Single Family Rental Portfolio Challenges in Utility Management
3 min read · Written By: May Galan, Senior Vice President, Association Management
Managing utilities for a single-family rental (SFR) portfolio can be complex and time-consuming for any property management team. There are several challenges that property managers face when dealing with SFR portfolios across several regions. Below are some of the challenges that you can encounter when managing the utility's activation and deactivation:
Fragmented set of providers. SFR portfolios often have many utility providers, each with different billing and turn-on processes. This can make it challenging to keep track of all the accounts and ensure that bills are set up correctly and paid on time.
Here is a list of deregulated states for electricity and natural gas:
Electricity: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, Virginia, Washington, West Virginia, and the District of Columbia.
Natural gas: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas, Virginia, Washington, West Virginia, and the District of Columbia.
In-person inspections before activation across multiple geographies. Many utility providers require inspections, in-person activations and may require licensed vendors. These requirements delay coordinating inspections and getting utilities turned on for turnover, repairs, cleaning, and new tenant move-ins.
Limited payment functionality at many providers. Many utility providers have limited payment functionality, and some may require walk-in applications, making it difficult for property managers to activate and pay bills online or on time. These limitations can lead to late fees and other penalties, impacting the bottom line.
Lienable utilities can be used to file a lien against a property if the owner does not pay the bills. This includes water, sewer, gas, electric, and trash collection services. Homeowners are responsible for paying the bills for all lienable utilities at their property, regardless of who is listed on the account. This is true even if the homeowner does not live on the property or if they are not the ones who use the utilities. Property managers need to be aware of this issue and take steps to ensure that all lienable utilities at their properties are paid on time.
Manual bill retrieval and audit across 4-6 utilities at each property. Property managers must often manually retrieve and audit bills from multiple utility providers for each property in their portfolio. Reconciling these accounts can be a time-consuming and error-prone process.
Mail-based provider invoices. Many utility providers still send invoices through the mail, which increases mail-processing times, can delay payments, and make it challenging to track billing history.
These are just some challenges property managers face when managing utilities for SFR portfolios. Several solutions are available to help property managers address these challenges, such as outsourcing utility management to a third-party provider or using a cloud-based utility management platform.
How to Overcome the Challenges of Utility Management for SFR Portfolios
There are some things that property managers can do to overcome the challenges of utility management for SFR portfolios. These include:
Centralizing utility management. One of the best ways to simplify utility management is to centralize it. This means having a single point of contact for all utility-related matters, such as billing, payments, and customer service.
Using a cloud-based utility management platform. A cloud-based utility management platform can help property managers automate some tasks involved in utility management, such as bill retrieval, payment processing, and tenant billing. However, often these subscriptions have limited functionality and are costly.
Outsourcing utility management. Another option for property managers is outsourcing utility management to a third-party provider. This can free up property managers' time and resources to focus on other aspects of their business.
By taking these steps, property managers can reduce utility management's complexity and time commitment, improve efficiency, and save money.
Utility management is an essential but often overlooked aspect of SFR portfolio management. Read more about leveraging utility management here: How to leverage utility management services to increase your NOI. Property managers can improve the efficiency and profitability of their businesses by understanding the challenges involved and partnering with an experienced utility servicer like Precedent Management. Here are some of the ways Precedent Management can help:
Reduce the risk of errors. Precedent Management can reduce the risk of errors by providing a central repository for all utility-related documentation. This documentation can include past bills, contracts, and correspondence. By having all of this information in one place, property managers can easily reference it when making decisions about utility management.
Improve efficiency. Precedent Management can improve efficiency by automating many of the tasks involved in utility management. For example, Precedent Management can retrieve bills from utility providers, process payments, and generate tenant bills every month. This can save property managers a significant amount of time and effort.
Increase transparency. Precedent Management can increase transparency by providing property managers with a clear audit trail of all utility-related transactions. Audit trails can be used to track down errors, resolve disputes, and comply with regulatory requirements.
Improve customer service. Precedent Management can help to improve customer service by providing tenants with a single point of contact for all utility-related matters. This can make it easier for tenants to get their questions answered and their problems resolved faster.
Reduce cost by leveraging rates with providers. Owners and tenants can save money on their utility bills. This can be a significant savings, especially for large portfolios. Precedent Management can negotiate with the providers for better rates and often have working relationships with the providers due to their high volume of utility activations.
Precedent Management can be a valuable partner for SFR investors who want to improve their utility management practices' efficiency, accuracy, and transparency. Contact us at info@precedentmgmt.com to schedule a free consultation and demo of the services we can provide.