5 Ways Multifamily Companies Can Use Utility Insights to Improve Their Bottom Line
Making data-driven decisions is critical to the success of your portfolio, especially when it comes to high-cost items like utilities. But keeping track of key metrics, benchmarking and optimizing across multiple properties is challenging. There have probably been plenty of times where you haven’t had enough data to make heads or tails of a situation. Or sometimes, you have so much data, that it’s hard to come to a conclusion about what’s happening.
After years of working in the multifamily industry, I’ve discovered some best practices for getting to the metrics that matter – ones that will improve property performance and grow your portfolio. If you are lucky, you have a business intelligence tool that will cut through the clutter and get to these crucial metrics. But if not, you can still manually pull and track your data in a spreadsheet.
Start with making sure all of your properties are running at maximum efficiency:
Tip 1: Identify opportunities for efficiency improvement by benchmarking utility expenses
Do you have a firm understanding of how much you spend for each type of utility at each of your properties? If you look at your water charges every month across comparable properties, you will be able to quickly identify outliers and opportunities for efficiency improvement.
The bottom line: When you look at your utility expenses across your portfolio, you establish a benchmark for what “healthy” looks like to you. From there, you can take on projects to bring all of your properties to that level.
Tip 2: Analyze your utility recovery rates
To begin with, recovering your utility expenses is definitely something your properties should be doing. Assuming you’re already doing that, do you know how much of your utilities you are recovering at each of your properties? This is an important number to know. Regulations govern how much you can collect, and the rules vary by utility, location, etc. You may be doing the best that you can in terms of recovery, but are you confident in that?
The bottom line: If you don’t understand the regulations at each area, you’re leaving money on the table. Brush up on local utility billing regulations, or consult with a utility billing provider who can guide you on how much you can recover.
Tip 3: Identify and alleviate vacant unit costs
Are you confident that the utilities across all of your units are in the current new resident’s name? When a resident moves into a new unit, they have a lot on their mind. Intentional or not, they may forget to transfer one or more utilities into their name. Again, assuming you’re charging residents for their use, this neglect directly impacts your bottom line. The sooner you know that a utility has not been transferred to the new resident’s name, the sooner you can fix the issue. You may also choose to levy a penalty fee if the issue is not resolved after a certain grace period, which reimburses your property team for administrative and operational costs associated with issue resolution.
The bottom line: Actively tracking “vacant unit costs” is an important operational insight that directly impacts your bottom line.
Once you are confident that your property is performing optimally based on your benchmarks (i.e. you’re conserving, your recovery is optimized, you’re at max efficiency) a good business intelligence tool can help you proactively track your performance going forward so any anomalies are quickly identified and you can resolve them to go back to peak state.
Tip 4: Proactively track, identify and resolve utility equipment issues such as submeter health
Submeters are great because they give you exact readings on how much utilities are being used in each of your units. They also promote conservation by placing the impact of their usage directly on the resident. But they’re equipment, and equipment needs to be maintained and managed. Using a built-in intelligence tool, you can proactively monitor submeter health to make sure they are giving accurate readings and are not in need of repair. Without accurate reads, you may be undercharging your residents for utility consumption.
The bottom line: Plug “leaks” in your submeters (pun intended) to be sure you are accurately recovering your utility costs from residents.
Tip 5: Use automation to be proactively notified of anomalies and issues
Even with the best of intentions, keeping track of utility expenditures, recovery rates, and potential “leakages” is a challenge. If you have a business intelligence tool, it should allow you to set thresholds for metrics that matter to you, and receive notifications if they are exceeded. You can also notify colleagues via automated messages so they can take action quickly. For more time savings, customize your dashboards so you can easily visualize metrics that matter as soon as you log in. That way you won’t have to recreate the wheel each time you need an answer about utility data.
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