“My residents are not going to like this.”
That’s usually one of the first thoughts to enter a property management professional’s head when they consider billing residents back for their utility consumption.
It’s a logical conclusion. The act of receiving and paying a bill doesn’t typically evoke warm, fuzzy feelings. And if residents have never been billed for any of their utilities before – perhaps you’ve been including it in the price of rent – then you may naturally have concerns about how they’ll react once this becomes a reality.
As a multifamily operator, you already know the advantages of billing residents for their utility consumption: lower operating costs, increased NOI, and higher cap rates. While you’re doing what’s best for your business, fears about diminishing resident satisfaction may still be at the front of your brain. Sometimes this fear leads multifamily operators to utilize what’s referred to as a utility bill-and-collect provider. In this scenario, residents get a utility bill from a third-party and must remit their payments directly to them. While it might seem appealing for someone else to be the face behind your company’s utility bill, it’s fraught with pitfalls that can wreak havoc on cash flow and on resident satisfaction (if you want the lowdown on that, be sure to download our latest ebook).
The option that is mutually beneficial for all parties and maintains the highest level of resident satisfaction is a resident billing program. This is when residents receive a monthly statement directly from their property management company. The statement contains their rent, utilities, and any other ancillary charges. Residents pay their property management company directly in one transaction.
If you still flinch at the idea of your residents getting a bill each month, rest assured, there are several advantages for them. Here are some things you can point out to your residents as you make the move to consumption-based utility billing.
“It’s Going to Stabilize Your Rent”
No one enjoys being given a rent increase under any circumstance. Ever. Since fluctuating utility costs are usually a driver behind rent increases, having residents take on the responsibility of these expenses will help keep their rent in check.
“You’ll Have Better Visibility Into Your Monthly Charges”
It frustrates residents (or anyone) when they don’t have a clear understanding of what their hard-earned money needs to pay for. Monthly statements are an avenue for you to be completely honest and transparent with them, and also allow residents to see item-by-item what they are accountable for. When everything is clearly laid out within a monthly statement, it saves them the hassle of having to get clarification from your on-site staff about their charges.
“You’ll Have the Ability to Control Your Monthly Costs”
Because residents are paying for their own utility consumption, you are handing them the reigns when it comes to what their monthly costs will be. If they want a lower bill, they can take simple steps to curb their usage. They have the ability to control how high or low their monthly bill will be each month.
“It’s Going to Be Easier to Make a Payment Each Month”
If you are sending residents a consolidated monthly statement, it will allow them to pay their entire balance in one convenient transaction. They won’t have to pay rent, then turn around and make a separate payment for utilities or any other charges they owe. Everything can be paid at once, preferably online. If they’d like, they can set up a variable autopay, which means their entire balance will automatically be paid each month without the resident having to log into the portal to update the payment amount.
If you want to better understand the difference between resident billing and utility bill-and-collect programs, then be sure to check out our latest ebook to learn more. Download your free copy of Multifamily Utility Bill-and-Collect Schemes Exposed now.
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