Charlie McHill had just bought a new apartment community and we were discussing submetering. The expression on his face seemed odd. A previous blog post explains why submetering made sense for his property – want us to evaluate your multifamily for submeters or RUBS?
Below is how he played me – pure evil…
Charlie McHill: My issue is one of priorities. I just bought the property and there is so much to do. We’re still putting together a long list of repairs and improvements that can’t wait. And we need to train onsite staff about new policies in order to get things running the way we want. I wonder – how soon should I around to submeters?
Me: In a perfect world, businesspeople would prioritize conservation and other green technologies like submeters at the top of their to-do lists. But let’s face it – multifamily operators are always putting out fires. Fixing leaky roofs, evicting bad tenants and repairing HVAC systems can’t wait.
Charlie McHill: So you agree. I should wait a few months before deciding on a course of action with respect to submeters?
Me: With all due respect, you are seeing your water and sewer costs in the wrong light. Although full implementation of submeters and utility billing will save you $18,000 per month, that’s the wrong way to look at it. It’s more urgent than just savings.
Charlie McHill: I like saving $18,000 per month. In what way is it more urgent than that?
Me: You need to repair leaky roofs and bad HVACs immediately because if you don’t, tenants will move out and that will cost you money. You need to evict bad tenants because you need to rent their units to good paying residents. In other words, if you don’t put out those fires, you will immediately feel it in your wallet. Losing tenants is not some abstract concept – the loss of a tenant means immediate loss of rent.
Charlie McHill: So you agree, making repairs is more urgent than submeters?
Me: I agree that making repairs is urgent. But submetering is an urgently needed repair, not a means to save.
Charlie: I’ve got to hear this. (The strange smile on his face had disappeared as he leaned forward to hear what I was saying.)
Me: When JC Penny has a 40% Off Sale on casual shirts, that is an opportunity to save. But since I can continue to wear the shirts that I already own, I don’t lose money if I wait until the next sale. Your situation is different. You can’t stop buying water and sewer until the point at which you are prepared to submeter. You will be losing the $18,000 that I can save you each and every month until you have fully implemented submetering.
Charlie: So you’re saying that my water and sewer system is broken?
Me: Exactly. Your system is broken. You’re leaking $18,000 per month. You need to fix it now.
Charlie: I have to admit something to you (Charlie’s funny smirk broke open into open laughter.) I’ve been playing with you. I already know everything that there is to know about submeters. I probably know more than you about the mechanics.
Me: Really, how so? (I was thinking that this Charlie guy was pretty arrogant.)
Charlie: I was one of the first people in the US to start a submetering company back in the 1990’s. But within a few years, it occurred to me that I could make more money buying submeters than selling them. That’s when I sold the submetering company and focused on the big bucks – buying submeters.
Me: Wait a second. Are you telling me that the better way to make money was to…?
Charlie McHill: That’s right. Selling submeters and billing services was tiring. I’d lay out the merits of submetering:
- It’s green because submetered residents conserve when they pay for their own consumption.
- You make green because your water bill goes down and because residents reimburse you for water and sewer costs.
Managers and owners would agree. But that’s when things would get frustrating. Multifamily operators were always putting out fires – fixing roofs, HVA CS, potholes in the parking lots, evictions, curing code violations, leasing new units, hiring and firing staff. Those things were priorities – submetering was something they wanted to do but they would leave it on the backburner. They didn’t recognize the money that they were losing on water and sewer as a priority.
Me: So you decided to buy properties and submeter them. Wow.
Check our blog in a few days for the conclusion…or request a submeter or RUBS proposal.