Moving into a new apartment is always accompanied with a long to-do list for your residents. One to-do that sometimes falls through the cracks is when residents are expected to move certain utilities into their own name prior to the move-in date.
Maybe it’s because moving is chaotic and they’ve simply forgotten. Or maybe they’ve purposefully put it off. No matter the reason, the property management company is stiffed with utility charges that belong to the resident. This is considered utility theft and is a frequent occurrence at multifamily communities. Usually, weeks, or even months, go by before the property management company realizes that they are footing the bill for their resident’s utility usage. Depending on the size of your portfolio and how long it takes for offenders to be identified, utility theft can cost property management companies thousands of dollars per year.
One way to mitigate the effects of utility theft is with vacant cost recovery. Vacant cost recovery is the process of examining move-in and out dates of each resident and comparing them with the property’s utility bills. If there is an overlap between the residents’ move-in date and the utility bills the property manager has received, it’s an indication of utility theft. Some property management companies perform vacant cost recovery in-house. But many simply do not have enough bandwidth and have found that outsourcing this tedious process is more cost effective. Outsourcing vacant cost recovery ensures that someone is routinely monitoring for instances of utility theft so that management companies don’t have their Net Operating Income harmed by paying for a slew of charges that don’t belong to them. Even better, some providers will automatically bill back the charges to residents so property managers can recoup their money. And, if local regulations permit, you can elect to assess a penalty fee to offending residents, creating a new revenue stream.
When it comes to recouping the charges from residents, timing is everything. The sooner you are notified about potential utility theft, the sooner efforts to recoup that money can happen. To help property managers stay ahead of the game, PayLease recently enhanced its vacant cost recovery platform and now offers same-day notifications for its Utility Expense Management clients. Unlike other services that are available in the multifamily industry, PayLease notifies property managers about delinquent utility account transfers within a day– versus weeks or months – of each utility’s new billing cycle. With expedited notifications, property managers can minimize instances (and the financial impacts) of utility theft. PayLease can even bill any offenders for what they owe so property managers can focus on other activities.
Vacant cost recovery services undoubtedly save multifamily companies money while reducing the administrative burdens for their employees. If your organization is struggling to stay on top of vacant cost recovery efforts, contact us for help. In the meantime, give this case study a read. It profiles Hilton Realty and gives a first-hand account of how PayLease’s Utility Expense Management and Vacant Cost Recovery solutions came to their rescue.