Tackling Rising Multifamily Expenses: How Utility Billing Can Make a Difference

The multifamily industry has faced yet another challenging year, with operating expenses continuing to climb while rent growth lags. The 2023 Income/Expense IQ benchmarks, recently released by NAA, IREM, and BOMA, paint a sobering picture: insurance costs soared, repairs and maintenance expenses rose significantly, and property taxes increased across nearly every market. With these pressures, property owners and managers are searching for ways to maintain profitability without further burdening tenants with higher rents.

One often-overlooked area to address these challenges is utility billing. As expenses for water, sewer, electricity, and other utilities remain significant, there’s an opportunity to recover costs and improve operational efficiency.

Rising Expenses, Shrinking Margins

The report revealed some stark trends in 2023:

• Insurance costs jumped 26.2%, fueled by natural disasters and market-wide risk adjustments.

• Repairs and maintenance climbed 11.8%, driven by inflation in labor and materials.

• Property taxes, a significant expense line, increased 9.7%, with some markets seeing double-digit spikes.

While utility expenses rose more modestly at 1.4%, they remain a critical component of operating budgets—and one of the few areas where operators can take meaningful action.

Utility Billing: A Key to Financial Balance

Utility billing offers a pathway to address rising expenses while maintaining transparency with residents. Here’s why it matters:

1. Recover Operating Costs Fairly

Utility expenses often represent a significant, recurring cost for property owners. Implementing systems like Ratio Utility Billing Systems (RUBS) can fairly allocate utility costs to residents based on factors like unit size or occupancy. This ensures that those who use shared resources contribute proportionally, reducing the burden on the property.

2. Stay Competitive Without Raising Rents

In markets with stagnant rent growth, billing utilities separately allows you to keep rents competitive while recovering additional costs. Residents often prefer transparency, knowing exactly what they’re paying for utilities rather than seeing a single bundled rental rate that’s harder to understand.

3. Improve Efficiency and Accuracy

Manually managing utility costs can be time-consuming and error-prone. Digitizing the process and integrating it with property management software can save time, reduce disputes, and ensure that residents receive accurate and timely utility charges.

4. Strengthen Resident Relationships

Transparent utility billing fosters trust with residents. When residents understand how their utility costs are calculated and see fair allocation methods, they’re less likely to feel dissatisfied, especially in a time when affordability is a top concern.

An Industry Shift

As multifamily owners and managers face increasing operational costs, utility billing is emerging as a critical tool to manage these challenges. By recovering utility expenses in a clear and fair manner, properties can offset rising costs in other areas, like insurance or repairs, without creating additional financial strain on tenants. It’s a strategy that aligns operational needs with tenant satisfaction—a win-win in today’s environment.

What You Can Do Next

If you’re exploring ways to streamline operations and recover rising utility expenses, consider the tools and systems available to make this process more efficient. The shift doesn’t have to be complicated, and with the right approach, it can create meaningful improvements in financial performance.

The multifamily industry is resilient, and as costs rise, opportunities exist to rethink how we approach expenses like utilities. With careful planning, you can find solutions that work for both your property’s bottom line and your residents’ satisfaction.

How to Stop Paying for Utilities – Starting Now

If you’re still covering water, sewer, and trash for your tenants, you’re missing out on thousands in NOI and potential property value growth.

It’s time to take that money back—and Utility Ranger makes it simple.

🔹 Here’s how to get started:

✅ Step 1: Sign up for a 60-day free trial of Utility Ranger.
✅ Step 2: Let us help you set up RUBS for your property.
✅ Step 3: Start recovering your utility costs immediately.

📅 Click Here to Start Your Free Trial