Author Archives: Minol USA

About Minol USA

Minol pioneered the submetering industry more than 60 years ago. Today, we are leading the industry with innovative solutions that help properties measure, manage, recover and conserve. From meter technologies and utility billing to energy management and water conservation, Minol offers a full suite of solutions that maximize NOI for the multifamily, military and student communities.

Increase Asset Value with Water Conservation Retrofit

It’s no surprise that multifamily properties often have high water consumption. Resident habits, pools, laundry rooms and sprinkler systems all contribute to increased usage and as a result – costly utility bills.

Common reasons for high water usage:

  • Residents often aren’t aware of leaks or don’t report them when discovered – 20% of all toilets leak at any given time.
  • Water conservation tips aren’t provided to residents (many residents see no relationship between the amount of water they use and their cost to live in the property).
  • Older fixtures.
  • Poor or aging plumbing.

Managing a property’s water expense varies based on the individual owner as well as city and state regulations. An owner may choose to invest in a submetering system that measures each unit’s actual consumption. If a submetering system is not an option or outside of the owner’s budget, an allocation method may be used to calculate usage and distribute charges among the residents. For some properties, such as affordable housing, residents are not billed for their water usage which can pose a heavy burden on already taxed budgets.  An effective water conservation program not only reduces consumption but has the potential to lower monthly water bills by up to 40%.

How an Affordable Housing Community Saved $500,000

An affordable housing client faced an increase in residents along with a decrease in funding and grant support. The management team decided it was time to explore solutions that would conserve both resources and dollars. The solution: Minol’s Water Conservation Program.

More than Shower Heads and Flappers

Minol developed the Water Conservation Program to minimize excessive water consumption within communities. This unique and innovative program utilizes a combination of high-quality components and a proven methodology developed more than 30 years ago.

The evaluation process to identify eligible properties is complimentary and begins with a Minol team member analyzing specific property survey information and 12 months of water usage. As the team identifies properties that need help, Minol rebuilds property components at its own expense through its Pay-Out-of-Savings Program. Minol’s investment is recovered through the savings generated, which is typically within 12 months. “The Pay-Out-of-Savings component was a key differentiator from other water conservation programs we had researched. We saw savings within months of implementing the program,” said a client representative.

Program Implementation and Results

The client provided property and water usage information for 162 properties with 15,007 units to Minol for evaluation. The Minol team identified 31 properties with 3,418 units that qualified for the program. The client chose to implement their water conservation plan in four phases. All toilets were retrofitted with highly-effective toilet flappers, while low-flow showerheads and aerators were also installed.

The team is very pleased with the results Minol’s Water Conservation program has yielded for their communities.


Will Your Property Qualify for Pay Out of Savings?

The criteria below are typical qualifiers. A simple survey and analysis can determine if your property qualifies. 

  • Property is older than 5 years
  • More than 100 units
  • Owner pays water (or water is allocated)
  • Water/sewer bills are more than $250 per unit annually

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Electric Bills Shouldn’t Keep You in the Dark

Rubber stamping electric bills is a secret no one wants to talk about; not you, not the company you work for and certainly not the utility company who bills you!

Electric bills can seem mind boggling when your area of expertise is managing buildings versus kWh and demand fees. You need answers now and utility companies are usually as illuminating as a blown generator. Understanding the anatomy of a bill sheds visibility on why your expenses are in or out of line with your budget.

First, there are four basic types of charges:

  • A Service Charge is a catch-all fee that’s charged on every bill for operational costs such as printing, overhead, customer service and maintenance.
  • The Energy Charge is a standard measure of a unit or kilowatt hour (kWh). The kWh = the measure of electricity you use x the length of time you use it.
  • A Power/Fuel Cost Adjustment is a way for utility companies to charge back operational expenses that fall out of budget. Example, if the expense of running a power plant is more than budgeted, your bill will be adjusted upwards by a proportional share to cover those expenses.
  • Demand Charges can be a large part of your electrical bill. A demand charge is based on when you use your energy and whether you’re using it during a ‘peak’ demand time. If you have a bill related to a piece of equipment that requires significant energy during specific periods of ‘peak’ time, this could adversely impact your bill.  Whereas, if your equipment uses relatively equal energy all the time, your bill would be less impacted. Peak demand use = big bills.

The last critical piece to understand is the rate structure and whether it’s correct or the best option available. There are seasonal rates, tiered rates, time of use rates, and now “real time” rates on smart meters. In addition, there are commercial rates and residential rates. By finding your rate type on your bill and reading the utility provider’s rate structure you can better understand what you’re paying and why:

  • A seasonal rate goes up or down based on the time of year. For example: A utility may charge a higher electrical rate in summer versus winter.
  • Tiered rates generally charge customers more if they use more and less if they use less.
  • A flat rate is simple; it won’t fluctuate based on usage and time. It always stays the same.
  • Time of use does fluctuate depending on when you use it. For example, a utility provider may charge more for residential clients in the mornings and evenings when most people are home and using the most electricity. Or, a commercial client may be charged a higher rate from 9 AM to 5 PM when office equipment is at its peak use.
  • “Real time” rates on smart meters are based on the actual time you use the electricity against the actual cost a utility spends at that same time to generate the electricity.

Armed with basic knowledge you can better dissect your bill. You may even find that you qualify for a lesser rate, such as a commercial or residential rate based on your usage patterns. Maybe you can adjust a high energy consuming piece of equipment to run at a cheaper time without impacting performance? Aim a strong light at your next big electric bill and see if there’s an opportunity to take power over your utility expenses.


 

Kate Forsyth
Dir
ector of Energy Management and North East Sales Representative

Kate joined the Minol team in August of 2009. She currently oversees the Energy Management Program with a special emphasis on utility provider bill payment, cost avoidance and green initiatives.

Prior to joining Minol USA, she was employed by REIT AvalonBay Communities, Inc. for more than 20 years where she was responsible for increasing water, sewer, electric and gas collections via onsite associate training; augmenting utility reimbursements by instituting a collection and training process, creating and implementing a new utility recovery program, Hot Water Energy, as well as developing a reinstatement and centralization of the collections programs for AvalonBay’s portfolio which consisted of 54,746 apartments. While with AvalonBay, Kate also successfully lobbied for the passing of the submetering law in Massachusetts in 2005.

 kforsyth@minolusa.com | 410.292.7132

Statistic: EIA 2012 AEO Annual Energy Outlook Table 19; EIA 2009 RECS, Table CE1.1.

When Technology is Ahead of Multifamily Regulations – What Are Your Options

The rapid evolution of technological advances in energy and utility metering and billing platforms is constantly surpassing the current regulatory arena causing most companies to turn a blind eye. From new software-based HVAC systems to touchscreen metering devices, in-house legal and compliance departments are encountering difficulties in advising their clients appropriately considering legislation is light years behind.

In looking at the Texas market, many companies are selling smarter technology to multifamily building owners at low costs with enhanced energy efficiency, guaranteed savings and cost-recovery for utility usage. Simultaneously, the Substantive Rules governing electric, water, and HVAC metering of multifamily properties in Texas remain steadfast with requirements to use only watt-hour or volumetric sub-meters or choose to allocate energy and utility charges by subpar standards, such as by square footage or number of occupants.1 Such outdated regulations limit owners from using smarter technology that may provide a more accurate measurement of energy and utility usage.

That being said, every new technology doesn’t necessarily warrant new legislation; however, outdated legislation can create havoc for regulatory and compliance teams. For example, attempting to accurately determine whether use of energy efficient systems that provide Green Building Certifications is within compliance may set up companies for potential risks against future regulatory violations and litigation.

Allocation: Is it Really Fair?

The multifamily industry needs to remain aware of the currently regulatory landscape and its puclimits in allowing property owners and consumers to potentially benefit from smarter technology.

Specifically, in Texas, tenants may be billed for water and electric usage based solely on the square footage and/or occupancy of their apartment unit. This type of current legislation may cause tenants to pay for energy usage not used solely by the tenant.

You may have one tenant occupying an 800-square foot apartment unit and three
tenants occupying a similar 800-square foot apartment unit while both units are billed for the same amount of energy usage. By adding smarter technology solutions as an option under current regulations, property owners may be able to more accurately measure usage by applying additional factors, such as thermostat set points, valve position and timing, as well as individual unit energy load (demand) for a more accurate assessment of energy usage.

The scenario above is common. In Texas alone, the Public Utility Commission of Texas lists 6,970 submetered and allocated properties. Of that 6,970, only 24% are submetered, with the remaining 75% allocated.

The following provides a high-level overview of some compliance issues with the use of smarter technology for measurement of energy and utility consumption:

Key Focal Points with Technology and the Resulting Issues
type-of-technology
Why Regulatory Change is Critical

The primary reason for regulatory change is to meet the demands of property owners who are seeking more energy efficient systems to accurately assess energy charges to their residents. In turn, consumers are seeking more accurate billing methods for energy consumption. Property owners benefit from smarter technology due to the design/installation flexibility, lower installation and maintenance expense, long-term energy cost savings and green building certifications. In addition, consumers also benefit from smarter technology with more accurate measurement devices/software, energy savings due to efficiency, and lower costs allocated as a result of an owner’s savings realized overall.

So where lies the disconnect between regulatory agencies and the industry? Due to the literal meaning of the regulations and lack of regulatory action in the past years, property owners are limited in their use of smarter technology since such use will prevent recovery of energy and utility charges from their residents. In addition, property owners are entrusting the sellers of the smarter technology to provide the due diligence that will allow implementation and use of the technology in this current regulatory arena. Unfortunately; however, property owners are stuck with an enormous project that is of no use after proper review of regulations. Meanwhile, residents continue to be billed charges based on the most inaccurate methodologies of square footage and occupancy or outdated metering systems. 

To avoid these issues and take advantage of the smarter technology, consider the following steps to avoid future compliance issues:

Steps to Consider to Help Avoid Compliance Issues

  • Prior to purchase of smart technology systems, complete due diligence in (1) regulatory research (i.e., regulatory landscape, intent, need for approvals, etc.), (2) manufacturer studies, specifications, testing, actual use, and (3) review of seller’s references.
  • Search for third-party billing providers willing to work with you through the regulatory approval procedures, if necessary.
  • Conduct proper training of leasing staff to keep residents well-informed.
  • Ensure lease language incorporates new technology/billing methodologies with simple summary notices for ease of reference by residents.

While the current regulatory landscape does not incentivize owners to incorporate smarter technology and more energy efficient products within their properties, there are a few methods available that may allow owners to take advantage of energy savings.  Until legislation catches up, owners may have to take the extra, but necessary, steps to ensuring proper implementation of these smarter systems for measurement of energy and utility consumption.


kim-godsey
Kimberly Godsey, Esq.
Attorney, Director of Legal Affairs
972.386.6611, x422
kgodsey@minolusa.com

Kimberly has a wealth of experience in regulatory review and compliance. She led the development of Minol’s internal regulatory database that covers all fifty states and contains third-party utility billing compliance information from the utility provider requirements through state regulations. She has facilitated seminars for multifamily property owners in Texas and Massachusetts discussing utility billing compliance. She is a member of the Utility Management and Conservation Association.

She is a graduate of Texas Wesleyan School of Law (currently Texas A&M University School of Law) and is a licensed attorney in the state of Texas.

(1) See P.U.C. Subst. R. § 25.142, § 25.142, and 30 TAC § 291.121-127.

THE INFORMATION CONTAINED HEREIN IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD NOT BE CONSTRUED AS LEGAL ADVICE NOR RELIED ON AS LEGAL AUTHORITY. PLEASE CONSULT LEGAL COUNSEL TO DETERMINE SUITABILITY FOR YOUR SPECIFIC PROPERTY.

Electric Retrofits: What You Need to Know

If you own or manage a building with master metered electricity that is not submetered, you are likely getting zapped!

The average monthly cost for an apartment’s electricity usage is approximately $1,419 per year or about $118 per month. That equates to, not including common area expenses, a $23,600 electric bill just on interior usage for a 200 unit community.

If you haven’t considered submetering, now may be a good time to evaluate your options. Submetered apartments save between 15-25% on electricity versus non-submetered apartments. In addition to promoting conservation, many owners see a return on investment in less than 18 months.

Master Metered Electricity
A multifamily building with one master meter installed by the provider, or multiple in the case of garden style buildings, captures both common and interior usage for that particular building’s usage. In this scenario, the owner pays the entire bill directly to the provider.

Submetered Electricity
Submetering measures each individual apartment’s usage. The submeters are installed off the main line in a position that will capture all usage for lighting, appliances and HVAC where applicable (may require separate metering). The resident’s specific usage is billed back and allows for a fair and equitable solution to recoup interior electric expenses.powerstrip

Is Submetering the Right Choice for You?
The building’s electrical configuration will determine what type of submetering solution you will need so it is critical to know what to look for before investing.

Below are key items to evaluate:

  1. Locate the distribution panel. Is it in a common area closet, basement, outside or in each apartment?
  2. If the distribution panel is located in a common area closet, does the distribution panel have a circuit breaker for each unit so that each can be turned off by itself at the panel? For example: 12 units per floor or 12 units per building.
    • If each unit can be turned off individually at the panel, it makes sense and is less disruptive and expensive, to submeter at the panel. The submeters are installed either in the distribution panel itself or right next to it.
    • If you can’t turn off one unit at a time, the submeter must go inside the unit next to the distribution panel, usually in or near the kitchen. A flush mount meter is recommended for aesthetics.
    • If the apartment distribution panel is in a closet, a protruding submeter can be used.
  3. An outdoor distribution panel follows Steps 1 and 2 but requires a different, weather grade submetering solution. For example: An outside NEMA enclosure to house the meters.
  4. Determine the Amp Rating on the main distribution panel: 20, 50, 100, 150, 200 or other.
  5. Are the apartments labeled on the distribution panel? If not, this will need to be audited and identified prior to installation.
  6. Determine the phasing for the distribution panel: Single-phase, three-phase, Delta phase or other.
  7. How many wires feed the distribution panel? 2, 3, 4 or other?
  8. The number and location of the building(s) will determine how the electronics needed to read the meters will be installed. A site map is important. Certain topography (mountains and hills) requires careful placement of electronics so reads can be collected. Basements may require more signal strength.
  9. Determine where the data collector (a small computer that collects the reads) will go. An interior, dry and sometimes climate controlled space is required.

After conducting the above analysis, you are now ready to choose a submetering solution. A Request for Proposal (RFP) may be the easiest way to gather comparable proposals.  An RFP allows vendors to propose solutions based on your requirements so you can compare hardware specifics, pricing and labor. Remember that a licensed electrician should be included in the labor pricing and a drywall/painter as well if installing within the apartments.

Solutions by Electric Configuration

  • Distribution panel: The distribution panel is in a common area or basement and each apartment can be turned off at the panel. Mini meters are the best and least expensive solution. A mini meter is small, designed for residential application and generally works for 100A, 200A, and 400A electric submeters. They are perfect for metering electric consumption or production for nearly any 120V 2-wire or 120/240V 3-wire application.
  • Individual unit turn off: The electric for an apartment can only be turned off individually within the unit – A mini meter will still likely work plus an indoor flush mount enclosure. Additional expenses for drywall and paint work will need to be considered.
  • Outdoor application: An outdoor rated MMU (Multiple Meter Unit) is typically the best solution. An MMU allows for multiple outdoor submeters to be installed at the exterior distribution panel in a weather grade enclosure. Another option is to use socket style meters. There are pros and cons with these in that they rely heavily on available building space and if meter sockets are already available or would need to be installed.

Be prepared to bring in reliable electricians to help you select the highest quality and most cost effective submetering solution. They will also determine the best configuration for your building type. The payoff is well worth the effort – greatly increasing revenue and property value while also encouraging conservation.

Kate Forsyth
Director of Energy Management for Minol
410.292.7132
kforsyth@minolusa.com

About the Author
Kate joined the Minol USA team in August of 2009. She currently oversees the Energy Management Program with a special emphasis on utility provider bill payment, cost avoidance and green initiatives.

Prior to joining Minol USA, she was employed by REIT AvalonBay Communities, Inc. for more than 20 years. While with AvalonBay, Kate successfully lobbied for the passing of the submetering law in Massachusetts in 2005.

New Construction Utility Expense Management

Getting Your Asset Off to a Good Start from the Ground Up

What if on Day One of the earth moving on your new community you didn’t have to touch the utility aspect of the site?  And, if you wanted to understand what accounts have been created you only need to go to one place to see everything – from what utilities are set up to your current spend? And, what if you could outsource doing everything from powering up the accounts for the trailer right down to installing the last meter woodneeded at the lowest, possible rate available?

Introducing an Energy Manager to the construction team mix in the planning stages will help establish a strong utility expense management structures that carries throughout the life of the investment.

Finding the right person requires a basic understanding of the scope of work and practical benefits. They must have the knowledge to educate you on technology options, as well as the fine details associated with this complex service.

Anyone involved with new construction has experienced the hazards, frustrations, and hair pulling while trying to understand utility bills.

Benefits of Employing an Energy Manager from Day One: 

  • A controlled set up of utility accounts at the right time with the correct, lowest rate available is obviously the best case scenario. Let’s face it, construction companies have the accounts set up at the last minute, rarely worrying about whether the rate is correct. This is a temporary gig for them. You will manage or own the asset long term. An Energy Manager can handle set up based on the construction schedule, on time, at the right rate. No frantic phone calls and unnecessary delays to the project. And, if an issue arises, the Energy Manager sits on the phone with the utility company – not you.
  • The centralization and accessibility of data in an energy management software system is imperative. Imagine no more digging through piles of paper bills trying to find the one number you need. Also, with data being captured correctly and in detail, the ease of accessing it for monthly variance analysis and annual budgets is a breeze. Reports on usage, rates, expenses and exceptions is possible. And, so is making data-driven decisions.
  • Streamlining of A/P processes and the alleviation of work for the accounting and construction, teams, i.e., the rubber stamping of bills versus skilled, audit reviews before payment. For example, the initial paperwork to create accounts, important continuous service agreements and the creation of a standardized process with one point of contact for construction and management can all be handled by an experienced energy manager.

A central point of contact smooths the transition from construction to management with business rules dictating the allocation of bills to be paid based on certificate of occupancy acceptance:

  • Once operational, the Energy Manager continues to add value by eliminating work load for management and expertly handling all your utility needs:
  • Continuous bill auditing using defined metrics. Utility providers never stop making mistakes and rate errors or leaks left unnoticed will cost you big if undetected. Issue resolution on behalf of management is also a critical component. Early detection of problems, such as leaks, and quick resolution are vital to quality utility bill management.
  • Negotiation of procurement contracts is more than just calling brokers and looking for the lowest price. There are dangerous pitfalls of low kWh/high extra fees. A seasoned Energy Manager is crucial to avoiding costly mistakes. Important steps will include reviewing historical usage patterns for your portfolio, aggregating load to gain maximum deal, determining hedging options, scrutinizing hidden fees, finding reputable brokers to contact, manage and negotiate the proposal process, and ultimately present the best options for your consideration. Once a provider is chosen, the Energy Manager maintains and manages the contracts going forward.
  • Failure to connect management and billing. This shouldn’t be a manual process completed on site. Management teams are busy and will miss opportunities to capture all failures to connect problems. An Energy Manager uses a software program designed to capture all failures to connect based on rent roll data versus bill service periods. These would then become exceptions and billed out with an additional penalty fee where allowable by law.
  • If the data is centralized, a budget should be created at an account level based on historical usage patterns, current rate and researched increases triggered to occur in the month forward when actually taking place. Further, anomalies from the previous year, such as leaks, credits or true ups should be scrubbed so the next year’s budget isn’t skewed. This is not the common practice of last year’s expense plus 3-5% increases. It takes a seasoned energy management veteran’s depth of knowledge in utilities to create a realistic budget.

In conclusion, efficient and effective utility bill management is a reality. An Energy Manager will make sure your management associates never open another utility bill envelope.  They will save you time and money and likely make you even more money. Paying a utility bill can cost you upwards of $15 per bill to process. Considering that utilities comprises 16% of your expenses, finding a good energy management program should be a top initiative and not an afterthought.

Kate ForsythKate Forsyth
Director of Energy Management
410.292.7132   kforsyth@minolusa.com

Kate joined the Minol USA team in August of 2009. She currently oversees the Energy Management Program with a special emphasis on utility provider bill payment, cost avoidance and green initiatives. Prior to joining Minol USA, she was employed by REIT AvalonBay Communities, Inc. for more than 20 years. While with AvalonBay, Kate successfully lobbied for the passing of the submetering law in Massachusetts in 2005.

Minol Announces the Release of the Minomess 130 Polymer

Lighter weight and more cost-effective water submetering solution for optimal
Utility Expense Management

Addison, TX – June 24, 2015 – Minol announced the release of the Minomess 130 polymer water meter today at the National Apartment Association’s Annual Conference. The Minomess, specifically designed for multifamily and commercial usage, provides owners and managers with a cost-effective solution for managing their utility expenses.

In the past decade, U.S. cities have seen a trend toward higher water bills. A few of the driving factors are excessive consumption, increasing water costs, decaying infrastructures and droughts. According to a recent Circle of Blue survey, the price of residential water service in 2015 is uMinomess Polymerp 6 percent in 30 major U.S. cities; a 41 percent rise since 2010. With utilities accounting for 15% or more of an owners’ overall expense, submetering has become a necessity in sustaining positive cash flow throughout the portfolio. Three states, Texas, Georgia and California, require submetering on new construction with more states likely to follow suit.

“Studies show that submetering may result in a 10-26 percent reduction in that utility’s consumption,” said Corey Hauser, Vice President of Meter Data Management for Minol. “Installing a submetering solution not only increases property value and revenue but promotes conservation by measuring individual consumption and proactively identifying leaks. The Minomess polymer gives owners an even more cost-effective metering solution to maximize the value of their assets.”

The Minomess polymer meter is a single-jet meter for cold water applications. The polymer meter body provides a lighter weight and more cost-effective submetering option. The Minomess polymer and Minomess brass for hot or cold water application are both ANSI/NSF 61 certified and comply with AWWA C712, ISO 4064 and G13IT19001-ISO9000 performance standards.

Minol’s in-house Meter Data Management Team successfully maintains 1.5 million hardware components nationwide by proactively managing daily meter health for water, gas and electric systems. Traditional AMR systems are designed just for meter reads. Minol’s MDM solution provides two-way data to insure accurate data which results in accurate billing.

How to Calculate and Increase the Cap Rate on Your Multifamily Asset

The financial market has changed in the past decade with an emphasis on less speculative valuing of investment properties and more reliance on hard numbers. Investors evaluating multifamily assets are far more conservative in valuing a potential purchase for income growth in both the short and long term.  As a result, it is critical to understand a property’s net value and continually look for areas to improve cash flow.

While market location and prospective neighborhood improvements are enticing, today’s buyer is more interested in the capitalization rate (Cap Rate) as a true measure of worth. Cap Rate is defined as the ratio of a property’s net income to its purchase price. The obvious first step in understanding a property’s value is to calculate the Cap Rate.
Cap Rate Calculation

Let’s take this example:

A property of 300 rental apartments with a gross annual rent of $300,000

According to a 2013 NAAHQ survey, a master metered community spends about 46% of its income on operating costs. Of that amount, 13% is utilities. Conversely, a submetered or individual metered property spends about 53% of its income on operation costs with a cost of 6.2% for utilities.

A master metered property with an income of $300,000 will spend $138,000 in
operating expenses

A submetered property with an income of $300,000 will spend $158,000 in
operating expenses

The value of a property is calculated using a Gross Rent Multiplier or GRM.  If the property is in a good neighborhood with good occupancy, take the Annual Income x a Range of 9-11 multipliers to get what the property value should be.

GMR = $300,000 x 11 = $3.3 million

Now put it all together to get your Cap Rate:

Master Metered Property with a Net Operating Income of $138,000/$3,300,000 valued asset
= 4.27% Cap Rate
Or
Submetered Property with a Net Operating Income of $158,000/$3,300,000 valued asset
= 4.8% Cap Rate

8 Tips to Increase a Property’s Income and Reduce Expenses to Improve the Cap Rate:

  1. Never underestimate relentless collection actions – For example, if your residents know you will begin to call, email and send letters 5 days after the rent was due, they will know you mean business.
  2. Carefully screen all residents through a proven application process to avoid delinquent payers and property damage.
  3. Additional income opportunities, with little to no investment, such as coin operated laundry machines, paid parking for premium spots, storage, pet deposits and premium apartment locations are easy to implement on new move-ins and renewals.
  4. Utility recovery can be done two ways where allowed by law: submetering and allocation. A 300 unit community with a cost of $397 annually per unit and a $35,100 investment will recoup about $31,266 the first year, $85,737 year two and $97,387 year three assuming a 2.5% turnover and a 15% common area expense. Simply put, submetering requires an investment and measures each apartment’s utility use, allowing the owner to bill the resident back. A typical payback is 12-13 months. Allocation has no investment and is a billing method that assigns a portion of the utility expense to each apartment based on a number of possible calculations: by occupant count, square feet, number of bathrooms, etc. All residents signed up at move in and renewal would result in net income.
  5. Conservation of common areas in the area of lighting, building envelope, insulation and central system upgrades can greatly reduce utility expenses. Each likely upgrade would need to be carefully vetted to determine the payback so you would know exactly when to expect an increase in income.
  6. Reduce vacancy. Keep in mind that every day an apartment sits vacant on a rent of $1,000 per month, you are losing approximately $33. At a 5% vacant rate, that’s $495 a week and $14,850 a month. Make sure your leasing staff is dedicated, skilled and focused on leasing as a top priority. To borrow a hospitality phrase – “Heads in beds!” – is what the daily goal should be.
  7. Raise rents annually so residents expect an increase and are prepared for it. A lower, consistent annual increase is better than trying to increase rents drastically and losing residents.
  8. Property improvements: If there is an improvement you can make that you can charge for and show a payback within a reasonable period, consider it.

It’s worth taking the time to determine and understand your Cap Rate. Once you do, you can review your options for increasing income. Each property has the potential to increase its Cap Rate. The question is how will you make it happen and what’s the best way to do it?

Kate Forsyth


Kate Forsyth

Director of Energy Management, Minol
410.292.7132
kforsyth@minolusa.com

Kate joined the Minol USA team in August of 2009. She currently oversees the Energy Management Program with a special emphasis on utility provider bill payment, cost avoidance and green initiatives. Prior to joining Minol USA, she was employed by REIT AvalonBay Communities, Inc. for more than 20 years. While with AvalonBay, Kate successfully lobbied for the passing of the submetering law in Massachusetts in 2005.