May 25, 2022
How Landlords Can Save Money on Utilities with Submetering
Saving money on utilities is essential for landlords seeking to boost their net operating income (NOI) – especially as utility rates continue to rise. In this blog, we review how you can keep your property profitable and save money on utilities with submetering.
To save money on utilities, many landlords turn to investing in energy-efficient building updates. While these updates are usually a good investment for your property, there is another option that you might be overlooking: submetering.
What Is Submetering?
Submetering is when utility meters are installed between the master meter and each unit in your property. This arrangement provides accurate consumption data for each unit. That allows property owners and managers to fairly allocate gas, water and electric costs to individual units within multifamily buildings, homeowners’ associations and developments.
At first glance, it may not seem like this utility arrangement would have much of an effect on utility cost savings. After all, utility usage isn’t affected by how the data is collected – right? Not so fast. Making the investment in a utility submetering system can help landlords save money in a variety of ways.
How Submetering Reduces Utility Costs for Landlords
#1. Takes Utility Costs Off Your Plate Entirely
Utility expenses can kill your bottom line. Because they vary from month to month, including utility costs in the rent or as a fixed monthly fee for your residents is not enough to reliably recover those costs.
Submetering allows you to measure the actual usage of each unit. With this precise consumption data, you can bill your residents for exactly what they consume and reliably recover 100% of the cost of utilities for your entire property. This billing arrangement also allows your residents to see their usage data and make adjustments that fit their lifestyle and budget.
#2. Incentivizes Conservation
When utilities are included in rent or as a fixed fee each month, there is nothing stopping residents from using as much of those utilities as they want each month.
With submetering, your residents know what they’re using each month, and they’re responsible for paying that amount. That means they’re more likely to conserve their usage each month.
As a result, many landlords see their residents cut consumption dramatically. Not only are you better able to recover utility costs month-to-month, but also that cost is less than it was before you installed submeters.
#3. Provides Detailed Usage Data
Finally, submetering gives you access to more in-depth usage analytics, which show exact usage down to the smallest unit possible. Having access to analytics this detailed may seem like overkill, but it allows you to spot any trends or abnormalities in your usage month-to-month, better equipping you to address any problems.
Let’s dig into why this detailed data can be so valuable for landlords.
The Importance of Detailed Utility Analytics
#1. Find Leaks Fast
With access to real-time utility metrics broken down by the unit, you can spot spikes in usage that usually indicate leaks. From there, you can easily identify the affected units and locate the leak.
Now, don’t be swayed into thinking that leaks aren’t your problem if you’re billing back tenants. It’s in your best interest to solve leaks as soon as possible. When charges that you bill back to your residents are excessive due to an unresolved leak, your residents may refuse to pay, and you won’t recover that cost. Not to mention, it creates an undesirable resident experience that can hurt retention in the long run.
#2. Make Informed Improvements
Detailed utility usage data from submeters empowers you to make informed, energy-efficient improvements to your building. With each unit metered, you can spot usage trends in your property.
For example, units in one wing of your building might be using more heat in the winter than units on another wing. With this information, you can prioritize insulation work on the units that use more heat.
Resources are finite. In-depth utility analytics help you see where investments in your property will go the furthest.
#3. Take Advantage of Conservation Incentives
Lastly, submetering allows your property to take advantage of green initiatives. With submetering, your residents will most likely consume less utilities, and you’ll be able to make data-driven energy-efficient investments in your building.
Plus, you’ll have the data to show how much energy your building has conserved, allowing you to take advantage of any local incentives for energy-efficient businesses and buildings.
Conclusion – Submetering Unlocks Value for Your Property
Investing in a submetering system is a great way to start billing back utilities to residents and fully recover utility costs. You will not only boost your NOI but also provide a better experience to residents – all while unlocking more value for your property through data-driven investments that wouldn’t be possible without submetering.
If you’re interested in setting up your own submetering system, get in touch with Synergy. We’re submetering experts happy to help you get the most out of your utility billing.