By charging the cost of utilities back to residents, multifamily operators are able to promote conservation, stabilize rents, lower their administrative burden, reduce operating costs, increase property value and improve cash flow. Many multifamily owners have enjoyed the benefits of submetering for years, but the student housing industry has been much slower to adopt.
Now, student housing operators are taking a closer look at submetering water, gas and electric. One of the best ways to promote conservation of resources is to have students be financially responsible for their utilities usage, use less and have a lower bill. This encourages students to be conscious of their utility usage.
At the same time, separating utility expenses from rent allows the property owner to unlock greater value in the student housing asset. This renewed interest in submetering is also being driven by the availability of apps that can easily keep residents and guarantors—usually mom and dad—informed of resident utilities consumption throughout the billing cycle.
“The student housing industry has a variety of resident utility policies, ranging from all-inclusive models typically seen in residence hall type properties to 100 percent resident responsibility where residents are the customer of record with the utility provider,” Jack Forrest, vice president of asset management and development services for American Campus Communities, told Multi-Housing News.
“As sustainability has become a more important consideration for our residents, ACC uses a variety of utility policies and methodologies to provide transparency to our residents regarding energy and water consumption and cost,” Forrest added. “This includes submeters, direct meters and other approved allocation methods to provide residents with consumption information to better understand their impact on the environment.”
Submetering installation and billing services can be used for any multi-unit property that is master-metered. Even when submeters aren’t installed in every apartment, utility usage can be allocated to each resident based on apartment size, the number of occupants or the number of bathrooms. This method of utility allocation is known as Ratio Utility Billing System, or RUBS.
Operators can reduce labor costs and collect submeter data remotely by installing an automatic meter reading system—a device that automates the collection of utility data from submeters and eliminates the need for staff to enter the apartment homes to read the meters.
Students control their spend
“Asking student housing residents to pay for their share of utilities separately is not a new idea, but it’s becoming more of a common practice in student housing,” said Lance Carter, vice president of operations at Caliber Living, an Atlanta-based property management company currently focusing on the Southeast. A Mallory & Evans company, Caliber Living has managed more than 20,000 beds.
“I joined the company in 2018 and at that time we were already charging utilities directly back to the residents at most of our student housing properties,” Carter noted. “We want students to be responsible for their usage just like in multi-housing where the responsibility falls on the tenant to get electric, cable and Wi-Fi in their name.”
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Originally, some of Caliber’s properties built in the early 2000s were not charging utilities back to residents. The management team eventually opined that it is their responsibility to help students prepare for the realities they will face after graduation.
“Students pay $400 to $600 dollars a month, but that’s not going to be a real apartment cost when they get out of college,” Carter said. “We decided we’d start charging back at all our properties for cable, internet, water, electricity and heat. For them to see real bills, I think really does prepare them for life,” he explained.
Messaging the benefits
When student housing operators include utilities with rent, it can sometimes lead to wastefulness with a negative impact on the environment. “If students have lived previously at a complex where the utilities were included in the rent price or there was a cap on utilities, you really have to explain to the resident and their parents/guarantor how this new model works and the impact of leaving the water running or not turning off the lights,” Carter pointed out.
By adopting this model, residents are able to control how much money they spend by controlling how much they use—it’s all up to them. What’s more, Caliber Living has energy-efficient appliances and Alexa capability throughout the apartments, which means that residents don’t have to be physically present to turn off the lights. All thermostats are smart-enabled as well.
“Those are really good marketing points when we are talking to mom and dad,” Carter said.
Usage is broken down on the bill by utility. Guarantors also like that they will be able to log in on their phone throughout the month—or over the course of the year—to see how much everybody’s using.
The most important benefit of submetering to owner/operators is not having to assume that cost. “We can offset expenses by giving the bill back to the resident,” Carter noted. “This is great for us, too, for our vacant units. If they are generating high electricity costs, we can do analysis,” he added.