Utility Billing Services Blog & Resources

Does this describe the utility billing situation at your multifamily property?

If you’re experiencing problems with your current utility billing services provider or receive daily and recurring calls from angry tenants, you’re not alone. The following are actual complaints from multifamily owners and property managers regarding their utility companies:

• The billing company added a service fee to the last month’s bill without our notification. In two days, we received 55 calls from residents complaining
• A tenant renting a one bedroom studio brought in her current water/sewer bill. The amount due was $1,000
• Their customer service is really poor. They can’t answer simple questions, they don’t have any authority to fix problems, and they don’t really seem to care
• Several tenants called our office wondering why their electric bills are so late. They were being billed for consumption three months ago
• We call our billing company four or five times a week and all we ever get is voice mail
• My e-mails are never returned
• I don’t think the readings from the submeters are correct and the bill amounts are all over the place
• We skipped a month of utility billing to apologize to our residents for all the billing problems they’ve experienced.

 Don’t be Afraid to Switch Utility Billing Providers (PDF) 

 Increase revenues without increasing rents

Many apartment owners and property managers are curious about how Ratio Utility Billing Systems (RUBS) are used to calculate resident water and sewer bills. This article includes two videos that explain how to calculate a RUBS water/sewer bill for up to ten (10) apartment units. It also includes a complimentary spreadsheet you can use to make the calculations.

Instructions for using the spreadsheet are written below. Please note that AmCoBi assumes no liability for your utility billing operations or the calculations made with the RUBS Billing Worksheet. Contact us if you have any questions. 

Video – How to Calculate a RUBS Water/Sewer Bill – Part 1

Video – How to Calculate a RUBS Water/Sewer Bill – Part 2

When utilities are included in an apartment complex's rent, some tenants are naturally going to consume more than others. High utility users, even if they represent a small group of tenants, can substantially increase costs. Since these cost increases are effectively hidden in the rent, those residents who use utilities responsibly subsidize those who don't.

A question to consider then is how much are high users increasing utility expenses? Does it make financial sense for an owner to include utilities or bill tenants directly? If an owner does decide to transition away from the utilities included model, what options are available?

The Challenge of a Master-Metered Multifamily Complex

An owner is most likely to include utilities in the rent when his multifamily complex is master-metered for water, gas, or electricity. The drawback of a master-metered community is that there's no way to tell how much of a given utility each resident is using.

If I'm one of those residents who runs the heat continually, lets a broken toilet flapper leak without reporting it, or keeps the air conditioning on even when I'm not home, it's my neighbors who pick up most of the tab. The usual feedback loop that links the amount I pay, to the amount I consume, is missing. Without this feedback loop, I'm more likely to consume carelessly.

As we're about to see, careless or abusive consumption can raise multifamily utility expenses as much as 70%!

Learn how to protect your NOI

If your multifamily complex includes utilities in the rental fee, brace yourself. Utility cost increases are coming your way that may erode your hard-earned profits. Even more concerning is that you're responsible for a sizable expense that you have little or no control over. The "utilities included" model puts you squarely at the financial mercy of tenants, their usage tendencies, and utility companies. "Utilities included" also means that you have to be an accurate budget forecaster to ensure that your rental rates cover the annual utility expenses. Miss the mark and it's you who'll pay.

The exciting news is that you can quickly and easily change this situation by separating utilities from the rent fee and billing tenants directly--at no cost to you. By doing this, you'll make a positive and immediate impact on your net operating income (NOI) and the value of your property. From a price perspective, your complex will be more appealing to prospective tenants and you'll have effectively removed yourself from the utility equation altogether. Billing residents means no more worrying about the effects of runaway tenant usage and it leads to higher profits.

The sooner you get started the better, especially given the trajectory of utility rates. They seem only to move in one direction...up! Water rates for multifamily owners in Houston have increased by 30% this year alone. In New York City, water rates are up nearly 13% and in Milwaukee, they're projected to rise 27%. In Jacksonville, utility rates will increase 9%. Owners who can't adjust rents fast enough to cover the increased costs take a direct hit to their revenues.

Choosing a vendor

If you own or manage multifamily residential units--apartments, condominiums, student housing, affordable housing, manufactured homes, or military housing--you are probably involved in utility billing in some fashion. Utility expenses for these types of properties can be substantial so most owners look for effective ways to manage these costs.

The Master-Metered Complex Predicament

It's common for multi-tenant commercial and multi-residential properties to be "master-metered." Master-metered properties receive a single utility bill that includes consumption for several tenants. The problem with master-metered properties is that there's no way to bill tenants for their actual usage.

This has led owners to use different methods to divide utility bills so that they can recoup the tenants' share of the overall utility expense. In fact, transitioning a multifamily complex from owner-paid utilities to tenant-paid utilities can be one of the fastest ways to boost net operating income (NOI).

Utility billing is usually managed in two ways:

• Internally by owners and property managers
• Externally by a third party utility billing service provider.

While some owners prefer to manage utility billing "in-house," billing providers have invested extensively in software tools and technologies to streamline the process so that it is efficient, affordable, and well-supported. Multifamily utility billing is a task that can successfully be outsourced, saving property owners and managers significant time, effort, and money.

 Selecting An Effective Multifamily Utility Billing Services Provider (PDF)

AmCoBi was recently interviewed by Jessica Fiur, News Editor at Multi-Housing News MHN Online for an article titled "Increasing Revenue, Not Rents, With Utility Billing Systems." Ms. Fiur discusses how billing residents for their share of the utilities can prevent rent increases and lower overall costs.

The two primary approaches for billing residents for utilities involve:

1. Installing a utility submetering system or

2. Using a Ratio Utility Billing System (RUBS)atio Utility Billing System (RUBS).

The article also highlights a free report we recently published titled "The Multifamily Owners Complete Guide to Resident Utility Billing."

MHN provides the leaders of the multi-housing industry with the most current and complete news, information and analysis in print and online to help them run their businesses more efficiently and profitably. The online magazine recently featured AmCoBi's article titled, "How Much Money Is Your Multifamily Community Losing?"

Click here to read the full article.

How Much Money Is Your Multifamily Complex Losing?

Owner loses nearly $200,000. Find out why and how you can avoid this situation.

How much money do you estimate was lost?" We put this question to a multifamily owner whose complexes total nearly 500 units. His answer was shocking. "Nearly $200,000 over three to four years." Our next question was obvious..."How?"

"It was very difficult to identify," the owner replied. "Each year, the amount of money we paid for our master-meter water and sewer bills increased, but the amount we recovered from our resident utility billing program slowly decreased. We relied on a billing provider to manage the process for us but the losses happened gradually enough that we didn't catch the errors."

AmCoBi was recently interviewed by Jeffrey Lee for an article titled “Sensible Submetering: Apartment providers find both financial and conservation benefits from charging utilities to residents”, that was recently published in the National Apartment Association’s Units Magazine, April 2010 issue. AmCoBi was a contributor to the section on "Data Mines."

Click here to download the complete article.