October 10, 2022

What Drives Complexity In Single Family Rental Utility Management?

By
Team Nutiliti

We recently had a new entrant into the property management space ask us an excellent question: What makes utility management in single-family rentals so complex?

We had such a great time walking them through the nuances of SFR utility management that we thought we'd publish a blog post about it in case others were interested.

Nutiliti handles this mission critical but noncore function for the property manager

From a property manager's perspective, utilities impact operations across the entire unit's lifecycle.

1. When a new unit is acquired, the property manager must ensure that every utility (electricity, gas, water) is activated so renovations can begin at the unit. Turn-ons can include handling in-person service appointments (meter needs to be turned on at the unit).  

2. While renovating the unit, the property manager must ensure that each bill is paid on time to prevent any disconnects. That includes handling utility providers that mail paper invoices and require monthly manual payments.

3. The property manager must explain details of the utility program when a new tenant moves in. For example: do the tenants need to transfer certain utilities into their name, or will it stay in the property managers?

4. For the utilities that remain in the property manager's name (primarily due to regulatory restrictions) - the property manager must ensure that the tenant is being billed for their consumption during their lease term. The billing process must include the proration of bills based on unique resident move-ins and managing varying due dates across utility providers at the unit.

5. During the lease, the property manager must be prepared to face utility questions around high bills or power outages.

6. When the resident moves out, the property manager needs to ensure that the final bill is delivered promptly to the resident.

This list doesn't factor in the other components of utility operations that can impact a property manager's economics, like consumption anomalies (water leaks), programmatic collections (managing delinquent tenants), or electricity procurement (reducing rates).

Now that you understand the various places a property manager engages their utilities, let's dive into what drives the complexity.

Managing utility providers across an SFR portfolio is challenging for several reasons:

• Fragmented set of providers

• Differing billing and turn-on processes of each provider

• In-person activations across multiple geographies

• Limited payment functionality at providers

• Manual bill retrieval and audit across 4-6 utilities at each unit

• Mail-based provider invoices

Today most property managers manage utilities in-house, with their field operations teams handling turn-ons, accounting team members handling the payment of invoices/tenant billing, and leasing team handling customer service calls/ad hoc requests. These all have their issues which we'll write about later.

SFR utility management has generally been an after-thought, bundled across various team members, but now given its strategic importance, an increasing number of property managers are allocating more time and capital to this category.

Just as many SFR owners/operators have turned to technology, vendors to support various pieces of their operations across leasing, maintenance, and customer service; they are now allocating budgets toward utility management.

By partnering with companies like Nutiliti, property managers can take advantage of various new technologies and deploy them across their portfolios. This includes technology like our bot automation product that retrieves and parses invoices across providers.

We're grateful for the clients that have trusted us to manage this mission-critical part of their operations and provided us with detailed feedback ensuring we're building the right platform.

We look forward to educating more folks about utility management.

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