Last modified on September 18th, 2020
By Brittany Benz
With large-scale multifamily buildings it can be difficult to manage your utility bills and accurately measure residents’ individual utility costs. As a result, your team may spend hours calculating costs, processing bills, and manually entering data every month. Not to mention, without a proper utility system in place, you may not be able to detect leaks or abnormal spikes until it’s too late, costing your business and owners even more money and frustration.
Utility management software automates bill processing and resident billing, while collecting real-time utility data in one convenient place, so you can maximize your net operating income, increase efficiency, and discover new opportunities. However, according to a recent AppFolio survey, many property management businesses are not taking advantage of this kind of technology or billing back utilities consistently across all of their properties. As a result, they are missing out on these opportunities.
Bay Area property management business, 2B Living, uses AppFolio’s Utility Management software to strategically manage their utilities and boost their net operating income. We got a chance to talk to Scott Cattaneo, Director of Accounting at 2B Living, to learn more about how using this technology has helped their business. Here are a few takeaways from our conversation:
You Can Leverage Utilities to Boost NOI When You Can’t Raise Rents
In the current environment, it’s going to be hard to rely on rent increases alone to drive revenue for your business and owners, however there are other ways you can still maximize your net operating income. By billing back common area utilities to their residents, 2B Living has seen success in recouping some of their properties’ operating costs.
In addition, they analyze their buildings’ usage of particular services, such as trash and recycling, to see if there are areas where they can cut costs. As a rule of thumb when you begin managing a new building, Scott says it’s also a good idea to review how much your vendors are charging for services, such as landscaping and pool care, to see if you could save by switching to a different vendor.
Utility Management Software Enables You to Detect Spikes Early
If left undetected, a running toilet, busted pipe, or leaky sink can cost your business and owners a lot of money. The team at 2B Living uses AppFolio Utility Management to gain more control over their utilities and prevent spikes from getting out of hand, “It was kind of a pain point for us for a long time. We would take on a property and just continue what they did before. With AppFolio Utility Management, it has made managing our utilities tremendously easy. We get a weekly email explaining any spikes in utilities at the property. Before we’d look at prior bills, which means a leak could have been going on for weeks. Now we are nipping issues in the bud immediately. We can really control those spikes now. ”
It’s Crucial to Explain Utilities’ Value to Owners
An effective utility management system doesn’t just benefit your business and residents, it also benefits your owners. For 2B Living, one of the biggest things their owners are interested in is the monthly water bill, and AppFolio Utility Management enables their team to show owners where their building stands and where they could improve, “Instead of just relying on past bills, and telling owners they had a 10% reduction in utilities, AppFolio Utility Management enables us to leverage the data from all of the customers and compare their building to other buildings in the area. We can take this data and present it to owners and show them how efficient they are and where there are areas for opportunity.”
Things to Consider When Navigating a Utility Billing Rollout
When 2B Living first started using AppFolio Utility Management they had to make sure they were in compliance with state and local jurisdictions. In rolling out a new utility billing program Scott recommends that every property management business should consult their legal counsel to make sure they’re not billing too much.
In addition, Scott mentioned that it’s important to give your residents ample time (a full 90 days) prior to implementing the bill back to give them time to plan, “Communication is key. You need to give your residents advanced notice, and explain the charges and why you’re doing it. You have to be transparent and build trust. As we say at 2B Living, “Happy residents. Happy property managers. Happy owners.”
In summary, AppFolio Utility Management truly gives Scott and the team at 2B Living the clarity to focus on what matters, “We get an email before the end of every month from AppFolio with a breakdown of what they are about to charge the tenants, so they do all of the backend work. Then all we have to do is confirm everything looks good and then it automatically gets added to all of the ledgers for the tenants. So it’s a really seamless process.”
With the right utility management software, you can streamline your business, increase efficiency, satisfy your owners and residents, and maximize your NOI. Save your team time from having to manually enter data and calculate utilities every month, and instead opt for a modern utility management system.