Maximizing Submeter Collections

Josie yelled at me, “$3.25 a month per unit? Are you crazy?”

Wanting to set her mind at ease, I looked her straight in the face and said “No, I don’t think so.” Probably because my retort was no different than what a crazy person would have said, Josie looked even more convinced that I am one crazy dude.

But I should probably start from the top. Josie manages 3 small apartment complexes that are submetered for water – cumulatively 206 units. She was telling me how displeased she was with the company that was providing Read/Bill/Collect service. Being the salesman that I am, I offered to give her a proposal to take over the RBC service.

When she saw my price, that’s when she yelled at me, “$3.25 a month per unit? Are you crazy?” After my less than clever defense, “No, I don’t think so,” she said “The billing company we use charges only $2.50 per unit. I thought that was expensive. But you want even more. You’re crazy!”

Some guys have a positive effect on women without even trying. Not me. I explained:

“The RBC company that you are doing business with is cheap. $2.50 per unit per month is a great price. But they aren’t performing. Billing is not going out promptly and your residents cannot reach the RBC company’s customer service. Bottom line is that due to poor service, you’re recovering only 62% of water and sewer costs.”

Josie was listening. Maybe I’m not so crazy.

“Your average unit is being billed about $55 per unit per month. If you were recovering 80% instead of 62% of your communities’ water and sewer costs, you would be collecting $9.90 more per unit per month. We charge $.75 more per unit because we invest the necessary money to maximize collections.”

I had her ear. Like I said, I don’t exude an aura that causes women to agree with me. I use reason. It works.

“We spend extra money to properly staff our bilingual customer service department with professionally trained professionals. We also spend time and money on the hawkeye system – this means that we photo-capture the date/time stamps of all outgoing bills. That way, when certain habitual late payers claim that they never got the bill, we can prove that it entered the mail stream.”

Result: My wife still says I’m crazy…but Josie is now a happy client. Want to find out more about submetering or RUBS?

Water Rate Increase

Water Bill Delivery

Most annual increases in water and sewer rates take effect between July and October. Here’s a sampling of recent increases in water and sewer rates in some of the nation’s major multifamily markets (bear in mind that in most districts, sewer costs account for about 2/3 the cost and water for 1/3:

It’s not all bad news. Atlanta is bucking the trend…well, not really. Due to water  rates increases of 233% since 2001, Atlanta’s water and sewer is amongst the most expensive in the country. A small reprieve is that further rate increases probably won’t take place until 2016.

As water and sewer rates escalate, not billing residents for this utility is almost as bad as giving away free electricity – would you do that? Using submeters or RUBS in order to bill residents is no longer an option. Ask Charlie McHill.

Find out if how submetering and RUBS can save you money.


Shark delivering water bill

Water bill delivery!

Is there such a thing as a multifamily or commercial property owner that wouldn’t like to recover water and sewer costs from tenants? Of course, it is not cost effective to submeter certain older properties and RUBS is not permitted in some locales. But experience tells us that almost every landlord that doesn’t already recover water and sewer costs would like to do so if possible.

That being said, why is it that so many property owners continue to give away unlimited free water and sewer when it would be so easy for them to bill via submeter or RUBS? Some of the explanations we hear:

Property Manager: “We’ve always included water with rent. We see no reason to change now.”

Steve Hirsch: In rare cases where a property’s water and sewer costs haven’t increased significantly enough to impact Net Operating Income in a substantial way, this argument is perfectly sensible. But most properties are experiencing rate increases that outstrip even medical costs. Although it was no problem to give away free unlimited water 25 years ago, that is no longer the case. My article in Florida Apartment Association’s eConnect shows how billing residents for water enables them to save money while increasing your profits.

Property Manager: We fear losing good tenants if we begin billing for water.

Steve Hirsch: Submetering and RUBS are common practices. The vast majority of tenants do not object. Taking a 200 unit property with average $800 rent and a $10,000 water bill exclusive of common area, the math usually works something like this:

  • Two or three tenants move out and are replaced within a month or two, causing a one-time loss of about $3,000 revenue.
  • The property gains recurring revenue of about $8,000 per month.
  • Common strategies to soften the impact of utility billing is for the property owner to subsidize a percentage of each unit’s water and sewer bill for the first 3 to 6 months or to give each unit a fixed monthly credit against the utility bill.

Property Manager: “Our occupancy is low. We’ll start billing for water once we reach our occupancy goal.”

Steve Hirsch: New tenants should be trained to pay for their own water and sewer use from the get-go. Otherwise, new tenants will feel ambushed when utility billing is enacted shortly after they move in.

Property Manager: “We know that we should be submetering or RUBSing the property and we fully intend to do it. But how do we compare one billing company to the next?

Steve Hirsch: Now you’re talking! I thought it would be a good idea to write a primer that explains how to compare billing services. Fortunately, Florida Apartment Association agreed and published my article. Read about how to compare submetering and RUBS services here.