August 13, 2020
4 Challenges Multifamily Landlords Must Know How to Address
Managing a residential property comes with a number of challenges and responsibilities. Here are four of the most common problems landlords face and what you can do to work through them.
Late Rent and Utility Payments
It’s no secret late rent is one of the biggest financial challenges landlords face. And with unemployment as high as 14.7%, it’s becoming even more common. Late utility payments, while less significant than rent payments, also create financial challenges. Because when any form of payment is late, you’re responsible for covering it. And utility bills can add up to thousands or tens of thousands of dollars a month.
Collecting payments on time is an existential challenge for the residential housing industry. There’s no one simple solution to collect all of your payments on time. But there is an easy way to get your on-time collection percentage higher than it is now: offer tenants multiple payment methods.
When you accept payments through more than one channel, it becomes easier for tenants to pay rent and utilities. And when it’s easier for tenants to pay, they’re more likely to do so on time.
The most common payment options are online cards, check and over the phone. Some landlords who don’t have these capabilities in-house can work with utility billing companies to expand their channels for both rent and utility payments.
Not Having Enough Time
A common challenge landlords face is having too many responsibilities and not enough time. Time-consuming tasks like utility collection can take up precious resources that could be used for other tasks. Many in-house teams don’t have enough time for everything that needs to get done on the property.
Many landlords outsource day-to-day responsibilities to property management companies, giving them back valuable time. But what some landlords don’t realize is you can save even more time by outsourcing utility management to a utility billing company. This saves you countless hours spent on meter reads, data verification, invoice generation, payment collection and more.
Keeping Properties Competitive
Making your properties competitive with the market is essential to keeping units rented and tenant turnover low. But keeping a property competitive is easier said than done. There are a number of factors to evaluate.
The most obvious factor affecting a property’s competitiveness is rent. But there are a few ways you can use utilities to make your property more competitive without dropping rent.
First, does the market where your property is located allow you to charge for utilities and stay competitive? The utilities included in rent have a notable impact on this. If you are in a competitive market, you might be able to bill for some of your utilities while including the rest in rent. This will keep you competitive while improving cost recovery and NOI.
Second, installing submeters can increase tenant interest in a property. This is because many tenants like having the ability to reduce their utility usage and save money. They’ll be more likely to choose your property if it comes with a way to keep costs down.
Billing Tenants Fairly
Every month, tenants consume thousands of dollars of utilities. This places a significant liability on landlords, who have to either recover the costs from tenants or foot the bill themselves.
The most effective way to handle this problem is to bill the utility consumption back to tenants as a charge separate from rent.
But how do you bill tenants the right amount? If you under-charge tenants, the property loses money. If you over-charge them, tenants may get frustrated and leave.
To keep cost recovery high and tenant turnover low, you’ll need a system that can help you bill fairly and accurately. There are many ways to do this, but the two most effective are submetering and RUBS.
Submetering involves installing individual meters in each unit and charging tenants for their exact consumption. RUBS, in contrast, allocates the bill among tenants based on billing factors, like occupancy.
Every property is unique in design and the way it’s built. To get accurate reads and utility bills, you’ll need a solution that can address complex situations with flexibility. While it is possible to deploy your own solution in-house, many landlords work with utility billing companies who have experience creating fair and accurate bills.
Managing a multi-family property is challenging. If you’re looking for ways to streamline the management of your property, trying out a number of solutions is likely to yield success. And if you need more support and resources, it’s worth setting up a consultation with a utility billing company as a next step.