials will pay more for a product or service that is sustainable. It's clear sustainability is a driving force in how this generation lives, including its housing.

Person pushing smart home feature panel.

Image source: Getty Images.

How to make a rental more sustainable

There are several ways real estate investors can make a rental more sustainable. How successful these are will depend on location, market, and the property itself. But certain features are highly desirable in green buildings that will apply across the board. Try including a few of these in your rentals so you can market your units as eco-friendly:

  • Energy-efficient appliances and heating/cooling units
  • Improving insulation for windows and walls
  • Low-VOC paint
  • Green building development
  • Water-saving features
  • Native plant or xeriscape landscaping
  • Replacing incandescent with LED bulbs
  • Electric car charging stations
  • Recycling services

Real estate investment trusts (REITs) like Camden Property Trust (NYSE:CPT) and Equity Residential (NYSE:EQR), two major residential REITs specializing in apartment housing, are improving and introducing several of the sustainability efforts above, including green buildings, water reduction, and smart home features. 

When it comes to your own rental property, simply adding these features to your rental will be the first step. Appropriately marketing and highlighting the features will be what actually helps you to realize the returns. Talk with a local Realtor who has expertise in green housing so they can give you applicable comps as well as the verbiage to help get your units rented. Incorporating eco-friendly features to attract the majority of the rental market can quickly turn your efforts into profits.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.