If you are a multifamily property owner, there’s a lot you need to do for things to run smoothly. Ensuring your units are full and maintaining happy tenants is only part of your job. On the business end of things, you also have to think about money-saving tips to maximize profitability and improving multifamily utilities.
This is often easier said than done. Whether you have been in the business for a while or are just getting started, here are some actionable money-saving tips for success.
If you are charging a flat fee for utilities, you are doing yourself a disservice. While this system might be easy, it does not really capture the expenses as they are.
When you think about it, utility rates are fluid. So is usage. Charging your tenants a flat fee means there are likely to be months where you will undercharge. You are also leaving yourself at the mercy of utility rate fluctuations. This makes your cash flow volatile, making it incredibly challenging to make business projections and advanced planning.
There is, however, a way out of this: Ratio Utility Billing System (RUBS) and submetering. With utility submetering, you install individual meters for each housing unit. These can allocate gas, water, electricity, and common areas. Meter readings are then done manually or sent automatically to a utility company like Conservice, which collects payments on your behalf.
RUBS uses a similar system; only it uses a formula to calculate utility costs. With this system, there is no installation or reading of meters.
Both methods are beneficial to your tenants as well as yourself. The key benefits are that you recover your costs quicker, and your tenants are only billed for what they use. Similarly, tenants are more incentivized to conserve utility usage when they know they are being billed for use.
Water bills tend to be among the highest expenses for property owners. While RUBS and submetering pass on these costs to the tenants, you can still benefit significantly from water conservation.
Simple things like low water flow faucets, showerheads, and toilets can save residents a lot of money over time. You can also use this as a selling point to charge slightly higher rents.
The other aspect to look at is irrigation for units that come with green spaces. This is one way you can make savings from common areas whose water bill is a direct expense on your business. You can install smart irrigation systems timers that automatically shut off when it rains.
You can also educate your residents on conservation. This will benefit you directly if there are water outlets in common spaces whose bill ends up on your desk. Artificial grass, as opposed to natural grass, is also one way to save on water bills from irrigation and landscaping maintenance.
Millennials are quickly making up a significant number of home renters. According to reports, this age group is more than happy to live in and pay more for a green lifestyle. Aside from making cost savings, this is one way to attract and retain millennial renters, which, of course, is beneficial for your business.
Simple things like replacing outdoor lighting with LED bulbs can significantly cut your lighting costs over time.
Installing solar panels to power your outdoor lighting and common areas is another way to reduce costs. Granted, solar installations can be expensive upfront. However, the cost savings you will realize with long term investments such as rental housing are enormous.
While it is often written off as an unnecessary or premature expense, preventative maintenance should be part of your rental property’s business process. This should be budgeted for over and above repair costs.
When you have regular property inspections, you tend to catch problem areas or possible problem areas long before they erupt into larger ones. These are often easier and cheaper to fix than when they snowball into more significant issues that could cause more damage.
Take a roof leak, for example. Replacing several shingles on your roof will not cost you much. However, if this festers, there will be more leakage into the top apartment walls, causing even more structural damage. This will take longer to fix, cost more, and could cause several tenants in the process. Aside from saving you money, preventative maintenance will also extend your property's life.
Again, this being a long-term investment, investing in some of the required technologies can save you a lot over time. For example, a pressure washer can cut your cleaning costs almost nil because you are already paying a maintenance person.
You might currently be doing the bare minimum when it comes to taxes, but if you get a firm understanding of how taxation works and the tax breaks, this can become another money-saving area. Some of the deductions you can make include:
Essentially, you can deduct any expense that directly goes into the maintenance and care of your property. This is important because the cost savings you make from taxation can be channeled towards property improvements or other investments.
Bad tenants damage your house, fail to pay, or both. Even if you take them to court, it will still cost you time and money. If you want to save up on repair costs and get your money in a timely fashion, screening is a must.
Some of the things to look at during this process include credit checks and references. Screening also helps you meet your tenants in person to get a feel of who they are. During this process, you need to have a detailed tenant screening questionnaire to guide the tenant interaction.
As you are implementing the above tips, constantly monitor their progress, and make adjustments whenever needed. Similarly, keep well-updated records of everything that goes into the business. Such records are an excellent resource when looking to reevaluate your business and institute more money-saving measures.
Thinking about changing your tenant bill-back method to increase accuracy and cost recovery? Let us help you. Download our free eBook, “Bill-Back Better: A Condensed Guide to Resident Billing Methods”, today.
If you want more information on how we can help you, fill out this form and our team will be in touch to work out a tailored solution for you. You can also read more tips for saving money with our free ebook “Stop Losing Money: How to Plug the Leaks in Your Multifamily Property Finances.”
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